Kinship in the Shadow of the Corporation: The Interbuilder Network in Clyde River Shipbuilding, 1711–1990

Abstract

The authors identify a system of intercompetitor affiliation that helped Clyde River shipbuilding companies to thrive, but was ultimately undermined by the rise of corporate capitalism. They find that connections between companies through their leaders' family ties or friendships were common, and beneficial, as every such tie maintained by a company reduced its annual risk of failure by 10 percent. This average effect, however, masks an important contingency. The direct benefits of interbuilder ties accrued only to family firms, which enjoyed a reduced risk of failure of 34 percent with each tie, and not at all to corporations. The authors maintain that the shift to the corporate form inhibited the operation of the interbuilder network by reducing the autonomy of leaders to work through personal relations with their competitors. The results encourage heightened attention both to the idea that horizontal ties within an industry may be a key determinant of organizational success, and to the idea that some modes of relational governance may be incompatible with corporate governance.