ABSTRACT
Corporations in the US have shared directors since as far back as 1816 (Bunting 1983). By the end of the nineteenth century, the vast majority of the largest American firms were connected into a single, continuous network through board of director ties. Through most of the twentieth century, this network exhibited a high level of stability. Across wars, economic crises, the rise and fall of various sectors, technological revolutions and the conglomeration mania of the 1960s, the density of the network persisted within a fairly narrow range. The network began to unravel in the 1980s, however, and the decline accelerated in the 1990s. There has been a nearly monotonic reduction in the density of the network since 1982. The path lengths between firms have either increased or have disappeared altogether. This decline, after a century of stability, has wide-ranging implications for the behavior of individual firms, the diffusion of corporate policies and practices, collective action by corporations, and the larger society. We argue in this chapter that the decline of the American corporate network has its roots in a series of events that occurred in the 1970s and 1980s: the business-led neutralization of the countervailing forces of government and organized labor; the resurgence of corporate shareholders, what Useem (1989) has called the “revolt of the corporate owners”; and the historic withdrawal of banking from its traditional role in the economy and, as a consequence, the network. We will suggest that these three interrelated factors inadvertently vaulted the network into a trajectory of decline.
