The network of Dutch firms
One of the ways in which firms are linked is through board members who also sit on the boards of other firms. Researchers use these board interlocks to determine which firms occupy a central position in the corporate network. This «is widely considered as an indication of a powerful or at least advantageous position», Frank Takes and Eelke Heemskerk explain in an interesting paper on the subject.
Two Dutch newspapers, de Volkskrant and NRC Handelsblad, have published visualisations of the Dutch (corporate) elite and their board memberships. You can use the data from those visualisations to create board interlock networks. Below is an example using data from NRC Handelsblad from 2017:
Darker nodes represent organisations with a more central position in the network, as measured by their betweenness centrality. Below is another example, using data from de Volkskrant from 2013:
The most obvious difference is that the second graph contains far more nodes (organisations) and edges (shared board members) than the 2017 chart. But there’s more. The 2017 dataset contains only nodes that have at least two edges - probably the result of a selection criterion used by NRC Handelsblad because of the type of visualisation they wanted to make. Further, the 2013 dataset consists of multiple components: three sets of organisations only share board members with each other; not with the rest of the network.
Given the differences between the datasets, would it still be meaningful to make comparisons between the two? The table below shows the top 10 of organisations with the highest centrality scores, for 2013 and 2017. The comparison is limited to organisations that are included in both datasets.
Organisations like employers’ organisation VNO-NCW, the Concertgebouw concert hall and airline KLM seem to occupy a pretty stable position at the centre of the network. VNO-NCW has a huge non-executive board with representatives from a wide range of industries. The Concertgebouw has been described years ago as the living room of the [Dutch] elite.
Aside from these stable elements, there are substantial differences between the two rankings. The rank correlation is only 0.33 and not statistically significant. This may be due to differences in the way the datasets were created; the small size of the overlap between them (only 34 organisations) and other data quality issues.
On the other hand, some changes in the ranking appear to reflect genuine changes in the position firms occupy. Two examples:
- One of the fastest risers is Ahold. Ahold merged with Belgian retailer Delhaize in 2016. It would seem plausible that this has strengthened their position in the corporate network.
- ABN Amro disappeared from the top 10. The bank used to have a board with well-connected members like Gerrit Zalm and Joop Wijn (both have gone through the revolving door between government and the corporate world), Peter Wakkie and Marjan Oudeman (one of the most influential Dutch women according to various rankings). In 2015, chairman Wakkie stepped down over a commotion caused by excessive executive board remunerations (the bank was still state-owned after having been bailed out with public money in 2008). Subsequently, Oudeman, Zalm and Wijn also left the bank, for reasons partly related to its upcoming flotation. It appears the current board has a lower profile.
This type of analyses could benefit enormously from having a larger dataset available. This is yet another reason why the Dutch Company Register should be opened up as open data: this will allow for better understanding of the networks of corporate control.
Method and data
Both de Volkskrant (2013, 2014) and NRC Handelsblad (2017) have published visualisations of the Dutch (corporate) elite and their board memberships. Note that these board memberships not only include companies, but also employers’ organisations, cultural institutions and other types of organisations the collectors of the data deemed relevant for analysing corporate elite networks.
Before comparisons can be made, the names of the organisations need to be cleaned up. Beyond correcting typos and dealing with additions like N.V. (plc) and B.V. (ltd), this involves deciding when to consider units as part of the same organisation. Pragmatically, I decided to treat businesses that are part of the same corporate structure as identical. This may not always be the ideal approach; on the other hand, it’s not always possible to determine what unit a name refers to (e.g. ING could refer to the holding or to one of its subsidiaries). I did treat foundations (e.g. charities linked to a company) as separate from the company.
There are different ways to measure the centrality of a node in a network. Taking my cue from Takes and Heemskerk, I used betweenness centrality, which is based on how often a node is on the shortest path between two other nodes. I calculated centrality for the entire network, that is, before taking a subgraph. I included endpoints to prevent many nodes having a score of zero.
I used the Python library
networkx to analyse the graphs (here’s the code and here’s the accompanying text file for cleaning up organisation names). I used d3.js to visualise the network graphs - here’s a description of the problems I ran into and how I dealt with them.