Firms, directors and time in the directorate tie market

Abstract

Continuing the structural analysis of corporate profits and cooptive interorganizational ties through boards of directors, I summarize results obtained from research proposed several years ago in this journal. As expected, ties through directorates occurred in the 1967 American economy where market constraints on profits in manufacturing industries were most severe. Moreover. types of ties were coordinated as multiplex cooptive relations to sources of market constraint. The results led me to believe that there was a directorate tie market in the economy during the late 1960s — a social network composed of directorate ties providing a nonmarket context for the most competitive buying and selling between business establishments. Acting on this speculation, I propose lines of research into processes by which individual firms and individual persons would have had an incentive to maintain such a market. The research includes an analysis of the etiology of successful cooptation at the level of individual firms and assesses the impact of this success on corporate profitability and growth. The research includes an analysis of the etiology of an individual director's participation in successful cooptation and assesses the impact of this participation on his ability to obtain positions on the boards of large, profitable firms. The research includes analyses of the association between market constraints and directorate ties over a twenty year interval, 1960 through 1980, so that inferences made from the cross-sectional analysis in 1967 can be generalized with evidence on stability and change in the association between market constraint and directorate ties.