Skip to main content
Log in

Interlocking directorates in Italy: persistent links in network dynamics

  • Regular Article
  • Published:
Journal of Economic Interaction and Coordination Aims and scope Submit manuscript

Abstract

In this work we study the time evolution of interlocking directorates in Italy from 1998 to 2011 by means of dynamical networks. Our purpose is to assess if in Italy there is a connected and stable structure, due to the presence of directors with multiple mandates, like it happens in the German case. We find a very cohesive network structure, due to the presence of a few directors with multiple assignments and, unlike the German case, this structure is stable, but not connected. Moreover we propose an alternative approach to investigate the dynamics, based on temporal networks, in order to quantify the variation of links in a certain time period. We construct a unique cumulative network, where nodes are companies and the existence of an edge is related with the persistence in time of an interlock between two companies. This persistence is due on the one hand to the ownership of a few family firms, and on the other hand to cross-shareholdings between companies. To complete the analysis we also investigate whether the link stability results from the appointments of the same director or from the stepping in/out of different directors.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Notes

  1. For other graph definitions, we refer to Harary (1969).

  2. Associazione tra le Società Italiane per Azioni.

  3. D.L. nr. 58/1998, D.L. nr. 6/2003.

  4. Law nr. 214/2011.

  5. \(b\)-core is used with the same meaning as in Milaković et al. (2009), which is different from the definition of \(k\)-core introduced and used by Seidman (1983).

  6. Since our main goal is to show the persistence of links, the existence of isolated, fictitious vertices does not affect the validity of our study.

  7. In this work, the word “stability” refers to the presence over time of network links, and it does not have the meaning assumed in dynamical system theory.

  8. This is a typical Italian expression to identify a the well-heeled elite of bankers, industrialists and politicians that still dominate Italy’s economic life (see Corrado and Zollo 2006).

References

  • Barabasi A, Reka A (2002) Statistical mechanics of complex networks. Rev Mod Phys 74:47–97

    Article  Google Scholar 

  • Barabasi A, Oltvai ZN (2004) Network biology: understanding the cell’s functional organization. Nat Rev Genet 5:101–114

    Article  Google Scholar 

  • Battiston S, Catanzaro M (2004) Statistical properties of corporate board and director networks. Eur Phys J B 38(2):345–352

    Article  Google Scholar 

  • Bertoni F, Randone P (2006) The small-world of Italian finance: ownership interconnections and board interlocks amongst Italian listed companies (May 1, 2006). Available at SSRN: http://ssrn.com/abstract=917587. doi:10.2139/ssrn.917587

  • Bianco M, Pagnoni E (1997) I Legami Creati Tra le Società Quotate dagli Interlocking Directorates: il Caso delle Banche. In Quaderni di Moneta e Credito, Banca Nazionale del Lavoro

  • Caldarelli G, Catanzaro M (2004) The corporate boards networks. Phys A 338:98–106

    Article  Google Scholar 

  • Carley KM (2003) Dynamic network analysis. In: Breiger R, Carley K, Pattison P (eds) Dynamic social network modeling and analysis: workshop summary and papers, pp 133–145. Committee on Human Factors, National Research Council, National Research Council, Washington, DC

  • Conyon MJ, Muldoon MR (2006) The small world of corporate boards. J Bus Finance Acc 33:1321–1343

    Article  Google Scholar 

  • Corrado R, Zollo M (2006) Small worlds evolving: governance reforms. Privatizations, and ownership networks in Italy. Industrial and corporate change, vol 15, pp 319–352

  • Croci E, Grassi R (2013) The economic effect of interlocking directorates in Italy: new evidence using centrality measures. Comput Math Organ Theory, 1–24. doi:10.1007/s10588-013-9154-1

  • Davis GF, Yoo M, Baker WE (2003) The small world of the American corporate Elite, 1982–2001. Strateg Organi 1:301–326. doi:10.1177/14761270030013002

    Article  Google Scholar 

  • Ferri G, Trento S (1997) La Dirigenza delle Grandi Banche e delle Grandi Imprese: Ricambio e Legami. In Barca F (a cura di) Storia del Capitalismo Italiano, Donzelli, Roma

  • Ferris S, Jagannathan M, Pritchard AC (2003) Too busy to mind the business? Monitoring by directors with multiple board appointments. J Finance 58:1087–1112

    Article  Google Scholar 

  • Gambini A, Sarno E, Zazzaro A (2012) Composizione e struttura di rete tra le società quotate in Italia, Mo.Fi.R. Working papers 63, Money and Finance Research Group (Mo.Fi.R.). Deparment of Economic and Social Sciences, Univ. Politecnica Marche

  • Garlaschelli D, Battiston S, Castri M, Servedio VDP, Caldarelli G (2005) The scale-free topology of market investments. Phys A Stat Mech Appl 350(2–4):491–499

    Article  Google Scholar 

  • Harary F (1969) Graph theory. Addison-Wesley, Reading, MA

    Google Scholar 

  • Heemskerk EM (2013) The rise of the european corporate elite: evidence from the network of interlocking directorates in 2005 and 2010. Econ Soc 42(1):74–101

    Article  Google Scholar 

  • Holme P, Saramaki J (2012) Temporal networks. airXiv:1108.1780v2

  • Lahiri M, Berger-Wolf TY (2007) Structure prediction in temporal networks using frequent subgraphs. In: Proceeings of the IEEE CIDM 2007, Honolulu, Hawaii

  • Milaković M, Alfarano S, Lux T (2010) The small core of the German corporate board network. Comput Math Organ Theory 16(2):201–215

    Article  Google Scholar 

  • Milaković M, Raddant M, Birg L (2009) Persistence of a network core in the time evolution of interlocking directorates. Economics working papers 2009,10. Department of Economics, Christian-Albrechts-University of Kiel

  • Mirzuchi MS (1996) What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates. Annu Rev Sociol 22:271–298

    Article  Google Scholar 

  • Nicosia V, Tang J, Musolesi M, Russo G, Mascolo C, Latora V (2012) Components in time varying graphs arXiv:1106.2134v3

  • Non M, Franses P-H (2007) Interlocking boards and firm performance: evidence from a new panel database, TI 2007-034/2. Tinbergen Institute discussion paper

  • Piccardi C, Calatroni L, Bertoni F (2010) Communities in Italian corporate networks. Phys A 389(22):5247–5258

    Article  Google Scholar 

  • Rinaldi A, Vasta M (2005) The structure of Italian capitalism, 1952–1972: new evidence using the interlocking directorates technique. Financ Hist Rev 2:173–198

    Article  Google Scholar 

  • Rinaldi A, Vasta M (2008) The Italian corporate network, 1952–1983: new evidence using the interlocking directorates technique—RECent: WP n. 24, Università di Modena

  • Rinaldi A, Vasta M (2009) State-owned enterprises in the Italian corporate network, 1972–1983. Business and economic history on-line, vol 7, pp 1–35

  • Robins G, Alexander M (2004) Small worlds among interlocking directors: network structure and distance in bipartite graphs. Comput Math Organ Theory 10:69–94

    Article  Google Scholar 

  • Rotundo G, D’Arcangelis MA (2010a) Ownership and control in shareholding networks. J Econ Interact Coord 5(2):191–219

    Article  Google Scholar 

  • Rotundo G, D’Arcangelis MA (2010b) Network analysis of ownership and control structure in the Italian stock market. Adv Appl Stat Sci 2(2):255–274

    Google Scholar 

  • Seidman SB (1983) Network structure and minimum degree. Soc Netw 5:269–287

    Article  Google Scholar 

  • Santella P, Drago C, Polo A (2009) The Italian Chamber of Lords sits on listed company boards: an empirical analysis of Italian listed company boards from 1998 to 2006 (February 16, 2009). Available at SSRN: http://ssrn.com/abstract=1027947. doi:10.2139/ssrn.1027947

  • Santella P, Drago C, Polo A, Gagliardi E (2009) A comparison among the director networks in the main listed companies in France, Germany, Italy, and the United Kingdom. MPRA paper 16397. University Library of Munich, Germany

  • Stefani S, Torriero A (2013) Formal and informal networks in organizations, Advanced dynamic modeling of economic and social systems. Studies in computational intelligence. Springer, Heidelberg, Germany, pp 61–77

  • Wasserman S, Faust K (1994) Social network analysis: methods and applications. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Yeo HE, Pochet C, Alcouffe A (2003) CEO Reciprocal Interlocks in French corporations. J Manag Gov 7:87–108

    Article  Google Scholar 

Download references

Acknowledgments

We thank Gianfranco Gianfrate, Gianfranco Forte and the anonymous referee for their helpful suggestions and comments which really improved the quality of the paper. We also thank Ettore Croci, Massimo Belcredi and Assonime, that kindly provided us with corporate board data from 1998 to 2011.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Rosanna Grassi.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Bellenzier, L., Grassi, R. Interlocking directorates in Italy: persistent links in network dynamics. J Econ Interact Coord 9, 183–202 (2014). https://doi.org/10.1007/s11403-013-0119-8

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11403-013-0119-8

Keywords

JEL Classification

Navigation