Decline of the corporate community

Heemskerk, Eelke M.

2007

Amsterdam University Press

From its inception, big business in the western industrialised world has been organised in national business communities. Central elements of these business communities are corporate board interlocks that constitute the notorious 'Old Boys Network'. This corporate elite connects the centres of corporate governance. In recent times, these networks of the corporate elite show signs of decline. Heemskerk investigates how the decline of the old boys network in the Netherlands has affected Dutch capitalism. Combining formal network analysis with insights from interviews with key corporate elite members, he shows how during the last quarter of the 20th century the Dutch business community has disappeared. This is interpreted as a drift towards a liberal market economy. However, as the study shows, even in a liberal market economy corporate directors need social networks to communicate and coordinate their strategic decisions. Hence, the corporate elite shift its meeting network to private and informal circles. To order this book, mail to "mailto:orders@aup.nl">orders@aup.nl

Business t

Management

Linguistics

English

978 90 5356 973 3 (print)

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Decline of the Corporate Community

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Decline of the Corporate Community
Network Dynamics of the Dutch Business Elite

Eelke M. Heemskerk

A M S T E R DA M U N I V E R S I T Y P R E S S

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Cover photo: © Laif / Hollandse Hoogte
Cover design: Maedium, Utrecht
Lay-out: prografici, Goes
isbn 978 90 5356 973 3
nur 741 / 801
© Amsterdam University Press, Amsterdam 2007
All rights reserved. Without limiting the rights under copyright reserved
above, no part of this book may be reproduced, stored in or introduced into
a retrieval system, or transmitted, in any form or by any means (electronic,
mechanical, photocopying, recording or otherwise) without the written permission of both the copyright owner and the author of the book.

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Table of Contens

Tables and Figures

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Preface

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I Corporate Communities, Governance and Control
Introduction
Corporate Power and the Corporate Elite
Research Questions
Corporate Governance and Corporate Control
Coordination and Competition
Networks as Institutions
The Social Organisation of Corporate Governance
Networks
The Transformation of the Business System
Informal Institutions and Change
Outline

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2 Decline of the Corporate Network
Introduction
Corporate Networks and Corporate Regimes
The Dutch Corporate Regime
Governance in the Financial Sector
Ownership and Control in the Netherlands
Network Analysis of Interlocking Directorates
Disintegration of the Corporate Network
Centrality of Firms
Corporate Boards
Multiple Board Interlocks
Executive and Supervisory Interlocks
The Loss of Bank Centrality
Conclusion

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3 The End of the Old Boys Network
Introduction
The Old Boys Network
The Inner Circle
The Small World of the Corporate Elite
Closure and Brokerage
Multiple Meetings
Big Linkers
Conclusion

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4 The Corporate Elite’s Informal Networks
Introduction
Interviewing the Corporate Elite
Corporate Elite and the Business Community
Business Associations and Non-Corporate Boards
The Formative Years
Patterns of Recruitment
Putting the Network to Use
Tournaments, Conferences and Funerals
The Fragility of Social Capital
Dinner and Debating Clubs
Yachts and the Skybox
Is There Still a Corporate Community?
Conclusion

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5 Formalisation of Governance
Introduction
Formalisation and Competition
Internationalisation of Boards
The Jostle for Board Seats
Accountability and Risks
Corporate Social Responsibility
Remuneration as Status Attainment
Conclusion

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149
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6 Conclusions
Decline of the Corporate Community
The Dutch Corporate Regime
Good Corporate Governance and the Corporate Elite
Why Did the Network Fall Apart?
Exhaustion and Displacement
Migrating Corporate Networks
Suggestions for Future Research

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Appendix I

Mergers and Acquisitions in Banking

171

Appendix II

Glossary

175

Appendix III

List of Top 250 Firms in the Netherlands

179

Appendix IV

Big Linkers

207

Appendix V

Meetings of the Interviewees

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Notes

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Literature

231

Index

249

TA B L E O F C O N T E N T S

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Tables and Figures

Table 1.1:
Table 2.1:
Table 2.2:
Table 2.3:
Table 2.4:
Table 2.5:
Table 2.6:
Table 2.7:
Table 3.1:

Characteristics of Forms of Capitalism
Characteristics of Interlocking Directorate Networks
Centrality and Cohesiveness
Sample and Board Composition
Edge Multiplicity
Executive and Outside Interlocks
Sending and Receiving Interlocks with Financials
Executive Interlocks with Financials
Corporate Elite and Inner Circle During
the Twentieth Century
Table 3.2: Properties of Meeting Networks
Table 3.3: Distribution of Betweenness Centrality in the Dominant
Component of the Inner Circle
Table 3.4: Big Linkers
Table 4.1: Stratified Sample of Corporate Directors
Table 5.1: Network Centrality and CSR
Table 5.2: Management Orientation and CSR Preference
Table 5.3: Promoters of CSR: Network Position
and Stakeholder Orientation
Table IV.1: Big Linkers
Figure 1.1:
Figure 2.1:
Figure 2.2:
Figure 2.3:
Figure 2.4:
Figure 2.5:
Figure 2.6:
Figure 3.1:
Figure 3.2:

The Social Organisation of Corporate Governance Networks
Main Component in 1976, 180 Firms
Main Component in 1996, 194 Firms
Main Component in 2001, 137 Firms
Multiple Interlocks in 1976
Multiple Interlocks in 1996
Multiple Interlocks in 2001
From Caveman Graph to Interlocked Caveman Graph
Multiple Meetings in the Inner Circle,
Main Component in 1976
Figure 3.3: Multiple Meetings in the Inner Circle,
Main Components in 1996

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Figure 3.4: Multiple Meetings in the Inner Circle,
Main Components in 2001
Figure 3.5: Meetings of Big Linkers, 1976
Figure 3.6: Meetings of Big Linkers, 1996
Figure 3.7: Meetings of Big Linkers, 2001
Figure 5.1: Styles of Board Governance
Figure V.1 Corporate Network of the Interviewees
Figure V.2 Corporate Meeting Network Interviewees
Figure V.3 Indirect Connections between Interviewees

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Preface

With the turn of the century came an end to a period of perceived economic prosperity. Many believed that the rapid innovation in information and
communication technology (ICT) meant that a ‘new economy’ had emerged.
The belief in this new economy was the foundation of the ICT or ‘dotcom’
bubble of the late 1990s. However, by the turn of the century, it became crystal clear that stocks in ‘new economy’ companies were no different from the
highly praised investment objects in earlier economic bubbles, such as the
stocks of the South Sea Company in the early eighteenth-century Britain, or
tulips during the seventeenth-century Tulip Mania in Holland. As always,
the bubble did eventually burst. But this time, it was not only investors who
suffered great losses. As it turned out, the corporate leadership of some of
the most appreciated and highly valued corporations across the western
industrialised world was found to be guilty of fraud and severe mismanagement. In their quest for ever-growing market value, these corporate directors used every means at their disposal to achieve high stock appreciation,
including fraudulous accounting schemes. At the same time, the directors
filled their pockets with corporate revenues through extremely large remuneration packages. During the glorious days of the investment bubble, directors of corporations such as Enron, Worldcom, Parmalat and Ahold were
still considered by friends and foes as no less than beneficiaries of society.
But when the economic tide turned, and their dark side became clear, they
were outcast, fired, penalised, and in some cases sent to jail.
The scandals and incidences of corporate fraud underlined that good corporate governance is not merely a nice and noble goal, but a necessity. And
it is up to those who occupy the control centres of the corporate economy to
live up to the highest standards of corporate governance. As a group, it is up
to the corporate elite to assure good corporate governance. But is the contemporary corporate elite able to do so? On the one hand, the ‘old boys network’ forms a social environment which can uphold those badly needed
norms of good governance and proper behaviour. On the other hand, the
concentration of corporate control in the hands of a relatively small, homogeneous and closed corporate elite has long been recognised as a democratic difficulty of capitalism.
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My personal interest for social networks of the corporate elite was raised
on a summer afternoon in 2001, when Meindert Fennema invited me to participate in a research group on globalisation and corporate power, taking
place that year at the Netherlands Institute for Advanced Study in the
Humanities and Social Sciences. I took up the task of investigating the network of corporate board interlocks in the Netherlands, and found myself
privileged to be working with William Carroll, Malcolm Alexander,
Meindert Fennema and, most closely, Robert Mokken. By the summer of
2002, we had found that long-standing practices of intense intertwined networks of corporations at the level of the boards were slowly but steadily
removed. For us, these findings raised more questions than they answered.
Most importantly, we were particularly interested in the interplay between
the network of corporations on the one hand, and the network of corporate
directors on the other. The inter-firm network of corporate board interlocks
we investigated forms one side of the coin. The social interaction network of
the corporate elite forms the other side. Looking at just one of these two
‘projections’ of the network of board interlocks renders an incomplete view.
Rather, both the interpersonal and the inter-corporate network must be
analysed in conjunction, if we want to understand fully the dynamics of network of interlocking directorates. This book aims to do so.
This book contains an analysis of the network of interlocking directorates
of the largest 250 firms in the Netherlands at three points in time: 1976,
1996 and 2001. However, if we really want to understand the role these networks play for the corporate elite and corporate governance, we need to
acquire more detailed, qualitative insights as well. Therefore, a number of
interviews were organised with members of the corporate elite. I am
extremely grateful for the time and effort these people invested in this
research. Their willingness to share their smart and keen observations has
been invaluable to this book. In alphabetical order, I would like to thank
them: J. Aalberts, Ir. J.G. Andreae, Viscount E. Davignon, Drs. J.A.N. van Dijk,
Prof. Mr. A.J.C.M. Geers, Prof. Drs. C.A.J. Herkströter, Mr. P.C. van den Hoek,
Mr. E.M. d‘Hondt, Drs. F.H.J. Koffrie, Drs. R.H.Ph.W. Kottman, A.H. Land, Ir.
J.M. Leemhuis-Stout, Jhr. Mr. A.A. Loudon, Ing. M.I. Platschorre, Dr. A.H.G.
Rinooy Kan, Prof. Dr. A.J.M. Roobeek, Mr. B. Staal, Ir. P.O. Vermeulen, Dr. J.A.J.
Vink, Prof. Dr. A.H.C.M. Walravens, Drs. A. Wateler, Mr. N.J. Westdijk, Mr. A.
Westerlaken and Dr. H.H.F. Wijffels.
In some ways, I am not so different from the corporate directors this book
investigates. We both draw on our social networks for help, insights, comments, critiques, resources and friendship. There are many people who contributed to this book. I wrote this book when I was at the Amsterdam School
for Social science Research (ASSR) at the University of Amsterdam, the ASSR
financed and supported this research. The school offers a unique heteroge-

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neous academic community of high standard, with a great group of talented
and motivated young scholars. My time there has been a wonderful, extremely stimulating period. At the office, Hans Sonneveld and José Komen, together with Teun Bijvoet, Anneke Dammers and Miriam May form the cornerstones of the ASSR. During those years, I was lucky to be able to draw from
good students. In particular, I would like to mention Mijke van Ballegooijen,
who contributed much to this research while she was working on her MA
thesis on corporate social responsibility. Michiel Bezemer assisted me with
the collection of the data. Typical for the ASSR atmosphere, Brian Burgoon
left his mark on this book as ‘reverend’ of our International Political
Economy club. Our bi-weekly meetings have been an extremely fruitful place
to discuss our work, and I owe much to all who participated in these meetings. I thank my colleagues for their friendship, as well as for their comments and critiques on many aspects of my work. In particular, Sjoukje,
Mara, Josien, Marta and Gianluca, thanks for your support and friendships.
Joost, your comradeship has become extremely precious to me. Furthermore,
my friends in Ermelo, Amsterdam and abroad have been a much-needed
social anchor for me in the sometimes turbulent waters of this research.
I benefited from scholarly support of many, including, Martin Höpner,
Gerhard Schnyder, Gerald Davis, Andreas Nölke and Henk Overbeek. I would
like to thank Bruce Kogut for getting me acquainted with a very stimulating
international community of academics. Bert Schijf’s knowledge on elite
research has proved to be an important source of information for me. Nico
Wilterdink provided comments on earlier drafts, and John Scott, Jaap
Boonstra and Abe de Jong shared their comments and critique in the final
stage. A special word of thanks goes to Robert Mokken, whose clear mind
and ideas have been so stimulating to me. He provided me with the incentive to embark on the journey which led me to write this book. In the final
stage, his comments were invaluable as well. Jelle Visser was with me
throughout the entire project. He helped to shape this book by his smart
and to-the-point comments. This book could have never been written without the relentless support and friendship of Meindert Fennema. It was he
who put me on the trail of scientific research, and guided me all throughout the thorny path which culminated in this book. Thank you.
Froukje made it all possible. She helped me and supported me in all imaginable aspects one has to deal with when writing a book. She commented on
my drafts, gave me confidence when I most needed it, and most importantly, she ensures that my life extends well beyond the confinements of academia. Thank you so much.
Finally, I pay gratitude to those who have been with me the longest. I am
fortunate to have a family who has always supported me, even when my
enthusiasm over quite incomprehensible topics surmounted time and

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again. I thank Yuri, Mireille, and my parents, Carla and Gerard. Of course,
notwithstanding the collaborative nature of writing a book, any mistakes,
errors and omissions are solely my responsibility.
Eelke M. Heemskerk
Amsterdam, Winter 2006.

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1

Corporate Communities, Governance and Control

Introduction
In the early years of the twenty-first century, it became evident that directors of a considerable number of large – and very much respected firms –
were engaged in corporate fraud and severe mismanagement, leading to the
(near) collapse of firms such as Enron, Worldcom, Parmalat, Ahold and
many more. As a result of the fraud, value worth billions was destroyed and
jobs and savings were lost. The primary driving factor behind the corporate
scandals was the effort of top directors to uphold the appreciation of the
shares of their firms on the stock market. These directors were deeply entangled in the struggle for ongoing growth of shareholder value. The growth
targets of the fraudulent firms were at extraordinarily high levels, compared to the industries averages (Cools 2005). A study of 25 fraudulent international corporations compared with 25 comparable ‘non-fraudulent’ firms
revealed some additional interesting findings on the nature of the failure of
corporate governance. As it turned out, compliance with formal ‘good corporate governance’ rules and regulations proved to be insignificant for predicting governance failure. While these stipulations and best practices were
especially designed over the past ten years to safeguard and increase the
quality of corporate control, they prove quite ineffective. Other indications
proved more useful in spotting potential governance failure.
First of all, chief executive officers (CEOs) of fraudulent firms enjoyed a
very positive public reputation. They were not only mentioned more often,
but also more positively in newspapers and magazines than their colleagues
of the ‘non-fraudulent’ firms were. For example, in his glory days, former
Ahold CEO Cees van der Hoeven was often referred to as ‘Emperor Cees’
(Keizer Cees), and frequently made his appearance in popular television programs and the columns of tabloids. As one smart investor said, ‘When I
increasingly saw the CEO of Ahold at this kind of meetings, I sold everything’ (Cools 2005, p. 53, author’s translation; De Jong et al. 2005a provide
an overview of the Ahold case; while Smit 2004 sketches the entire drama in
his book).
Second, CEOs of companies where fraud has been established had eight

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times as many stock options and stocks than their ‘non-fraud’ colleagues
(Cools 2005). This is somewhat ironic, as stock options and stocks are included in the remuneration schemes of top executives in order to align their personal interests with those of the firm and its shareholders. Granting the
managers and directors pieces of (future) ownership is supposed to discipline them to act in the best interests of the shareholders. However, these
mechanisms proved to serve as perverse incentives, stimulating directors to
cheat and commit fraud. Looking at the past, those who are interested in
predicting future corporate fraud should be watching for over-optimistic
corporate results and ‘sovereign behaviour’ amongst corporate directors.
The repercussions of the failure of corporate governance reach beyond
those who are directly affected, such as employees and their families, shareholders, and small and large investors. The question is whether the scandals
are exceptional cases, or only the tip of an iceberg. They raise doubts about
the efficacy of shareholder-oriented capitalism, which has received more
and more appreciation over the past decades. Albert (1991) has made a distinction between two forms of capitalism:1 Rhenish and Anglo-American. In
the first form, there is a focus on long-term prospects, social welfare provisions and government involvement in business. Competition plays a role,
but direct coordination (for instance in industrial relations) is quite common. In the Anglo-American form, the focus is much more on direct competition as a leading principle. Individual achievements and short-term profits
determine individual and corporate behaviour. Albert’s book provoked a
great number of comparative studies on forms of capitalism. A multitude of
terminology emerged that describes differences in advanced capitalism.
Dore (2002) speaks of stock market capitalism and welfare capitalism; Nestor
and Thompson (1999) of insider and outsider systems; Berglöv (1990) chooses the terms bank-oriented and market-oriented system; and Moerland
explicitly speaks of network-oriented systems as opposed to market-oriented
ones (Moerland 1995a; Moerland 1995b).2 The common denominator in all
these typologies is that they all deal with the extent to which the liberal
market mechanism of competition is complemented by other means of (economic) coordination. Basically, all the ideal types can be characterised by
Hirschman’s distinction between strategies of voice and exit (Hirschman
1970), where exit is embodied by arm’s-length coordination through liberal
market behaviour, and voice based on coordination next to existing liberal
market relations. The extent to which liberal market mechanisms can, or
even should be supplemented by other forms of coordination is one of the
most fundamental normative issues in contemporary political economy, as
there is a very large difference across business systems in the appreciation
for coordination beyond the liberal market mechanism.
Building on these prevailing notions of forms of capitalism, Hall and
Soskice propose a dichotomy of market models. On the one hand, there is the

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liberal market economy (LME), and on the other hand the coordinated market
economy (CME). Where in a LME the equilibrium outcome of firm behaviour
is the result of demand and supply conditions in a competitive market, in a
CME this equilibrium is the result of strategic interaction among firms and
other actors (Hall and Soskice 2001a, p. 8).3 The LME and CME models are
close to a shareholder-oriented and a stakeholder-oriented economy. Table
1.1 summarises a number of elements and characteristics that are commonly used to discern types of capitalism.

Table 1.1: Characteristics of Forms of Capitalism

Labels

Conception of firm
Interest orientation
Influencing strategy
Ownership
Board structure
Stock market
Takeover market
Coordination
Inter-firm relations

Coordinated Market
Economy

Liberal Market Economy

Rhenish capitalism,
stakeholder model,
welfare state capitalism,
network oriented economy, organised capitalism
Community of interests

Anglo-American capitalism,
shareholder model, stock
market capitalism, market
oriented economy,
disorganised capitalism
Value-creating instrument
for shareholder
Shareholders
Exit
Dispersed
One-tier
Highly developed
Common practice
Market or hierarchy

Stakeholders
Voice
Concentrated
Two-tier
Less developed
Rare
Between market and
hierarchy
Durable

Arm’s length

(soures: Fennema 1982; Freeman 1984; Friedman 1962/1982; Frooman 1999; Heemskerk,
Mokken and Fennema 2003; Hirschman 1970; Nooteboom 1999; Weimar and Paape 1999).

In coordinated market economies the concept of the firm is one of a community of interest, where all that have a stake in the firm should be able to
voice their concerns. Ownership of the corporation is typically concentrated
in only a few hands. The stock market is relatively underdeveloped, as is the
market for corporate control (the market for large pieces of corporate ownership which will render the owner effective control over the firm). A twotier board structure with a separate executive and supervisory board is common in CMEs. On the contrary, in LMEs the firm is first and foremost a value-

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creating instrument of the shareholders. Ownership is dispersed and fragmented, and exit strategies of influence are preferred over voice. Capital and
takeover markets are relatively developed. A one-tier board structure is common in LMEs. The coordination mechanisms of an LME are hierarchy within the firm and competition between firms. On the contrary, in a CME coordination can also come about through networks positioned in between markets and hierarchies. In a LME, durable corporate networks are a liability,
while in CMEs they are considered to be an asset.4
The stark differences in normative or political consensus on how the
economy should be organised shows in the legal framework as well.
Corporate law defines what a corporation is, its responsibilities, opportunities and possibilities. Law is frozen politics: an outcome of political struggles
between stakeholders, and as such a codification of particular norms and
values, convictions and political trade-offs. A general distinction can be
made between the extent to which regulation is based upon rules and legislation, or upon principles. On the one hand, rule-based corporate governance (or per se prohibition) is firmly based on legislation; all corporate governance stipulations are codified in law. Rule-based corporate governance is
strong in countries such as the USA. Principle-based governance (or rule of
reason), on the other hand, is well appreciated in continental Western
Europe. Trying to avoid the rigidity of rule-based governance, principlebased governance leaves room for self-regulation and self-organisation of
business, on the basis of commonly accepted business principles. Thus, in
the USA, building on a long tradition of rule-based intervention in corporate
governance, the Enron debacle in 2001 led to the (hasty) construction of the
Sarbanes-Oxley Act. Rules and legislation are used to confine and discipline
corporations and the corporate elite. Many European countries, however,
endorse a principle-based code of good governance, which leaves room for
manoeuvring and flexibility. A crucial element in principle-based codes of
good governance is the concept of ‘comply or explain’. A corporation can
divert from the guidelines and principles of a code, as long as they explain
why they choose to do so.5
A key issue in comparative studies of business systems is whether national varieties of capitalism endure, or whether convergence between different
forms of capitalism across the globe results in an ever similar, global form
of capitalism. More specifically, the question boils down to whether Rhenish
countries are becoming more and more Anglo-American. The failure of corporate governance as it was revealed through the cases of fraud and mismanagement at the beginning of the twenty-first century further provokes
the issue of national forms of capitalism. This revealed that the dominant,
shareholder-oriented form of capitalism was not flawless at all. In fact,
methods carefully designed under the aegis of shareholder interests to
increase the quality of corporate governance proved to be ineffective or even

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counterproductive in disciplining corporate directors. The international
scope in strategy, finance and operations of the firms that fell victim to corporate fraud underscores the potential importance of the internationalisation of business and finance in these matters. One consequence of such globalisation is that corporate directors are less embedded in national elite networks.
For a long time, social networks between the top decision-making bodies
of the largest corporations contributed to the cohesion of business and the
corporate elite. Throughout the twentieth century, big business in the
Western industrialised world has been organised in national business communities. Foundational elements of these business communities are corporate board ‘interlocks’, where corporate directors sit on multiple boards.
These interlocking directorates tie together a corporate elite network that
spans the corporate control centres of the economy. But in recent times, the
architecture of these ubiquitous networks of interlocking corporate directorates has changed. In countries as diverse as Norway (Grønmo and Løyning
2002), Germany (Beyer and Höpner 2003), Spain (Rodriguez 2002),
Switzerland (Schnyder et al. 2005), Canada (Carroll 2002), New Zealand (Roy,
Fox and Hamilton 1994), the United Kingdom (Windolf 2002), the USA
(Davis, Yoo and Baker 2003) and the Netherlands (Heemskerk, Mokken and
Fennema 2003; Stokman, Van der Knoop and Wasseur 1988), networks of corporate board interlocks show signs of decline.6 At the level of corporate
directors, it might very well be the case that the national business communities they were once embedded in are now gone. This ‘disembedding’ of
corporate directors alters the social reality of the corporate elite. One of the
arguments this chapter advances is that the business community can function as a touchstone for behaviour, providing for norms and values that
guide conduct.
This study investigates the leading firms and the corporate elite of one
West-European country: the Netherlands. The Netherlands is a small, internationally oriented country with a relatively large number of multinational corporations. It is widely considered to be a Rhenish country, and has relatively strong corporate networks. Although some early research already
revealed patterns of interlocking directorates in the early twentieth century, it was not until the 1970s that an entire network of corporate board interlocks was exposed. The accumulation of many corporate board positions by
the corporate elite has led to concerns about the concentration of too much
(positional) power in the hands of a few. Concentration of (economic) power
by means of board interlocks remained topical throughout the twentieth
century (Davis 1996; Dooley 1969; Haunschild 1993; Levine 1972; Means
1939; Mintz and Schwartz 1981; Palmer 1983; Pennings 1980; Sonquist and
Koenig 1975; Sweezy 1953; Useem 1984). Some early research already
revealed patterns of interlocking directorates. These studies start with a few

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of the largest firms or banks, and map the relations of its directors with
other firms, with the goal of understanding the way in which corporate
power and control coincide in a small group in society: the corporate elite.
However insightful the findings might have been, it remained a highly limited approach in that it lacked a full understanding of the overall structure
of the network in which the largest firms are embedded at the highest level
of corporate control. It was not until the early 1970s that a network of corporate board interlocks in the Netherlands was revealed.

Corporate Power and the Corporate Elite
By the late 1960s, concentration of corporate power became topical in the
Dutch public debate. Interlocking directorates in particular were targeted as
signposts of the concentration of corporate power in the hands of a relatively small group of corporate director. In 1968, the Catholic trade union leader
P.J.J. Mertens addressed the issue of corporate power in a speech, arguing
that a group of roughly two hundred men controlled the Dutch economy.
According to Mertens, this group of directors was well acquainted, not in the
least place because of their shared board memberships. He described them
as a group which is ‘as skilled and financially strong as it is frightening’.7
Since then, the ‘Mertens 200’ became the shorthand expression for excessive
concentration of economic power in the Netherlands. While there is no indication that Mertens himself had strong empirical evidence to support his
claim,8 it was not the first time that the number 200 had come up. In
France, bankers were attacked as early as 1869 for the many board positions
they held. It was said that a group of 200 people were running French business through a network of their directorships and shareholdings (Zeldin
1973, p. 53-54, quoted in Schijf 1993). And, in 1934, the French radical socialist, Edouard Daladier, spoke of two hundred families who ran businesses as
well as politics in France (Schijf 1993, p. 16).
Inspired by the public debate about the ‘Mertens 200’, new techniques
and methods of computer-based network analysis were applied to map and
analyse the network of interlocking directorates for the largest 86 corporations in the Netherlands (Helmers et al. 1975; Mokken 1971). The results of
this study (entitled Traces of Power) were astonishing. Not only did the analysis show that all but two of the 86 largest Dutch firms were indeed connected in one network of interlocking directorates, they also corroborated
Mertens’ thesis. The 84 firms were connected through 873 interlocks, which
were in turn carried by a group of 195 directors, only five people less than
Mertens had predicted. The publication of the preliminary research report
hit like a bomb, and stirred public debate even more than Mertens’ initial
speech had done three years earlier. The media was excited about finding a
dense network of corporate directors spanning the control centres of the

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economy, as might have be expected. However, the uncovering of the corporate elite network aroused particularly fierce reactions from within the circles of the corporate elite itself.
While the researchers stressed that, for them, power rests with institutions (i.e. the firms) rather with individuals, the media immediately used
the analysis as an empirical basis of the Mertens 200. J.R. van den Brink,
chairman of the AMRO bank, was portrayed as the most ‘powerful’ person in
the Netherlands, since his firm was found to be the most central one in the
network. Although Van den Brink did see merit in the personalistic perspective on corporate power, he expressed his deep concerns regarding the
impact the study had. He felt he was being portrayed as no less than a monster. Moreover, he was deeply concerned because ‘the trust in those in Dutch
business who bear the responsibilities is lost’ (De Bruijn 1972). A similar
strong reaction came from De Pous, a former minister and chairman of the
socio-economic council. For instance, where the scholars used shared occupational background as a basis for group cohesion, De Pous argues that
‘these former members are unrelated individuals, who do not communicate
with each other, and who do not propagate any policy whatsoever’ (De
Nieuwe Linie 1972, authors translation). (Interestingly, only one year earlier,
the trade unions N.V.V. and N.K.V. demanded the departure of De Pous as
chairman of the SER, precisely because of his many directorships (De Nieuwe
Linie 1972).) What caused these spokespersons of the Dutch corporate elite
to react so strongly to the accusation of corporate power?
Perhaps it was because in the Netherlands the concentration of power
within the corporate elite had never been a big issue before. Only socialist
and communist intellectuals outside academia were engaged in this kind of
research. In 1913, F. Wibaut copied the research design of Otto Jeidels (1905)
and mapped interlocking directorates between Dutch banks and industry.
He found 300 firms interlocked with the nine largest banks (Wibaut 1913, p.
342). Similarly inspired by Marxist theory, F. Baruch published a two-volume
study on the Netherlands entitled ‘Big Power in a Small Country’ (Baruch
1962). He mapped the interlocks between the four largest banks and a number of industrial firms. This study, however, did not circulate outside the
sphere of influence of the communist party. Yet, not long after publication
of Baruch’s study, the capitalist system as it had developed came under
attack in a much broader public debate. In the political climate of the early
1970s, ‘power’ had in general a very strong, negative connotation. To make
things worse for the corporate elite, the accusation of concentration of
power was further induced by a wave of mergers that swept Dutch business,
and finance in particular, during the 1960s (see appendix I). Additionally,
relationships between banks and industry were becoming increasingly
intense. Firms were unable to finance new investments from retained earnings, as they were used to. They now had to rely on the banks for credit, and

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the banks consequently tightened their relationships with industry. Within
this setting of growing institutional power of financial institutions, the corporate elite fell victim to the accusation of possessing too much and uncontrolled power.
Besides the political perspective on the situation, there is also a structural aspect which might help us to understand the reaction of the corporate
elite. The structural aspect is not restricted to a specific political period in
time. The bottom line is that for those outsiders without power, the ‘old
boys network’ of corporate directors appears as a cohesive and highly powerful and influential group. Those who are inside these elite circles however,
typically have a different view altogether. They stress the limits of their
influence, and the lack of cohesion in their community. So, when commenting upon the first findings of the Dutch network of board interlocks and the
public debate it aroused, AMRO chairman Van den Brink argued that, ‘For
me, power is just one side of the coin. The flipside is responsibility. I feel that
pressure very strongly’ (De Bruijn 1972, author’s translation). Likewise, the
first president of the European Central Bank, W. Duisenberg, had a similar
view. He explicitly denied that he should be considered as a powerful person
(Tegenlicht 2003). Outsiders are inclined to stress the agency at the level of
the group, where concerted action of the corporate elite leads to outcomes
favourable to those who are in power. However, those within the corporate
elite are eager to stress the limitations of their own individual agency. As a
result, a banker might rightfully point at his limited ability to influence his
surroundings, while outsiders can argue, with the same validity, that the
bankers as a group have an enormous impact on the economy.
These two views on agency and (corporate) power also found their way
into the academic debate on power and elites. In the second half of the twentieth century, the debate on elites was divided in two main camps: the pluralists and the elitists. The elitists would argue that a cohesive ruling or
power elite dominates society. These scholars saw the group of connected
business people as a relatively closed ‘power elite’ (Domhoff 1967; Domhoff
1970; Domhoff 1980; Mills 1956/2000). This power structure research was
founded on the early work of C. Wright Mills (Mills 1956/2000) and Floyd
Hunter (Hunter 1953). The main object of study is the ruling class, which
brings together people from business, government and the military.
Theorists of the ‘power elite’ were opposed by pluralists such as Robert Dahl
(Dahl 1968; Dahl 1961/1989). Pluralists would point at the irreconcilable differences that exist between factions of the elite, and argued that that there
was not enough overlap among various power structures to speak of a single
ruling elite. It is this latter point of view which those who are inside the corporate elite would presumably adhere to most.
In the end, the power and influence of the group of corporate directors
(i.e. the corporate elite) are difficult to assess precisely. It does not have our

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prime interest either. Rather than using power (or influence, for that matter) as the primary lens through which to analyse the corporate elite, it
might prove more fruitful to take the concept of community as lens for investigating the role and function of the corporate elite because it allows for a
more sociological analysis of corporate governance. Together, corporate
directors form a distinctive, more or less cohesive group in society. The
social structure binding them together in and of itself creates opportunities
for collective action and coordination. It is this ability to act which is the
underlying basis for any power (or influence) they might possess as a group.
As such, the corporate elite network is part and parcel of the Dutch form of
capitalism.

Research Questions
Since the days of the Mertens 200 and the Traces of Power study, times have
changed significantly. Internationalisation led to a transformation of business, and the advances in information and communication technologies
altered and influenced society to a large extent. Some scholars do question
the alleged impact (Doremus et al. 1998; Hirst and Thompson 1996) and uniformity (Therborn 2000) of globalisation. However, it is undeniable that business now operates in a world quite different from the early 1970s. Some
scholars argue that we are now witnessing an emerging transnational corporate elite (Carroll and Fennema 2002; Kentor and Jang 2004), who meet in
the global cities of the world (Sassen 1991) and share the same neo-liberal
ideology (Sklair 2001). During the 1970s, a transnational network of board
interlocks did indeed emerge (Fennema 1982). However, after a short period
of construction, this expansion of the international network stagnated and
was resilient to further change and expansion. Thus, by the mid-1990s, ongoing internationalisation of business and finance was – surprisingly – not
accompanied by increasing international board interlocks (Carroll and
Fennema 2002). In fact, ties amongst the world’s largest corporations continued to respect national borders for the most part, leading Carroll and
Fennema to conclude that corporate governance still takes place predominantly within national frameworks (ibid.). At least until the mid-1990s, internationalisation in and of itself did not trigger a reorientation of board interlocks from the national to the transnational level. Likewise, in their study of
ownership ties between German firms, Kogut and Walker conclude that the
global economy still consists of many national business systems, composed
of country-specific institutions (Kogut and Walker 2001, p. 31). These observations trigger two sets of questions on the dynamics of the corporate elite
networks over time, which will form the basis for this study.
First, there is a descriptive issue. How has the Dutch corporate elite network that ties together the main economic entities changed since the late

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1960s? What are the impacts of globalisation on the appreciation of firms
and directors for durable social ties amongst each other? And furthermore,
what has been the impact of the ongoing and growing attention for shareholder interests which became more and more dominant since the early
1990s? Under the header of ‘good corporate governance’, checks and balances between different stakeholders of corporations receive growing attention from investors, media and directors alike. The driving force behind this
attention is the growing power and prominence of shareholders. During the
1990s, a number of documents were drawn up that specify which corporate
governance practices firms are expected to follow in order to ensure higher
‘shareholder value’. Issues as diverse as accounting standards, remuneration, recruitment and the structure of the board are all taken into account
in these codes of corporate governance (see for instance Cadbury 1992 for
the U.K.; and Commissie Corporate Governance 1997; Commissie Corporate
Governance 2003 for the Netherlands).9 As these codes of conduct are by and
large inspired by concerns for shareholder interests, they neatly follow the
liberal market perspective. Hence, board interlocks are negatively evaluated.
Former Unilever executive Tabaksblat, who chaired the committee on the
Dutch corporate governance code, explicitly states that his code aims to
reduce the concentration of economic power by imposing a restriction on
the number of board seats directors should have (Bogaarts and Nods 2003).
Mapping the network of interlocking directorates for a large group of firms
at several points in time will render insights in the impact of these developments on the cohesion of the Dutch corporate elite, and as such on the durability of Dutch capitalism in the wake of globalisation.
The second set of questions is concerned with institutional change. Here
we will examine the institutional change of business systems, and in particular the role of directors as individuals and as a group in these systems.
What instigated the change in the configuration of board interlocks that
have been present throughout the twentieth century? The point of departure in answering this question is that it is not sufficient to just point at the
structural, macro forces of globalisation in order to understand institutional change. Institutional change in modern capitalist societies is not always
fully captured by external, or exogenous, ‘shocks’, as Deeg shows by comparing change in German and Italian finance during the 1990s (Deeg 2005).
Internal, or endogenous, elements play an important role in institutional
change as well. The corporate elite is a highly influential group in society,
with vested stakes in the way capitalism is organised. Facilitating and
enabling change from within, the corporate elite might prove to be a crucial
link in the interplay between macro and micro levels of institutional change.
What we expect is that the Dutch business system shows a shift towards
a more liberal market oriented economic system. Stirred by ‘a strengthening
belief in the universal efficacy of competition’, Dore argues that:

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Institutional arrangements involving economic actors are increasingly
predicated on the assumptions: (i) that the individuals and the corporate groups involved are animated, if not solely at least predominantly, by considerations of self-interest maximalisation, and (ii) that,
except for a few cases of market failure, market competition amongst
those driven by self-interest can be relied on to maximise the total sum
of welfare (Dore 2002, p. 116).
Decreasing corporate networks are signposts of this ‘marketisation’, as Dore
terms it. Thus, we expect a thinning of the network of corporate board interlocks. According to Streeck and Thelen ‘the current transformation of modern capitalism is making it more market-driven and market-accommodating, as it releases ever more economic transactions from public-political control and turns them over to private contracts’ (Streeck and Thelen 2005, p.
4). This transformation has become one of the key issues in the literature on
comparative business systems, leading to the question of whether the pressures of globalisation lead to the convergence of systems of capitalism, or if
national variety in capitalism will endure. It would seem that across the
globe, corporate governance practices are being redesigned to promote market mechanisms of competition as a disciplining force for corporate management, in particular with respect to financial and labour markets. We expect
that the Netherlands will follow this trajectory.
The remainder of this chapter elaborates on these questions. The next section starts with introducing corporate governance, the contemporary framework for issues of corporate power, control and the struggle of interests
between various corporate stakeholders. The section argues that we need to
go beyond a narrow definition of corporate governance that only takes into
account the problematic relationships between directors and suppliers of
capital. Rather, a system approach is needed in order to fully encompass the
spectrum between the individual, micro level of directors and the level of
business systems. At the level of business systems, one of the most important
issues is the appreciation of coordination over competition, as the subsequent section argues. In this, corporate networks have an institutional role
in the economy, as the following section argues. Building on this relational
perspective on governance, and the appreciation of social structures as institutions in the economy, an analytical framework is introduced for studying
this social organisation of corporate governance. This section presents the
building blocks for the research of the following chapters. The relational
view developed in this chapter is used to further develop the issue of institutional change in business systems. The chapter concludes with an outline
of the following chapters.

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Corporate Governance and Corporate Control
The issue of corporate governance has received growing attention during
the past two decades. When the incidences of corporate fraud took place,
corporate governance had already been on the corporate agenda for several
years. Due to growing attention for shareholder interests, corporate governance became an issue in the early 1990s. Although the concept itself
remains ambiguous and multifaceted, one central element is that corporate
governance always deals with the interests of the stakeholders of firms, and
their relative influence over the firm. Narrowly defined, corporate governance is about the relationship between a company (the directors in particular) and its capital supplier (shareholders in particular) (Shleifer and
Vishny 1997, p. 737). Here, the core issue of corporate governance is how suppliers of capital can secure their investments.
Adam Smith already identified the discrepancy between the interest of
owners of a firm and the directors, when he discussed contemporary failure
of corporate governance at the South Sea Company. Being a joint-stock company with separation of ownership and control, Smith saw irreconcilable
and fundamental conflicts of interests as the main cause of the collapse of
the firm. Smith writes: ‘The directors of such companies, however, being the
managers rather of other people’s money than of their own, it cannot well
be expected that they should watch over it with the same anxious vigilance
with which the partners in a private copartnery frequently watch over their
own. Like the stewards of a rich man, they are apt to consider attention to
small matters as not for their master’s honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore,
must always prevail, more or less, in the management of the affairs of such
a company’ (Smith 1776/1993, book V, chapter I, par V.1.107). Flagged by
Adam Smith as a crucial problem of joint stock companies, the relationship
of suppliers of capital and the management of the firm remained an issue
ever since.
During the early 1930s, the issue gained growing interest when Berle and
Means (1932) observed that ownership and control of the larger firms
became increasingly separated. Initially, the founding entrepreneur and
owner controlled many of the largest firms, and these people both owned
and controlled the firm. When the firms grew larger, and the founding
entrepreneurs got older, a new class of professional managers arose. Over
time, they gained control of the firm without being the owners. At about
the same time, ownership became dispersed and fragmented as well. This
separation of ownership and control in corporations created a severe problem for shareholders, who could not control their investment anymore (a
principal-agent problem). Unorganised groups of shareholders had difficulty controlling the new class of powerful managers (Burnham 1947). Building
on the work of Berle and Means, a thriving literature on the diverging inter-

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est of owners and managers emerged. This literature more or less assumed
that the separation of ownership and control took place. Modern corporations were described as having dispersed and fragmented ownership, and
consequently an enduring power struggle between managers and shareholders emerged (Jensen and Meckling 1976). This power struggle served as the
basis for a burgeoning financial and legal literature, as well as the main
topic of much of the corporate governance literature.
However, the extent to which separation of ownership and control actually took place is often overstated. The narrow view on corporate governance,
which puts the alignment of shareholder and managerial interests at the
centre of the stage, is only fully applicable to a relatively select group of
firms, and more relevant to certain countries than to others (see for instance
Barca and Becht 2001). The USA and the UK have relatively high levels of dispersed and fragmented ownership, but this is much less the case in continental Europe, and fairly absent in Asia. Furthermore, most studies that
deal with the separation of ownership and control look at stock-listed firms
only (see for instance La Porta, Lopez-de-Silanes and Shleifer 1999). These
firms typically have relatively high levels of dispersed ownership. However,
by restricting the scope of research to stock-listed firms only, large segments
of the economy remain neglected. Thus, Vinke (1961) already warns not to
overemphasize the extent to which separation of ownership and control
took place, just because the largest firms in an economy show signs of such
a separation. The ‘astonishing consensus’ on the impact of the ‘alleged’ separation of ownership and control, as Zeitlin (1974) puts it, underlines the
ardent interest of many scholars.
Some scholars took issue with what they call the ‘normative’ stance of
shareholder primacy (see Engelen 2002 for a discussion of the moral claims
of ‘shareholderism’). Blair and Stout (2002), for instance, argue that it is a
misunderstanding to define a firm merely as a bundle of assets owned by
shareholders. They do not consider the principle-agent problem between
directors and owners to be the fundamental issue of corporate governance.
Boards of directors were not created to protect shareholder interest, but to
protect enterprise-specific investments of all members of the corporate
‘team’. After all, the key assets of the firm, knowledge and experience, reside
in the minds of employees (Blair and Stout 1999, p. 261). Therefore, ‘the
study of corporate governance must focus on more than just how to get
management to maximize value for shareholders. It must also be about the
human institutions that bind people together in cooperative relationships
over long periods of time’ (Blair 2002, p. 11). Thus, while the financial and
legal tradition in corporate governance commonly promotes shareholderoriented reforms, it does not fully encompass corporate reality. Following
Blair, ‘human institutions’ should be taken into account.
While Blair makes an important step in recognising the importance of

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cooperative relationships, her focus remains within the boundaries of the
firm. However, corporate governance is not only a set of rules that applies
between actors within a firm, such as management, workers and shareholders, and the control of shareholders over directors in particular. A broader
definition is proposed, for instance, in the British Cadbury report on good
corporate governance, a milestone document in the corporate governance
discussion. Cadbury speaks of corporate governance as ‘the system by which
business corporations are directed and controlled’ (Cadbury 1992; OECD
1999). Following this definition, corporate governance is not limited to the
corporation as such, but includes a multitude of elements and actors that
are involved in the control and governance of companies. Contrary to the
narrow approach, a system approach leaves room for the inclusion of other
stakeholder interests, such as those of employees, consumers, the state, and
perhaps even society at large. As the system by which business corporations
are managed and controlled, corporate governance has an external dimension as well. Corporations are part of a business system: an institutional setting consisting of formal and informal elements. These formal and informal
institutions differ between the business systems across the globe, which
inspires the term corporate regime. A corporate regime consists of customary
and statutory practices and relations, enforced in public and private practice, which determine both the way in which corporations are ruled, and
how they relate to other firms and institutions in a certain geographical
area.

Coordination and Competition
The concept of corporate regimes is a relational view, with attention for
structural connections and cultural norms, ideas, and rules of behaviour of
firms and of the corporate elite. A corporate regime thus consists of both formal and informal institutions. According to Streeck and Thelen,
‘[Institutions] represent socially sanctioned, that is, collectively enforced
expectations with respect to the behaviour of specific categories of actors or
to the performance of certain activities’ (Streeck and Thelen 2005, p. 9).
Furthermore, institutions typically ‘involve mutually related rights and obligations for actors, distinguishing between appropriate and inappropriate,
“right” and “wrong”, “possible” and “impossible” actions and thereby organizing behaviour into predictable and reliable patterns’ (ibid., p. 9, italics
original). As such, the corporate regime provides a moral foundation of business. Partly, these norms of appropriate behaviour and actions are codified
in laws and regulations, but for an important part these norms reside in the
social relations that tie directors and corporations together. Thus, the social
network of the corporate elite is part and parcel of the institutional configuration of the corporate regime.

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Few will deny that market economies need institutions in order to function. Even Adam Smith recognises that the liberal market is not, a priori,
optimal. In his theory of moral sentiments, Smith (1759/2000) argues that
not all unintended consequences of the liberal market are to be accepted as
beneficial. Order can only be the result of markets when both the legal as
well as the moral framework is operating well. So, for a liberal market system to work properly, it must be embedded in an institutional setting
including moral and legal rules and rule-making, which function as social
control (Samuels 1977).10 Fligstein mentions institutions indispensable for
any market economy including, among others, property rights, rules of
exchange and governance structures. Governance structures are ‘general
rules in society that define relations of competition, coordination, and market-specific definitions of how firms should be organized’ (Fligstein 1996, p.
658). The network of interlocking directorates forms an important structural part of this. Board interlocks are by themselves specific relations between
firms which reflect the extent to which corporations are embedded in
durable relations. At the same time, the corporate elite’s social network that
results from the board network forms an arena for the formation of consensus on, for instance, the extent to which coordination is appreciated over
competition.
Coordination takes place in both direct and indirect ways. Direct coordination can take the form of clear-cut collusion, where producers come
together in order to circumvent the disciplining forces of the market mechanism. Again, Adam Smith recognised the risks of such behaviour very well,
which he believed was inherent of economic actors. In a much-quoted sentence he writes, ‘people of the same trade seldom meet together, even for
merriment and diversion, but the conversation ends in a conspiracy against
the public, or in some contrivance to raise prices.’ Smith continues to note
that ‘it is impossible indeed to prevent such meetings, by any law which
either could be executed, or would be consistent with liberty and justice’
(Smith 1776/1993 book I, chapter 2). Smith celebrated the business system,
not individual businessmen; he was an admirer of their work but suspicious
of their motives (Samuels 1977). Ever since, social relations amongst the corporate elite are considered with a great deal of suspicion. This suspicion
builds on the idea that all coordination except for the liberal market mechanism leads to the weakening of the market, and thus results in suboptimal
outcomes.
While coordination might take place as clear-cut collusion (such as envisioned by Smith), it can also take a much more nuanced, indirect form. C.
Wright Mills writes that ‘there need not be explicit conspiracy, and certainly none that is provable. What is important is that each big producer makes
his decisions on the basis of his impression of the reactions of the other big
producers’ (Mills 1956/2000, p. 120). It is this kind of indirect coordination

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which leads outsiders to view the corporate elite as acting in concerted fashion, while the corporate director himself sees his power severely constrained
by its environment. To a certain extent, indirect coordination takes the form
of common social process that are not in any way specific for the corporate
elite. Westphal and Khanna (2003) give a good example of how social dynamics affect corporate directors. They studied how social distancing (reducing
the frequency and closeness of contact between people) is used amongst the
corporate elite as a control mechanism for defiant members. Not only do
board members become socialised into the normative expectations of the
corporate elite (Palmer 1983), these normative expectations are actually
enforced by social distancing. Westphal and Khanna find that directors who
participate in elite-threatening actions are more likely than others to experience social distancing in the two years following their actions.11 Directors
who sponsored such actions were invited to 49 per cent fewer informal
meetings, and their input on strategic issues was solicited on 53 per cent
fewer occasions (Westphal and Khanna 2003, p. 385). The authors claim that
the deterrent effects of social distancing outweigh the effect of economic
incentives and external pressures (ibid. p. 393). Likewise, Peij (2005) finds
that informal power outweighs formal power amongst the Dutch corporate
elite. The significant role of informal social mechanisms of power and control imply that group dynamics play an important – and largely neglected –
role in corporate governance. Corporate board interlocks are thus an opportunity structure for ‘non-market’ coordination between firms and the corporate elite.
(Social) networks are important for corporate governance because they
supplement the market mechanisms of competition as an opportunity structure for coordination, either direct or indirect. They are part of a framework
of formal and informal institutions that aim to coordinate the economy. A
good illustration of how corporate regimes differ in their assessment of
coordination over competition can be found when looking at business cartels. As Windolf (2002) points out, corporate cartels only recently received
the label of illegitimacy in continental Western European countries. For a
long time, cartels played a legitimate role in European industrial policies.
Government, business and finance acted together in a form of organised capitalism (Lash and Urry 1987; Offe 1985; Scott 1997). As recently as 1971, the
Dutch department of economic affairs kept a non-public register with 1,491
listed cartels (De Hen 1972, p. 41).12 Countries such as the Netherlands (and
also Germany) long considered cartels to be a useful coordination mechanism that could effectively assign resources and reduce risks of ruinous
competition, thereby lowering production costs (Jonker 1989). Concentration of economic power was not prohibited, but closely monitored. Fierce
competition was considered a danger to the social and economic order.
Economic (market) power in and of itself was not necessarily condemned.

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Rather, the abuses of power should be prevented, calling for the need to identify abuses of power without challenging non-abusive exercise of power (De
Gaay Fortman 1966).
The practice of organised capitalism stands in sharp contrast with, for
instance, the USA, where trusts and cartels have always been considered as
traces of collusion that hamper the proper workings of the liberal-market
system. Thus, in the best tradition of rule-based governance, the USA adopted early antitrust legislation with the Sherman Antitrust Act of 1890. Two
decades later, the hearings of the Pujo Committee (Pujo 1913) on the concentration of corporate power led to the Clayton Antitrust Act of 1914 that prohibited particular interlocks between corporate boards. According to
Chandler, ‘the passage of the Sherman Antitrust Act in 1890 and its enforcement by the federal courts reflected a shared belief in the value of competition, in Germany the strong support given to cartels and other inter-firm
agreements by the nation’s courts reflected a shared belief in the benefits of
industrial cooperation’ (Chandler 1990, p. 395; quoted in Sluyterman 1999,
p. 360). However, over the course of time legitimate, registered economic
coordination such as cartels transformed to illegitimate limitations on the
proper workings of the liberal market system.

Networks as Institutions
The value of coordination next to the liberal market mechanism of competition has been appreciated for many decades. After all, economic actors do
not always prove to be homines economici: calculating, risk-avoiding and profit-maximizing agents.13 Ongoing insights into the behaviour of the corporate elite teaches us that directors are not always as rational as some economists tend to believe (De Jong 2006). Bandwagon behaviour of the corporate
elite has been noted before as an explanation for dynamics leading to waves
of mergers and acquisitions (Schenk Forthcoming). Thus, notwithstanding
its merits, an actor-centred, rational choice model of economic action has
its limits (Abell 2003). In recognition of these limits, ample attempts have
been made to adapt the rational choice model, so that it better fits the social
reality.14 Taking relationships and network embeddedness into account as
alternative coordination mechanisms helps to better conceptualise rationality and understand economic behaviour. One influential stream of literature that aims to do so is transaction cost economics (TCE), originally developed by Oliver Williamson (1975; 1985; see also 1996). Williamson argued,
following the earlier work of Nobel laureate Coase that, the liberal market
mechanism is not necessarily the most optimal mechanism for coordinating
economic activities. While, in theory, the ideal, rational homo economicus acts
through arm’s-length market relations, it is in many cases actually advantageous to organise economic action in a hierarchical manner. Using hierar-

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chy for coordination reduces the costs that come with every single transaction. Coase (1937) used this logic to explain why firms exist in the first place.
Firms exist because the corporate hierarchy does a better job in the economic coordination of its constituency than the liberal market mechanism
would. TCE considers every market situation to be a relational setting, with
buyers, sellers and middlemen who are related through their economic
actions. Taking into account the costs of gathering and processing information that travels through market relations, TCE underlined how relationships can be used to reduce the costs of economic action.
Social relations do matter, and a relational view of economic action is helpful in understanding corporate behaviour. There is, however, a string attached
to any relational view. In one of the founding articles of socio-economics,
Mark Granovetter (1985) explicates the dangers of either an under-socialised
or over-socialised view of economic action. According to Granovetter, social
structures and economic actions are intrinsically connected:
[A]ctors do not behave or decide as atoms outside a social context, nor
do they adhere slavishly to a script written for them by the particular
intersection of social categories that they happen to occupy. Their
attempts at purposive action are instead embedded in concrete, ongoing systems of social action (Granovetter 1985, p. 487).
Inspired by this insight of social embeddedness of economic action, a literature emerged that studied inter-firm networks. Most of these studies are
interested in network forms of organisation, where chains of production
connect many small firms in one big ‘networked corporation’. In this way,
inter-firm networks function as an alternative mode of production, next to
the market and hierarchy forms of production (Powell 1990). But not all relationships between firms can be used to form a network of production. Out
of a larger set of inter-firm relations (such as client / supplier relations, R&D
relations etc.), interlocking directorates bear significance on corporate governance because they connect the top decision-making bodies of firms. The
(social) embeddedness of corporate governance through board interlocks
provides opportunities for the coordination of markets by ‘non-market’
means (i.e. with mechanisms other than liberal market competition). As
such, this kind of inter-firm network is a mode of governance, rather than a
mode of production. Inter-corporate governance networks are coordination
mechanisms, located between market and hierarchy (Fennema 1982;
Pennings 1980).
Traditionally, the analysis of corporate networks was inspired by the
study of corporate control (see for instance Helmers et al. 1975; Hilferding
1910/1968; Lenin 1916/1986; Palmer 1983; Stokman and Wasseur 1985;
Useem 1980). Board interlocks were seen as direct ‘traces of power’. Inspired

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by Hilferding’s (1910/1968) notion of Finanzkapital (‘Kapital in der Verfüging
der Banken und in der Verwendung der Industriellen’), interlocks of banks
with industry received particular attention. These interlocks were considered to be methods of control, and as such reflections of the power of bank
capital. With financial institutions highly central, the architecture of the
network of board interlocks was thought to be indicative for the corporate
control structures of the economy. Consequently, relations between finance
and industry, and the centrality of banks and bankers in particular, have
always been one of the main elements of national networks of interlocking
directorates (see for instance Fennema and Schijf 1978; Jeidels 1905).
However, next to the interpretation of (specific) board interlocks as traces
of direct influence (and hence coordination), board interlocks also bear relevance and significance even if they do not signify power relations.
According to Scott, all board interlocks at least involve a potential for communication and for the exercise of influence (Scott 1991, p. 182). Through
board interlock networks, the largest corporations can communicate and
disseminate information, best practices, and even collusion. Inspired by
such ideas, some scholars rejected the bank-control thesis as main theory
for the understanding of finance-industry relationships, and opted for a
model of financial hegemony. According to this viewpoint, directors of
financial firms determine the broad lines of corporate development for the
entire economy. This power ‘operates not through direct intervention in the
discretionary decision-making of corporate boards, but through their ability to set the parameters of the corporate environment within which all large
enterprises must act’ (Scott 1991, p. 188). Thus, according to this perspective,
the significance of board interlocks lies more in the indirect ability to set
the parameters than in direct control.
These inter-firm relations that build governance networks deserve appropriate attention in light of the recent corporate governance debate, and not
only as signs of ‘bad corporate governance’. In particular, the dynamics of
the network of interlocking directorates can reveal insights in both the way
in which institutions change, as well as in what direction the Dutch corporate regime is changing.

The Social Organisation of Corporate Governance Networks
Probing the social organisation of corporate governance asks for a multifaceted research design. We want to gain insights at both the macro level of the
inter-personal and inter-organizational structures, as well as insight at the
micro level of the firms and directors. The research questions and relational approach developed above calls for an in-depth case study, rather than a
comparative study across countries. Only unequivocal attention on one location leaves us with enough focus to reveal the role of social networks in the

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corporate regime. A case study can provide enough depth and width to fully
assess the social organisation of corporate governance. On the basis of the
outcomes of this study, further comparative efforts can be made.
Furthermore, a case study allows combining qualitative and quantitative
research methods. First, we will map the changing network structures of the
corporate elite with the aid of network analysis. However, this only renders
partial knowledge of the changes that are taking place in the corporate business community. Only on the basis of inside knowledge can we fruitfully
investigate the impact and consequences changing network structures have
on the way corporations are governed and controlled, as well as understand
why corporate networks changed as they did. The most optimal method
would be participatory observation. However, as corporations are not keen
to allow strangers in their midst, especially not at the highest levels of their
hierarchy, such studies are extremely rare (Winkler 1974 is a notable exception; see also Winkler 1987). In this book, interviews with the corporate elite
are used to fill in some of the blanks that remain after the networks have
been mapped and analysed.
This section further develops the conceptual framework from which we
can analyse the network of board overlap. In a relational approach, the obvious way to operationalise board overlap is with the aid of formal network
theory. At the core of the network are the two main objects of this study: corporations and directors. The directors and corporations are tied together
through the position the person has within the firm; it is an affiliation network (Wasserman and Faust 1994, p. 30). This affiliation is the foundation of
the corporate network as studied here. The relational perspective on corporate governance requires an accurate balance between the actor and system
level of analysis, because our interest lies both with actors and with structures. In fact, one cannot separate the system and actor level of analysis.
‘One cannot study the interlocking directorates from the point of view of
the single corporation or even the single financial group without taking
into account the structure of the networks as a whole and vice versa’
(Fennema 1982, p. 62). Next to the level of analysis there is a similar issue
with the object of the study. There are two ways of looking at membership
overlap networks, as Breiger (1974) brought to attention in his article on the
duality of persons and groups.
The first perspective is to look at the network of the groups, connected by
their common members. Here, the groups are the corporations, tied to each
other by means of the board members they share. This is the network of
interlocking directorates. The second perspective is to take the individual as
the central object, and study how people are connected through shared
membership. One can take directors as nodes in the network, connected
through their shared membership of the corporate board. This is the interpersonal network. Hence, persons who are nodes in one perspective are with

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equal legitimacy viewed as lines in the other perspective (Breiger 1974, p.
184). The interpersonal and the inter-firm network, although intrinsically
connected at the affiliation level, have distinct properties. A proper understanding of the interconnections between these levels of analysis is vital
when analysing the dynamics of these networks (Heemskerk 2001;
Heemskerk, Mokken and Fennema 2002; Newman, Watts and Strogatz 2001),
and figure 1.1 helps to demonstrate these interconnections.
As figure 1.1 shows, the company and the director are the two basic elements. Both can be studied at either the system or the agent level of analysis (see also Scott 1985, p. 3; Scott 1991). Network relations are depicted in
this example by the three firms A, B and C; the corporate directors one to
six, and the eight positions that relate the directors to the corporations. The
four quadrants of the figure complement specific theoretical perspectives
and empirical traditions. Sonquist and Koenig already noticed that ‘we may
not require one, but several explanatory models (…) There is no reason why
one model should be asked to explain all of [the board interlocks]’ (Sonquist
and Koenig 1975). Here the emphasis will mainly lie with the relational view
on firms and on the corporate elite; the right hand side of figure 1.1.
Figure 1.1:The Social Organisation of Corporate Governance Networks

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In the upper left-hand corner, the organisational perspective, corporations
are unconnected entities. In the organisational perspective, the decisionmaking process is usually approached from a strategic-rational point of
view. For instance, corporations invite directors on their board who are prestigious, competent, conscientious and non-controversial (Mace 1971).
Scholars are interested in employment and career advancement issues
(Mizruchi 1996) and the performance of top management teams (Carpenter
2002; Hambrick and Mason 1984).
The upper right-hand corner shows the inter-organisational perspective.
Here, corporations are placed in a contextualised and embedded environment. One can observe that company A and B share director two, and firms
B and C have director number four in common. The upper right-hand corner
of the figure shows the projection of these ties at the inter-firm level: A and
B are related, and B and C are related as well. Most corporate interlock studies depart from this inter-organisational perspective. Board interlocks can
be studied as a means for co-optation, as well as for monitoring (Burt 1983;
Koenig, Gogel and Sonquist 1979; Mizruchi and Stearns 1988). As a means of
co-optation, ‘interlocks are assumed to pacify the resource provider’s management’ (Mizruchi 1996, p. 280), and as monitoring mechanisms, interlocks are assumed to provide the monitoring firm with information on the
other firm’s operations. Other interpretations include board interlocks as
power relations and a means of collusion (Burt 1983; Mizruchi 1982;
Pennings 1980; Scott 1997). Recent work interprets these inter-firm networks as corporate social capital. The objective here is to understand how
network position is related to performance and innovation (Gabbay and
Leenders 2001; Svendsen et al. 2001).15
In the lower left-hand corner of figure 1.1, members of the corporate
boards are the prime research objects. This area includes studies on the
social background and common characteristics of the corporate elite. What
does it take to end up in the highest echelons of corporate business? Again,
career advancement is often considered here, but now from the perspective
of the director. Individuals look for directorships because of prestige, remuneration and contacts (Zajac 1988). Stokman et al. (1988) take the opposite
perspective in a study on Dutch corporate interlocks and conclude that
directors are sought after by corporations for their individual characteristics, rather than their corporate affiliations. Van den Broeke (1988) draws
similar conclusions in a historical study of board interlocks of the
Rotterdamsche Bank Vereniging. The many board interlocks maintained by
this bank did not reflect a growing desire for attracting bank credit, but the
desire for the specific competencies and skills of the bankers. According to
De Hen, Dutch directors owe their position to their personal characteristics,
and in particular their acceptance of the norms and values of the corporate
elite (De Hen 1972, p. 68).

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Finally, one can look at the social interaction network of corporate directors in the lower right-hand side of figure 1.1. Corporate elite networks can
be seen as the structural component of the social capital of the corporate
elite. Studies that were inspired by themes of power and influence often
considered the interpersonal network of directors to be a sign of class cohesion. The interpersonal network of the corporate elite is an opportunity
structure its members can use in order to, in the words of Bourdieu (1986),
effectively mobilise resources. These resources can be information, money,
trust and support. In this way, the set of relations turns into social capital.
At the group level, the social network helps to overcome the problem of collective action. Mizruchi (1996, p. 280) points out that ‘interlocks as reflections of social cohesion are often assumed to facilitate the political unity
necessary for effective political action’. An interlock can create generalised
trust between its members, which is a very valuable asset in a corporate
environment as a lubricant for economic relations. Social embeddedness
may result in learning and imitation (Barrera 2005), and consequently the
interpersonal network (where people actually meet each other) may help to
spread business practices from one company to the other (see for instance
Davis 1991; Davis and Greve 1997; Haunschild 1993; Rao and Sivakumar
1999). The interpersonal network of board overlap adds to the cohesion of
the corporate elite. However, members of the corporate elite relate to each
other in a number of other ways as well, and these other social networks
have also significance for the questions under investigation here. In particular, the social cohesion of the corporate elite is strengthened by a set of
informal social networks. Chapter four will explore these additional social
structures in more detail.
In corporate governance reforms, the four quadrants appear to be strongly interconnected. A good example of this interconnectedness is provided by
Davis and Greeve (1997) in their study on corporate governance changes in
the USA during the 1980s. They show that new corporate governance practices spread from one corporation to another through shared board members. However, the norms to which directors adhere are instrumental in
determining which practice does or does not spread. Defence mechanisms
do spread through board interlocks, but more malevolent practices (such as
golden parachutes) did not find their way through these social networks.
Thus, network structure alone cannot explain the pattern of diffusion;
norms of appropriate behaviour play an important role as well. Board interlocks, ‘determine the speed of adaptation and ultimate patterns of prevalence of governance practices by exposing a firm to particular role models
and standards of appropriateness’ (Davis and Greve 1997, p. 1). Both role
models as well as standards of appropriate behaviour determine the change
in governance practices. Hence, in order to understand why a company
adopts a strategy (organisational perspective), one has to consider how the

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firm is embedded in a corporate network (inter-organisational perspective).
This combination cannot be made without considering the norms of the
corporate elite.

The Transformation of the Business System
Corporate regimes are dynamic entities. For instance, Fennema (1982)
observed that during the mid-1970s the corporate regime in the USA was
institution oriented. The network in the USA was more purposive from a
firm’s perspective; interlocks were more often resulting from firms’ strategic decisions. This was a very valid conclusion for that time (mid-1970s). But
already by 1996 the network in the USA had become much less institution
oriented.16 The question then is how and why business systems change.
Furthermore, do these changes signal a particular strategy as adopted by the
corporate elite, or should we understand these dynamics merely as reactions
to system-wide developments such as the internationalisation of capital?
Streeck and Thelen (2005) rightly point out that much of the comparative
capitalism literature, as well as the welfare state literature, overstates continuity over change. Instead, they argue that the transformation of business
systems (i.e. liberalisation) proceeds gradually and continuously, apart from
short-lived episodes of turmoil. Nevertheless, this incremental process of
change causes gradual transformations that add up to major historical discontinuities. Because of the incremental nature of institutional change, it is
easy to understate the magnitude and significance of these dynamics.
Furthermore, some scholars seem to have a preoccupation for formal
institutions when looking at business systems. For instance, many scholars
see the character and origin of legal systems as being crucial in explaining
the success of business systems (e.g. La Porta et al. 1997).17 However, changes
in formal institutions (such as the legal framework) are usually not a sufficient condition for institutional change. In many cases, new or revised corporate law is merely an adaptation to an already changed reality, ensuring
that law remains close to business practice. Thus, in the Netherlands, the
widely debated corporate law of 1971 (the structure regime) was the fruit of
an already changed power balance between labour and capital. Similarly,
the main purpose of recent changes in Dutch corporate law is to rephrase
the position of the shareholder to match the de facto increased power position of shareholders in corporations.
The limited role of law in changing practices, and the importance of
informal institutions such as common norms and practices, can be well
illustrated by the reluctance of the Dutch construction industry to give up
their cartel practices. Building on the aforementioned positive conception
of a cartel, the Dutch construction industry traditionally had elaborate coordination mechanisms to divide work amongst its participants. Most impor-

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tantly, Dutch construction firms redistributed profits amongst each other,
in order to compensate the expenses of the bidding process. Thus, the firm
that received the order was assumed to compensate those firms that did not.
European legislation prohibited this practice of price agreements during
the early 1990s (Vos 2002), but changing the law proved insufficient for triggering actual change. In November 2001, a whistleblower revealed the secret
accounts of his employer, a big construction company in the Netherlands. It
showed that the cartel in the construction industry in the Netherlands was
still working as before. It took ten years before the gap between practice and
law was uncovered and it was only after a parliamentary inquiry that some
serious steps towards change have been made. In part, the trigger was the
European Commission’s increased interest in cartels during that period,
which shifted from an industry-friendly to a competition-only approach
(Wigger 2006). During the hearings of the parliamentary committee, board
members of Dutch construction firms declared that, for them, it seemed
impossible to disregard secret price agreements. They would be out of business soon if they chose not to attend the collusive meetings. This showed
how deeply the practice of coordination is rooted in some parts of the Dutch
economy. The legal framework entails a common normative framework on
how an economy should be organised, and reflects the power balance
between stakeholders in a corporation. Notions of proper behaviour are
deeply rooted in both formal institutions as well as in common practice. As
a result, legal change in and of itself is not a sufficient condition for institutional change. Corporate law reforms are often necessary, but not sufficient
by themselves, to instigate institutional change because, ‘of the way in
which shared beliefs can persist in the face of formal legal change’ (Culpepper
2005, p. 176, italics added). 18

Informal Institutions and Change
This brings us back to the inclusion of both formal and informal institutions
in our understanding of corporate governance and institutional change. The
legal framework is part of the formal institution, while the shared belief system is part of the informal side of market institutions. Structural conditions
such as formal institutions can create, act as a catalyst for or secure institutional change. But in most cases they do not determine the outcomes.
Enduring change will only occur if informal institutions change as well. In
corporate governance change, the shared belief system is anchored in the
unwritten rules (mores) of the corporate elite. Norms, values and ideas
together form a shared belief system. An important ingredient of the shared
belief system is the appreciation of coordination over competition, as discussed all throughout this chapter.
The foundation for the shared belief system of the corporate elite lies in

INFORMAL INSTITUTIONS AND CHANGE

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the social networks that bind them together. In the social interaction network, ideas, opinions and values are formulated and disseminated. These
social structures help to build consensus and conformity throughout the
corporate elite and give direction for economical and institutional change.
The network is an opportunity structure for the reproduction of existing
beliefs and ideas, as well as for the dissemination of new ones. The sociorelational foundation of the shared belief system has repercussions for its
dynamics. Culpepper for instance argues that change in a shared belief system is triggered by a signal of a central actor who is deserting the ‘status quo’
(Culpepper 2005, p. 183). In the decision-making processes amongst the corporate elite group behaviour, peer pressure, status, prestige and trust, all
play an important role (Pettigrew 1992).
The informal institutions of the corporate regime are typically inert and
quite resilient to change, as the example of the Dutch construction industry
illustrated. The interrelationships between firms and directors create interdependencies, which in turn restrict the impact of formal institutional
changes. The unwritten rules and practices of the corporate elite are, as
argued, intrinsically related to the social network in which they are embedded. When the architecture of the corporate elite’s social network changes,
this influences the shared belief system as it is negotiated and maintained
through this network. The expected thinning of the network of board interlocks might pave the way for (the acceptance of) institutional change. More
specifically, the pressures of ongoing internationalisation of business and
finance and the concomitant call for shareholder-oriented markets will lead
to durable institutional change only when the social network structures
that support the shared belief of the corporate elite have changed accordingly. For instance, by increasing levels of foreign shareholders, corporations
change their governance structures to meet international standards. From
this perspective, the dynamics in the corporate regime are instigated by
structural coercion, from ‘without’. However, durable institutional change
only occurs when the pressures from without are second to changes from
within. Informal institutions such as the corporate elite’s social network are
part and parcel of a endogenous institutional change.
What we expect to find is that the changes in the architecture of the corporate elite’s social network are a result of numerous small steps taken by
both firms and directors. These actors act myopically, considering only the
situation to be obtained immediately after the change (see Snijders 2005).
However, at a certain point these small steps reach a threshold value, where
the structure of the social network changes. The extent to which these internal triggers for institutional change are able to have an impact on the institutional landscape vis-à-vis external pressures for change will affect the
endurance of national varieties of capitalism. When institutional change in
the corporate regime is primarily induced by external elements, tendencies

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of convergence between different corporate regimes can be expected. When
change comes from within corporate regimes, differences and varieties in
capitalism are likely to persist. Understanding how and why the Dutch governance network changed as it did leaves us with the possibility to examine
the extent to which Dutch governance resembles a liberal market economy.

Outline
The four quadrants of figure 1.1 form the backbone of the conceptual
scheme of this book. The network of board interlocks will be studied both
from an inter-firm and an interpersonal perspective. Alternative networks,
such as ownership ties between firms, and additional social networks of the
corporate elite receive due attention as well. A combination of the inter-firm
with the interpersonal perspective allows us to analyse both the relational
and the socio-cultural elements of corporate governance. In order to meet
the ambitions of this study, a combination of formal network analysis with
interviews brings together a qualitative and quantitative analysis of the
dynamics of the corporate elite. Chapters 2 and 3 predominantly use network analysis as the main method of investigation, while chapters 4 and 5
extensively use interviews as empirical foundation.
The first part of chapter 2 further introduces the characteristics and particularities of the Dutch corporate regime. The Netherlands is typically portrayed as a Rhenish country, but there are some important differences with
neighbouring country Germany, which is the common example of a
Rhenish, coordinated market economy. Furthermore, chapter 2 sketches the
historical foundations of the Dutch network of interlocking directorates,
with special attention to governance in the financial sector and the way in
which corporate ownership differs from corporate control in the
Netherlands. The second part of the chapter is devoted to an analysis of the
inter-firm network of interlocking directorates. With the aid of formal network analysis, it is possible to map and measure the networks that connect
corporate boards and the corporate elite. This is done for the top 250 firms
in the Netherlands at three points in time: 1976, 1996 and 2001. Due to the
difficulty of assembling reliable and complete data, the analysis is restricted to three points in time only. The first point in time serves as a benchmark
for the latter ones. It provides historical depth to this study of corporate elite
circles, making it possible to pinpoint particularities in the dynamics in
either two periods of time. Unfortunately, the original datasets on the pioneering studies, which mapped the Dutch corporate interlock network in
1969, are no longer available (the original analysis can still be found in
Helmers et al. 1975; Mokken and Stokman 1979a; Mokken and Stokman
1979b). Due to these limitations the study commences in 1976, the first year
for which a large and reliable dataset is available.

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Subsequently, chapter 3 looks at the interpersonal network of the corporate elite. It distinguishes between the old boys network as a socio-historical
concept and the structural concept of inner circle. In an old boys network,
cohesion amongst the corporate elite stems from much more than just interlocking directorates. The boundaries of an old boys network are demarcated
by longstanding friendship, kinships ties and elite distinctiveness. The first
part of the chapter investigates this element of the corporate elite, with special interest for the role aristocracy played in the governance of corporations. The second part of the chapter considers the interpersonal meeting
network of directors that is created through interlocking directorates.
Although the interpersonal network is just another view on the network of
board overlap, the structure is different (Zijlstra 1982). Here, directors with
more than one board position form the inner circle, which ties together the
corporate elite in a more or less cohesive network. Using a small world
model of networks, the interpersonal meeting network of the corporate
elite is analysed for its social closure and cohesion, both at the level of the
network as a whole as well as at the level of individual directors.
After that, chapter 4 widens the study by incorporating the social network of the corporate elite that lies outside the corporate boards. After all,
cohesion amongst the corporate elite is brought about by many more relations than only shared board membership. Therefore, it is appropriate to
consider the possibility that change in the formal networks of board overlap
is countered by developments in the informal network of the corporate elite.
The corporate elite meets at dinner clubs, societies, sport events and so on.
Although it is impossible to fully map these informal structures, with the
aid of interviews it is feasible to determine how the corporate elite uses
these meetings. Therefore, chapter 4 looks into the informal networks of the
corporate elite, and asks whether the function of such relationships has
actually changed. After investigating the role of relatively formalised meeting places such as business associations and non-corporate boards, the lion’s
share of the chapter is devoted to the numerous informal meetings of the
corporate elite, as well as the way in which the elite make use of their network. Building on the results of the study so far, the chapter ends with
answering the question whether there is still a business community in the
Netherlands.
Chapter 5 similarly builds on interviews with corporate directors in order
to find out if and how changing network configurations affected the shared
belief system of the corporate elite. It argues that corporate governance has
become increasingly formal. This includes the atmosphere of the board
meetings and the way in which directors relate to each other as well. This
chapter further investigates the main driving forces for this formalisation,
including the internationalisation of board composition, the decreasing
tenure of executive directors and the increased levels of accountability

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directors now bear as a result of the shareholder-oriented good corporate
governance reforms. The chapter goes on to argue that the formalisation of
corporate governance results in the codification of – previously informal –
norms of behaviour. However, this reinstitutionalisation of norms and values appears to be more applicable to some areas than others. For instance,
corporate social responsibility proves to be a fine example of the codification of the common norm system. In fact, central directors play an important role as promoters of this new policy. However, the corporate elite seems
to be unable to form consensus on the issue of increasing remuneration
packages for directors. Building on the relational perspective as developed
above, the high remuneration of directors is interpreted as a means of social
hedging against the potential loss of status.
By means of conclusion, chapter 6 brings together the findings of the
four empirical chapters. Rejoining the results of the foregoing chapters, the
chapter identifies the character and direction of the change in Dutch capitalism. After a short discussion on the nature of good corporate governance,
the chapter goes on to discuss the causes of the institutional change of the
Dutch corporate regime. Interpreting the corporate dynamics as incremental change, the chapter shows how endogenous and exogenous drivers for
change go together with exhaustion and displacement of the corporate
elite’s network. In addition, the corporate elite’s social network seems to be
migrating towards non-corporate areas as well. The chapter ends with some
recommendations for further research. The study of Dutch capitalism provided in this book is as such an addition to the study of institutional change,
and a case study within the comparative literature on (forms of) capitalism.

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2

Decline of the Corporate Network

Introduction
In the shareholder-oriented Anglo-American model, liberal market mechanisms play a much more predominant role than in the Rhenish model.
Corporations in Rhenish countries are, overall, more strongly embedded in
networks of interlocking directorates (Heemskerk 2004b; Stokman and
Wasseur 1985; Windolf 2002). Together, these board interlocks form a social
interaction network that connects the top decision-making bodies of important economic actors. It serves as an opportunity structure for coordination
of economic activities, other than the liberal market mechanism of competition has to offer. According to Hall and Soskice, these dense networks of
inter-corporate linkages facilitate coordination between economic actors
(Hall and Soskice 2001a, p. 40). This chapter aims to shed light on the
changes and the dynamics of the network of interlocking directorates in the
Netherlands at three points in time: 1976, 1996 and 2001. As will be shown,
the majority of the largest Dutch corporations are part of the corporate governance network of board interlocks. Two different periods in time are compared, 1976-1996 and 1996-2001.
The analysis of the network of interlocking directorates in the
Netherlands will shed light on three aspects of the transformation of the
Dutch governance regime. First, chapter 1 argued that the expected shift in
the Dutch corporate regime would entail a growing importance of indirect
coordinating mechanisms (‘market’) at the expense of direct ones (‘network’). If there is a shift in corporate regime from a stakeholder-oriented
towards a shareholder-oriented system, the shift is to be expected to have an
effect on the institutional relations between companies as reflected by corporate board interlocks. Second, changing structures of the network of
interlocking directorates alter the basis of the corporate business community. To what extent are firms and directors still connected in a cohesive business community? While this chapter only considers the inter-firm side of
board overlap, the direction and pace of the changes are indicative of the
concomitant changes in the business community. And third, the study of
change in the network of interlocking directorates will yield buildings

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blocks for understanding institutional change of corporate regimes. An
examination of these issues necessarily goes beyond the boundaries of individual firms themselves. It is the way in which firms relate to each other
that captures our interest. Do firms operate at arm’s length, or do they
engage in strong and durable relationships that provide the structure for
cooperation?
The Dutch corporate regime seems to be moving from relational stakeholder oriented capitalism towards shareholder, stock market oriented capitalism. A relevant distinction in this process is that between marketisation
on the one hand, and financialisation on the other. Marketisation embodies
the strengthening belief in the universal efficacy of competition (Dore
2002). Chapter 1 discussed this in some depth. However, financialisation can
be separated from this ongoing process of increased liberal market orientation. Dore defines financialisation as follows:
Financialisation refers to the increasing dominance of the finance
industry in the sum total of economic activity, of financial controllers
in the management of corporations, of financial assets, of market securities, and particularly of equities, among financial assets, of the stock
market as a market for corporate control in determining corporate
strategies, and of fluctuations in the stock market as a determinant of
business cycles’ (Dore 2002, p. 116-117).
To put it differently, financialisation entails a movement from the coordination, domination and accommodation of, by, and to productive markets
towards coordination, domination and accommodation of, by, and to the
financial (capital) market. Due to this development, companies change from
socially embedded objects to financial market objects.
Already by the mid-1990s it was increasingly difficult to distinguish
financial companies from non-financial companies. In a narrow definition,
we can easily see investment funds, banks and insurance companies as
financials. Yet many corporate holding companies are effectively also financial corporations. Concentration due to take-overs and mergers led to large
conglomerates, leaving the peak directors effectively managing a financial
holding, whose business is to hold ownership in other firms. At the level of
the holding, nothing is produced. It is at the level of subsidiaries that production takes place (be it goods or services). Hence it is not surprising to see
increasing levels of financial expertise on the corporate boards in the
Netherlands (Icke, Mokken and Schijf 1997). In a way, it seems that the holding company integrated many of the functions that banks used to have in a
business group. Holdings, as mainly financial steering and allocation entities, dominate the industrial and commercial firms, which are embedded
within them. Hence it might be expected that the holdings replace the cen-

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tral positions of banks as prominent units in the classic version of
Hilferdings Finanzkapital (Hilferding 1910/1968). This new form of finance
capitalism presents us with some analytical problems: should we consider
holding companies as financial firms? In what follows, the term ‘financial’
is reserved for firms that engage in financial activities at the level of production, both for reasons of comparison over time, and because it is not restrictive for understanding the role of financials and holding firms in any way.
With the aid of formal network analysis, it is possible to place these
rather pertinent issues of the role of liberal market ideology and the growing importance of financial capital markets in an empirical setting. After
all, if these changes are indeed taking place we would expect important
changes in the network of board interlocks. Both the role and position of
financials as the architecture of the overall network should show signs that
will help us to test the validity of the points raised above. Next to the expected thinning of the network, there are more specific aspects at both the level
of the network as a whole and at the level of individual firms that can pinpoint particular changes. Chapter 1 already introduced and discussed the
different roles and functions of board interlocks. Most interlocks do not represent a hierarchical relationship (a relationship of control), although hierarchical relationships can be found in a fair amount of board interlocks.
Board interlocks can be a sign of a partnership in research and development,
of an upcoming merger, or perhaps they are a coincidence, with no underlying strategic behaviour of the firms whatsoever. It is a quasi-institutional
structure that is best understood as an opportunity structure. Board interlocks are an important element of corporate governance because they can
play a role in coordinating economic action between corporations. At the
same time, they provide an infrastructure for the dissemination of information. They are communication channels through which information as well
as practices spread from one corporate board to the other.
The long period of twenty years in between the first two networks we map
(1976 & 1996) calls for caution. We should be wary of inferring linearity in
the developments of the network properties. By comparing the two periods,
and by comparing the results with existing research, this caveat is continuously taken into account. The first twenty-year period provides not only historical depth in general, it also enables us to see whether the growing
importance of the shareholder model since the mid-1970s has had particular effects on the change in the corporate networks. Has the ongoing attention for the shareholder model of capitalism affected the embeddedness of
corporate boards? Furthermore, since the discussion about ‘good’ corporate
governance gained ground in the Netherlands as of the mid-1990s, the second period allows us to assess the impact of the corporate governance
debate on the corporate regime.
The chapter is organised as follows. Before the network analysis of the

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board interlocks commences, the first four sections provide some details
about the Dutch corporate regime. First, the Dutch corporate regime is positioned vis-à-vis the well-studied German case. After that, the history and
background of the Dutch corporate regime is discussed, with particular
focus on its legal and social origins. This is followed by a similar section that
deals specifically with governance of the financial sector. Finally, the peculiar relationship between ownership and control in the Netherlands is discussed, as it plays such an important role in the thinking on corporate governance. These four sections serve as background information for the analysis of the inter-firm network of board interlocks which the remainder of the
chapter deals with. First the data are introduced, followed by an analysis of
general characteristics, centrality and board composition. Subsequently, the
chapter investigates particular interlocks: those where firms share multiple
directors, and the interlocks that are created by executives and by supervisory directors. Finally, the role of financial institutions is considered. The conclusion summarises the findings.

Corporate Networks and Corporate Regimes
Dense governance networks are associated with coordinated market
economies, while sparse networks are associated with liberal market
economies. The analysis of a governance network as a proxy of shifts in the
corporate regime, however, calls for precision and caution. Interlocking
directorates occur in many corporate regimes, and board interlock networks
are ubiquitous across varieties of capitalism. Coordinated market economies
do sustain stronger and more durable governance networks, but even in
economies that are considered to be close to the LME (such as the USA),
board interlocks are present. It is therefore important to look at the dynamics of particular properties of corporate governance networks that can be
theoretically related to the different models (such as bank centrality, executive interlocks, fragmented and dispersed ownership and so on).
The two examples for the prototypes that are commonly used are the USA
for the LME or Anglo-American capitalism, and Germany for the CME or
Rhenish capitalism. The corporate regime in the USA is liberal market oriented and puts shareholder interests first, whereas the German corporate
regime builds on durable relations between corporations and institutions
and is stakeholder-oriented. Since ideal types are not meant to fully capture
reality, neither Germany nor the USA is a clear-cut case of the models they
represent. Unfortunately, this mismatch between models and actual
economies is easily disregarded when comparing capitalist systems. For
instance, the USA and the UK are usually seen as very similar examples of
the Anglo-American model, despite significant differences between the USA
and UK with respect to corporate governance characteristics. Short and

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Keasy (1999) point out that the institutional ownership in the USA is twothirds the level of that in the UK, and the USA has the largest percentage of
shareholders in the form of households. The ability of shareholders to coordinate corporate governance action effectively is severely restricted by legal
and regulatory restrictions in the USA, while far fewer restrictions are
placed on shareholders in the UK. Furthermore, the ability of boards in the
USA to adopt takeover defence mechanisms means that corporate management is protected from external corporate control mechanisms to a far
greater extent than their UK counterparts (Short and Keasy 1999). In a similar manner, while the Netherlands resembles the German corporate regime
in many ways, important differences exist as well.
It is not difficult to draw parallels between the Netherlands and Germany, the exemplary case of a Coordinated Market Economy (see for
instance Gelauff and den Broeder 1996). Not without reason, the Netherlands is sometimes dubbed as the most western of the German Länder. The
Netherlands is commonly placed under the heading of Rhenish capitalism
(Albert 1991) and CMEs (Hall and Soskice 2001a). The Netherlands fosters a
consensual type of politics, where labour, employers and government jointly coordinate important elements of social and economic change. During
the first part of the 1990s, the prosperous economic situation led some to
claim a Dutch ‘miracle’ of employment and welfare (see Visser and
Hemerijck 1997 for a probing study on this matter). The political culture is
one of consensual politics, which stems from years of pillarisation (Lijphart
1968). The Dutch economy is highly internationalised, both in terms of trade
and investment. And although the Netherlands is usually considered to be
close to the CME model, it is a particularly interesting site for researching
the dynamics of corporate governance networks precisely because it has
strong ties to both the Rhenish and Anglo-American systems and combines
elements of both systems (see for instance Scott 1997, p. 153). As such, the
Netherlands differs from the well-studied German case on a number of
accounts. The most obvious difference is the size of the country in terms of
population, GNP and territory. Only a small group of dominant corporations
account for the majority of Dutch GNP throughout the twentieth century
(Bloemen et al. 1993; Smits 1999). This small interlocked group of companies
could easily communicate their interests and act upon it towards government. Furthermore, key players in the Dutch corporate economy were oriented towards the UK and USA. At least two corporations dispute the
Rhenish character of Dutch capitalism: the British-Dutch companies Royal
Dutch/Shell and Unilever. One of the reasons Dutch corporations looked
across their borders for corporate alliances was the reluctance of Dutch
banks to participate in the long-term financing of industry (Jonker 1989;
Van den Broeke 1988; Van Goor 2000). Again, this reluctance marks a striking difference with the German corporate regime, where banks heavily par-

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ticipated in industry. Traditionally, Dutch banks focused on trade and commerce. In this line of business, short-term contracts and loans are common
practice. In 1856, the Dutch Central Bank writes, ‘to support industry by
lending her money or participating in its business, is a vision, that will only
be considered in times of a sick overstrained economy’ (quoted in De Jong
1967).1 When corporations expanded during the early twentieth century
and the demand for more durable credit lines increased, the Dutch banking
sector did not introduce new financial products. Dutch banks remained risk
averse, financing corporations through short-term, callable margin loans.
However, these loans were typically rolled over (prolonged system). Dutch
banks thus remained at arm’s length from industrial corporations, in sharp
contrast to their German counterparts. It was only during the late 1960s
that bankers became willing to extend these loans into more durable relations (Van der Lugt 1999, p. 395). There was an increased demand for longerterm loans, partly because the increase in wages during the 1960s caused
the retained earnings of the corporations to plummet (De Hen 1972, p. 38).
At the same time, the Dutch Central Bank tried to limit the inflation rate,
with such measures as limiting short-term credit lines. As a result of these
dynamics, bank-industry relations were at their height during the late 1960s
and culminated in a relatively dense network of board interlocks between
banks and industry in 1969, as demonstrated by the pioneering study of
Mokken and Stokman (Helmers et al. 1975; Mokken 1971), as well as later in
1976, the year this study starts. The next two sections further elaborate on
the characteristics and foundations of the Dutch corporate regime. The next
section first deals with the nascence of the corporate network, the following
section looks specifically at the governance in the financials sector.

The Dutch Corporate Regime
During the early nineteenth century, Dutch corporate law was a copy of
Napoleon’s 1804 code civil. The first genuine Dutch company law (Wetboek van
Koophandel) was not put into practice until 1838.2 Under this law, investors
had the opportunity to create a limited liability company, the Naamloze
Vennootschap (N.V.), which could only be done following approval from the
Crown. Notwithstanding the critique of this act, it took legislators and
politicians 90 years to come up with a new law. In 1928, approval for the formation of a limited liability company was transferred from the Crown to the
Minister of Justice. More importantly, the new act stipulated that corporations were obliged to publicly disclose full accounts. Until then, it was common to distribute accounts only within a very small circle of people with
direct stakes in the company. Limited liability firms were usually an insider’s project.
During the late nineteenth and early twentieth century, insiders occu-

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pied corporate boards: only people with close connections to the firm were
found in the boardroom. In many cases, directors owned a significant part
of the firm in order to be eligible for the directorship in the first place. The
board consisted of a number of executives, capital suppliers and related
businessmen. Ties with family, friends and business associates were of the
utmost importance because these networks supplied most of the finance for
industry. In general, private investors were wary of supplying capital without control. According to Frentrop, no sensible individual would invest
money in an industrial corporation without family ties to the directors
(Frentrop 2002, p. 168). Banks remained wary of engaging in durable (credit)
relations with industry as well. Thus, in 1929, F.H. Fentener van Vlissingen –
the most successful industrial of his time – urged for strong finance-industrial relations, in the wake of a growing population.3 He called for the revision of corporate laws where necessary, as well as for more industrial skills
and expertise within the rank and file of the banks (Fentener van Vlissingen
1929). His plea remained unanswered.
While in Germany, bankers were the largest group in the network of
board interlocks, in the Netherlands merchants were dominant. Bankers did
play a relatively big role in connecting the network, but they were on the
board for their expertise and status, rather than suppliers of capital (Schijf
1993). Corporations had to rely on personal and business networks in order
to gain capital. For larger projects of nation-wide importance, leading industrialists and bankers were expected to join forces. For instance, in 1917, the
Dutch corporate elite sought to decrease their (industrial) dependency on
Germany and decided to build a Dutch steel company (Koninklijke Hoogovens, now, after the merger with British Steel, part of Corus). All major
entrepreneurs were expected to take part in financing this huge project.
Anton Philips appeared uninterested and allegedly said that he would not
want to spend more than 10 guilders on this new company. However, prestige, and ‘the good cause’ led him to sign on personally for 25,000 guilders,
and he contributed another 25,000 on behalf of the Philips Corporation
(Wennekes 1993). He also took a seat on the board of directors. This is but
one example of how entrepreneurs used to invest their capital in close collaboration with other entrepreneurs. With an underdeveloped capital market, one had to rely on the close network of the corporate elite. As a result,
the boards of the largest firms were filled with the same people such as
Insinger, Luden, Westerwoudt, Hartogh and Royaards van Scherpenzeel. At
the end of the nineteenth century, family names as Cramerus, Van Eeghen,
De Marez Oyens, Luden, and De Monchy were very dominant on corporate
boards. And in the early twentieth century, people such as Van Loon, Philips,
Deterding, Fentener van Vlissingen, and Van Eeghen filled the boards (De
Vries 1991; Schijf 1993; Wennekes 1993). In many cases, prestigious businessmen were invited to the board as well. These key players in the business com-

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munity were not only invited for their knowledge and expertise, their presence on the board made the firm credible; the directors lend their prestige
to the corporations they were affiliated with.
The establishment of corporate boards soon led to the emergence of cohesive interlock networks within the relatively small Dutch business community. Initially, these networks were not national, but regionally based. The
main business networks were clustered around the cities of The Hague,
Rotterdam, Amsterdam and the Twente district in the eastern part of the
Netherlands (Schijf 1993; Van den Berge and Fennema 1985). Only after the
Second World War did a national network of corporate board interlocks
emerge. Following the adoptions in the legal framework in 1928, another
long period of relative stability characterised Dutch corporate law. The loss
of the colonies in Asia trigged a reorientation of Dutch firms active in that
region, further increasing the cohesion of the Dutch corporate network
(Nobel and Fennema 2004). With the new political agenda of a unified
Europe, reorientation became an almost perpetual element of the corporate
regime. European unification led to new changes in the legal corporate
framework. As a result of the European First Directive on Company Law
(1968), the Netherlands had to include a private limited liability company in
its corporate law. The Besloten Vennootschap (B.V., closed corporation) was created as an alternative to the existing Naamloze Vennnootschap (N.V.). A considerable number of companies immediately shifted corporate form, mostly
small ones. The private limited liability firm was a more interesting vehicle
for many entrepreneurs because it restricted the obligations to publish
accounts.
The post-war reconstruction agenda and the concomitant cooperation of
labour, capital and government culminated in a corporatist landscape. The
appreciation for coordination of economic activities as prevalent in postSecond World War Europe must be understood in relation to the strong
influence of religious ideology. The doctrines of both the Catholics
(i.e. Encyclical Rerum Novarum, 1891) and the Protestants/Calvinists
(Sovereignty in our own circles, souvereiniteit in eigen kring) were quite sympathetic for corporatist coordination of the economy and society at large. In
Germany, Italy and Spain, the fascist and nazi parties embraced corporatism
and implemented a highly rigid corporatist order that served their purpose
and added to their span of control over society. After the Second World War,
this corporatist order remained in place in the Netherlands, although
stripped from its autocratic and fascist elements. This resulted in a situation
of social (and hence economic) coordination. In the Netherlands, this coordination of the economy found its institutional embedding in sector organisations (the Publiekrechtelijke Bedrijfsorganisatie). Although many of the corporatist elements of (in particular) the social coordination disappeared, some
are still in place, such as the collective labour agreements (CAO), and the tri-

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partite consensus-building machine of the Social-Economic Council (SER).
The essence of the corporatist system was to elevate coordination over competition, in order to prevent ruinous competition. For corporate governance,
this practice entailed a stakeholder orientation, in the sense that none of
the parties involved in an enterprise (such as capital, labour and management), should have a definitive say in its workings. During the early 1970s
these governance practices were formalised in corporate law, through the
so-called ‘structure regime’ (structuurregeling).4 New corporate law gave
labour a voice within company decision-making structures. Contrary to
Germany, this representation of labour was not channelled through labour
representatives on the supervisory board. The structure regime envisioned a
supervisory board as an independent council of grand old men, with the
task of serving ‘the interest of the corporation and its enterprise’ (de vennootschap en de daarmee verbonden onderneming). Neither labour nor capital
should be able to control the firm unilaterally. Dutch corporations are
obliged to establish an ondernemingsraad, or works council, as an alternative
way to guarantee that labour interests are well served in the company. In
addition, the works council can nominate candidates for the supervisory
board. However, all supervisory directors are supposed to serve the interest
of the corporation, not of one of its constituencies.
The structure regime created an important and autonomous position for
corporate directors. Directors elect new members themselves (co-optation).
Furthermore, supervisory directors – not the shareholders – approve annual accounts. In recent times, the structure regime has received criticism. In
particular, multinational corporations have difficulties with the influence
of the works council because it puts Dutch employees in a much more favorable position than employees of foreign branches and subsidiaries. By the
turn of the century, many corporations abandoned the structure regime.5

Governance in the Financial Sector
The relationships between industry and finance have always played a foundational role in inter-firm networks. As main suppliers of capital, banks
positioned themselves in such a position that they were well able to control
and monitor their investments. As part of this strategy, bankers typically
hold board positions at non-financial firms, placing the banks central in the
network of board interlocks. However, there are signs that the role of banks
are changing. Firms are increasingly able to finance their investments
through the capital market, thereby decreasing the role of banks as suppliers of capital. Davis and Mizruchi (1999) show how banks lost their central
position in the corporate board network of the USA during the 1980s. They
explain this decline by pointing at the changing role of commercial banks.
A bank’s competitive advantage used to stem, for a large part, from exten-

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sive information about its clients. Strong and durable relations, reinforced
through board interlocks, ensured information asymmetry and superior
intelligence. But with the passing of time, technological changes made
financial information widely available and accessible, hence reducing the
comparative advantage of banks by the late 1980s. At the same time, bank
lending faced fierce competition from the growing capital market.
Alternative funding sources for corporate borrowers led banks’ corporate
lending business to stagnate, and with it, information asymmetry lost its
functionality. The upturn in banking did not result from a return of corporate borrowers, but from shifting away from pursuing net interest income
(traditional lending) and moving towards fee-based business such as securities underwriting, advisory work and money management. In such fee-based
business, durable relationships can, in fact, hamper a bank’s opportunities.
This shift in corporate strategy led to a changing configuration of the network of interlocking directorates in the USA (ibid.). A similar strategic reorientation of financial corporations took place on the other side of the
Atlantic as well (Van den Brink 2003). This reorientation indicates that the
way corporations are governed, and the way in which firms relate to each
other at the board level, is in flux at the end of the twentieth century.
The financial sector in the Netherlands saw some specific developments
worth mentioning here. For a long time, the financial segment was one
without any serious competition. Banks served their specific clientele (partly sustained by board interlocks), without significant joint ventures or cooperation between banking firms. Specific laws and regulations for cooperation between banks were deemed unnecessary. The Dutch Central Bank only
strengthened its policy with regard to participations and mergers between
financial firms in the early 1950s. A 1952 law (Wet Toezicht Kredietwezen) stipulated that the Central Bank had to explicitly approve any mergers between
banks, as well as any durable participation in a financial firm. This approval
gave the Central Bank some leeway to determine what they felt was a
desired economical landscape in the Netherlands. The main concern of the
Central Bank was to avoid large concentrations of (financial) power.
The Central Bank was not successful in steering clear of the (international) wave of mergers and acquisitions that took place during the second half
of the 1960s. Appendix I gives an historical overview of mergers and acquisitions in the banking sector in the Netherlands. Conglomerates were thought
to be an effective answer to the growing demand for capital. Both financial
and non-financial corporations merged into new, large groups. In 1964, the
Central Bank approved two big mergers in the financial sector. The
Twentsche Bank and the Nederlandsche Handels-Maatschappij merged to
form the Algemene Bank Nederland (ABN). At the same time, the integration
of the Amsterdamsche Bank and Rotterdamsche bank into the AMRO Bank
(already conceived before the Second World War) bridged the gap between

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the Amsterdam and Rotterdam business communities (27 years later, the
two companies merged into ABN AMRO, see appendix I). The Dutch Central
Bank did approve these two mergers, but at the same time they tightened
their policies with regard to cross shareholdings. The newly emerged banks
had to ask for approval for all participation in corporations, both financial
and non-financial.6 The Central Bank notified the financial sector that, by
their standards, participation of more than five per cent was an ‘undesirable’ situation. As a result, financial corporations never participated in
industry as heavily as their German counterparts did.7
In 1978 these cross-shareholding policies were codified in the Wet Toezicht
Kredietwezen. This law was the last moment in time when the policy was
tightened. Ever since, liberalisation of banking and corporate law made the
policies on participation less and less restrictive. During the early 1980s,
insurance companies saw the restriction on participation lifted (as long as
participation was purely an investment and not a strategic alliance). Six
years later, the restriction was also lifted for banks. Finally, and as a result
of the Second European Banking Directive, the restrictive policy on cross
participation in the financial sector was repealed in 1990.8 The European
single market project triggered the formation of a number of ‘bankassurer’
corporations (which were now possible for the first time in the Netherlands).
As a result, a number of banks and insurance companies merged into new,
large financial conglomerates, such as ABN AMRO (1991), ING (1991) and
FORTIS (1990).

Ownership and Control in the Netherlands
This section discusses the composition of ownership of Dutch firms, and the
way in which control is separated from ownership. The dominant position
of corporate directors in the governance of corporations is, for a large part,
safeguarded by a number of rules and regulations that weaken shareholders’ influence. Directors would point out that these devices serve the purpose of protecting the continuity of the firm and its stakeholder. In any case,
in the Netherlands, ownership and control are something quite different.
While many Dutch corporations issue shares of ownership on the market,
the disciplining effects of liberal market dynamics often are circumvented
by means of a wide array of defence mechanisms. These particular arrangements are part and parcel of the Dutch corporate regime (Voogd 1989).
The defence mechanisms and takeover defences can be either statutory or
non-statutory. Statutory defences aim to reduce the influence of the shareholders. The two most important statutory devices are special kinds of
shares: the priority share and the preference share. The priority share (prioriteitsaandeel) was first introduced in 1898 by Royal Dutch Petroleum
Corporation to fend off a hostile takeover by John D. Rockefeller’s American

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Standard Oil Co. (De Hen 1972). Holders of priority shares have extra votes in
matters such as nominating management and directors, dividend payout,
the modification of statutes and so on. Because there is no relationship
whatsoever between the voting power of the share and capital investment, a
share of 20 euros can be enough to control certain major decisions within a
firm (De Hen 1972). Priority shares were widely used by family firms that
converted to a public limited liability corporation (Arnoldus 2002).
Founders, family or friends kept extraordinary voting rights on key issues by
means of the priority shares. Right after the Second World War, 29.4 per
cent of all stock-listed firms used priority shares to reduce hostile influence,
while by 1970, 52.9 of the stock-listed firms had issued priority shares (De
Hen 1972).9 By 1993, 43 per cent of the 143 largest non-financials had issued
priority shares (De Jong and Röell 2005).
The preference share (preferente aandeel) was first issued in 1969. Its goal is
to influence the composition of the general meeting of shareholders, rather
than to restrict its powers. The basic idea is that management issues new
shares in order to destabilise the (voting) power distribution of current
shareholders. While regular shares can be used for this purpose, preference
shares are especially designed for doing so. The board does not need the
explicit consent of current shareholders to issue them, and preference
shares can have a much higher ratio of voting power to paid-in capital than
ordinary shares. Typically, a special-purpose trust office is set up with an
option on the shares, which will only be issued in case of a take-over threat
(the so-called poison pill construction). Preference shares are widely issued.
Of the earlier mentioned group of 143 non-financials in 1993, 60.14 per cent
had preference shares as an anti-take-over mechanism.10
The most important non-statutory defence is the use of certificates instead
of shares. The company sets up an administratiekantoor, a special purpose
trust office that owns most or all of the company’s shares, and issues only
non-voting certificates. These certificates carry all the share’s economic
rights, but not the voting power. The boards of such administratiekantoren are
typically populated by (former) directors of the firm whose shares the trust
office keeps, and other well-connected directors. Although not part of the
network analysis in this study, the boards of these trust offices do add to the
cohesion of the corporate elite. By 1994, 39 per cent of the 143 non-financials
issued these certificates. In some cases, certificate holders could exchange
their certificates for shares (sometimes given a certain threshold), yet in
other cases, the shares were non-transferable (niet royeerbaar). However, nontransferable certificates have been prohibited since 1992.
An array of defence mechanisms protects the corporate elite from – in
their eyes – excessive shareholder influence. Over the past 15 years, some
changes have taken place. Under the influence of shareholder activists,
more and more companies that issue certificates allow holders of certifi-

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cates to cast the votes of the shares as well. However, since many persons and
institutions typically do not show up, the administration office still holds a
decisive say. The period under investigation (1976-2001) is still characterised
by management control.
In many countries, the ownership structure of the corporations itself is
used as a defence mechanism as well. Holding companies and complex ownership chains that mount up to pyramid ownership structures keep the control of (groups of) companies in a few hands. In the Netherlands however,
these structures are exceptional. Lengthy statutory and non-statutory defence
mechanisms make complex ownership structures unnecessary from a defensive point of view.11 By the end of the twentieth century, Dutch corporate ownership structures still demonstrate a characteristic of Rhenish capitalism:
ownership is concentrated (De Jong et al. 2001; Windolf 2002). Contrary to the
UK and the USA for example, block holdings in the Netherlands often exceed
10 per cent of the shares of a corporation (Windolf 2002).
Regrettably, it is hard to make an accurate characterisation of ownership
structures in the Dutch corporate regime. The most insightful studies on
corporate ownership are probably in the field of corporate history, where
some were able to gain insight into the ownership structure of particular
Dutch firms (Bloemen et al. 1993; Van den Broeke 1988; Van den Broeke and
Van Nederveen Meerkerk 2001). Except in the few cases where ownership
information is available, the problem of data availability obscures almost
the entire twentieth century. It was not until 1992 that the Dutch government issued a law that made it obligatory for shareholders to disclose participation that surpassed certain thresholds (starting at five per cent).12
While this early information is still available, it is regarded by the institutions that monitor this information (Autoriteit Financiele Markten), as well as
by academic scholars (De Jong et al. 2001), as unfit for systematic analysis.
As a result, ample and reliable information is only available from 1997
onwards.
From the available data, the following picture emerges.13 In 1997, 44 per
cent of the top 50 non-financial firms (by turnover) had a majority shareholder.14 Levels of ownership concentration actually increased between 1997
and 2001. By 2001, 56 per cent of the firms already had a majority shareholder.15 This increase in ownership concentration is mainly due to a higher
number of foreign-owned subsidiaries in the top 50. And foreign investment
mostly comes in large blocks. While ownership concentration remains at
high levels, there is one actor that actively pursues a policy of cutting down
ownership blocks: the Dutch government. The Dutch government is gradually selling off the equity of (formerly) state-owned firms.16
The finding of increased ownership concentration seems to imply that, in
terms of ownership, the Dutch corporate regime does not show signs of
increasing congruence with a situation of dispersed and fragmented owner-

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ship of a liberal market economy. If the corporate regime was indeed fully
shifting towards a liberal market economy, one would expect to see a reduction in majority shareholdings and an increase in small shareholdings. Yet
the opposite is the case. The relative share of majority shareholdings grew
during the second half of the 1990s, while the share of smaller shareholdings declined. These conclusions also hold if a much larger set of shareholdings is considered.17 These somewhat unexpected findings show that owners
have consolidated and extended their existing block holdings. Joint ventures
were dissolved, and owners acquired outstanding shares of firms of which
they had significant ownership. A closer inspection shows that no effect of
spin-off companies was found, which might have been expected.
In general, cross shareholdings amongst non-financial corporations are
not very common in the Netherlands. However, financial corporations do
have quite significant capital ties. The liberalisation of the Central Bank’s
policy, as discussed in the previous section, made it possible for financials to
acquire significant ownership stakes in each other. Furthermore, Dutch fiscal policy stipulates that no income tax needs to be paid on the dividend or
sale of shareholdings of at least five per cent of the firm’s capital. Not only
does this fiscal policy make the Netherlands an appealing haven for holding
companies, it also stimulates Dutch firms to invest in large shareholdings.
Thus, at the turn of the century, the Internationale Nederlanden Group
(ING) had 17 per cent of the shares of ABN AMRO. At the same time, ABN
AMRO had five per cent of the ING shares. These ties create a common interest, as well as mutual dependency. A bank is not very likely to engage in cutthroat competition when it has a number of important investments in other
Dutch financial institutions. However, the network of capital ties is becoming less dense and less connected.
All in all, the picture that emerges is one of a corporate regime where
firms (and directors) have high levels of autonomy, shielded by an array of
statutory and non-statuary defences. Over the course of time, and notably
since the mid-1990s, some attempts have been made to increase shareholder influence, but these attempts remained insignificant until 2001. Thus,
the institutional setting is one of management control. This is strengthened
by the enduring concentration of corporate ownership, although some fragmentation of ownership with the formerly state-owned firms is visible. This
is a result of government policies, which are, as mentioned above, aimed at
liberalising the corporate regime and stimulating liberal market mechanisms. But are Dutch firms increasingly actors within a marketplace, or are
they still embedded in dense networks of interlocking directorates? For an
answer to this question we now turn to the network of interlocking directorates. The next section first discusses the method and data.

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Network Analysis of Interlocking Directorates
Social network analysis is a specific way of looking at social phenomena,
such that the network of interrelations is the prime research object. It
builds on insights and techniques from graph theory and matrix algebra
(see Wasserman and Faust 1994). A network is basically a set of nodes and a
set of edges. In the inter-firm network of interlocking directorates, corporate
boards are the nodes in the network, connected through interlocks. We have
one interlock between two companies when they share exactly one board
member. Two companies can have more than one interlock, as they can
share more than one board member. In the inter-firm network, a node represents each firm, and each interlock is represented by one line.
Consequently, between each pair of nodes (firms) there are as many lines as
there are directors they share on their boards. Consequently, we have an
edge between two nodes/firms in the network when they share at least one
director. The multiplicity of the edge is given by the number of interlocks
(lines) between them, that is, the number of directors they share. Networks
have numerous properties, such as size, density, clustering and average distance, that can be used to operationalise corporate relationships. Next to
network-wide properties, node-specific properties such as network centrality, local clustering and tie strength can also be analysed. These concepts will
be introduced and discussed during the analysis.
This chapter investigates the relationships between the top 250 firms in
the Netherlands in 1976, 1996 and 2001. The subsequent chapter also investigates the network of board overlap, but looks at the interpersonal network
instead of the inter-firm network (see figure 1.1). The data sample of corporations was constructed according to the conventions set by the study of
Stokman, Ziegler and Scott (1985). The network was built from a stratified
sample of the largest financial and industrial firms in the Netherlands with
a target of the top 50 financial institutions ranked by assets and the top 200
non-financial or industrial corporations ranked by revenue. Thus, ‘industrial’ is equivalent to ‘non-financial’ here. For a small country such as the
Netherlands, all main corporations were selected in the sample. In fact, for
1996 and 2001 corporations in the lower regions of the selection already
become relatively trivial in terms of size.
The distribution of firms over sectors did not radically change during the
25-year scope of this research.18 In the first period (1976-1996), a few more
manufacturing companies are in the sample, mainly at the expense of the
utilities sector. The decline in utility firms is explained by the privatisation
and subsequent centralisation in the sector. By 2001, the manufacturers are
back at 1976 levels, while the utility firms remain at the 1996 level. In the
second period, more trade firms entered the selection, as well as quite a
number of real estate firms. An analysis of the network of interlocking directorates at the aggregate level of sectors did not yield any significant insights

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(the distinction between finance and non-finance does prove to be of importance, though). The only eye-catching development is that between 1976 and
1996 trade firms actually became better connected, even when the sheer
number of trade firms dropped. They mainly build ties with manufacturing
and with the murky category ‘others’. Yet after 1996, when the number of
trading firms in the selection grows, they do disengage from many of the
board ties they had.
A fortunate position presented itself when it was possible to use the
Dutch 1976 dataset on corporate interlocks that was created by Stokman and
Wasseur as part of a comparative study on board interlocks in ten countries
(Stokman and Wasseur 1985). The 1996 and 2001 datasets were compiled
from numerous sources, but annual reports served as prime source material for the information on board composition in 1996 and 2001.19 In addition
the Financieel Economisch Lexicon (Delwel 1997), REACH (Bureau van Dijk 19962001), and multiple newspaper articles (particularly Het Financieele Dagblad)
were used to identify the top 250 firms and an initial list of directors.
Unfortunately, the quality of these sources does not meet the high standards
of precision and accuracy needed for formal network analysis. The information in the available (electronic) resources on board composition has an
unacceptably high level of omissions and errors. Therefore annual reports
serve as the basis for the data.
In terms of eligibility, a company had to have its home base in the
Netherlands. However, Dutch-based subsidiaries of foreign mother companies were also eligible if they met the size criteria. In this way, it is possible
to include the effects of foreign investments. Subsidiaries of corporations
that were already in the sample were excluded. In other words, for corporate
groups, only the holding company is included in the sample. For example,
ING Group N.V. is included, while its subsidiaries ING Verzekeringen and
ING Bank are not. Intra-group interlocks (between firms that are part of the
same holding group) regularly occur, and taking these into account would
blur the picture we are interested in: governance networks between independent firms.20 As a result, board interlocks cannot reflect full ownership.
Furthermore, in the Dutch corporate governance regime, a two-tier system
of governance is common. As a consequence, corporations have both an
executive and a supervisory board. Both tiers are represented in the network, while non-voting and advisory members have been excluded.21 For
some advanced network analysis, the software package Ucinet (Borgatti,
Everett and Freeman 2002) has been used. For the visualisation of the networks, Pajek (Batagelj and Mrvar 2004) and Netdraw (Borgatti 2002) have
been used.

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Disintegration of the Corporate Network
Figures 2.1, 2.2 and 2.3 show a visual representation of the networks of interlocking directorates in 1976, 1996 and 2001. Throughout this book, visual
representations serve to illustrate the interconnectedness of corporations
and the corporate elite. While visual graphics are not very helpful in rendering precise statistics on network dynamics, they do facilitate an understanding of key characteristics of the network portrayed (Krempel 2004).22 Please
note that graphical representations of the networks are optimised in order
to make the pictures as comprehensible as possible (such as minimizing
overlap of lines, strongly connected points together). As expected, board
interlocks are indeed building blocks of a vast network that connect the
boardrooms of main corporations in the Netherlands. By and large, the top
250 corporations are integrated in one component of interconnected corporate boards. Not all of the 250 firms in the sample share directors with other
firms. Such firms are isolates in this network. When firms do share at least
one board member, they form part of a component of the network. A component of a network is a maximal set of nodes, such that there are no other
points of the network which are connected to one of its points. Typically,
networks consist of a few small components and one single, large, dominant
component. The emergence of a dominant component in networks can be
Figure 2.1: Main Component in 1976, 180 Firms

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Figure 2.2: Main Component in 1996, 194 Firms

Figure 2.3: Main Component in 2001, 137 Firms

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expected, given a number of edges and nodes (Mokken 2001; Newman, Watts
and Strogatz 2001), and is a common finding in studies on large and complex networks.
In the network of corporate interlocks, the properties of the dominant
component can tell us about the properties of the national business network. Figures 2.1, 2.2 and 2.3 show the dominant component in all three
years. In 1976 and 1996, one very large dominant component existed, and
only a few small components of a handful of corporations were found. A
number of corporations remained isolated: they did not share directors with
other firms in the top 250 (1976: 56, 1996: 54). A closer look at the isolates
reveals that these are predominantly smaller firms or foreign subsidiaries.
The visualisation suggests that the dissolution of the network took place
only in the five years following 1996. The number of firms that are part of
the dominant component declines rapidly after 1996. This decline implies
that an increasing number of firms are disconnected from other firms at
the level of the board. The connectedness of the network decreased.

Table 2.1: Characteristics of Interlocking Directorate Networks23
Number of:

1976

1996

Firms with interlocks
Interlocks
Edges
Firms in dominant component
Number of other components
Isolated companies

194
1112
952
180
7
56

196
825
775
194
1
54

2001 Δ% 76-96
137
514
481
137
0
113

1.0
-25.8
-18.6
7.8
-85.7
-3.6

Δ% 96-01
-30.1
-37.7
-37.9
-29.4
-100.0
109.3

With the help of network statistics (see table 2.1), a more precise image of
the changes in the network of interlocking directorates reveals itself. The
two periods (1976-1996 and 1996-2001) show quite different dynamics. Let us
first look into the changes that took place during the twenty-year period
between 1976 and 1996. In terms of connectedness, the network remains stable. In both 1976 and 1996, a similar number of companies are connected,
even though 287 interlocks vanished.
As explained above, a board interlock is created when two boards share at
least one director. When two firms share, for instance, three directors, three
interlocks exist. In that case, the edge between the two firms has a multiplicity of three. The multiplicity thus indicates the intensity of the relationship
between the two boards. Board interlocks decreased by almost 26 per cent
over the course of twenty years after 1976; corporations gave up many of

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their board interlocks. The third row of table 2.1 shows the decline in the
number of edges. Between 1976 and 1996, 18.6 per cent of the edges disappeared. Still, the corporate network shows resilience against this decline,
since it did not affect the connectedness of the network. By 1996, the corporations are still connected in the dominant component, but with fewer
board interlocks.
The disappearance of a large part of the interlocks did influence the cohesiveness of the network, however. A network is cohesive if there are frequent
lines, many points with a lot of connections, and relatively short and numerous paths between pairs of nodes. If a network is not cohesive, then it is vulnerable to the removal of a few nodes or lines (Wasserman and Faust 1994,
p. 114). An intuitive measure for assessing the cohesion in a network is the
average distance between any two firms in the network.24 Two companies
that share a director are connected at distance one. Likewise, corporations
can be connected in an indirect way, mediated by another firm. This is the
case when two firms, A and B, do not share a director, but are both connected to at least one third firm, C. In that case, both A and C are at distance one
of firm B (directly connected), and at distance two from each other (indirectly). In 1976, the distance between any two firms was on average 2.7 steps (see
table 2.2). In twenty years’ time, this distance gradually increased by 8.8 per
cent to an average of 3.02.
The network dynamics during the first period underscore that firms in
the Netherlands disengage from board interlocks and that the network
becomes sparser. However, by the mid-1990s, the network still shows relatively high levels of connectedness. Almost 200 firms are still connected at
the highest level of the corporate hierarchy.
After 1996, the pace of decline increased significantly. The disembedding
of firms from board networks, already present before 1996, really took off
during the last years of the twentieth century. Between 1996 and 2001, the
number of interlocks decreased by 38 per cent. In only five years’ time, 294
edges vanished, 117 more than during the previous twenty years. Following
the steady removal of board interlocks up to 1996, the continuing decline
eventually led the network to fall apart. After 1996, the remaining board
interlocks could not sustain the traditional levels of connectedness anymore. The continuing – and increased – decline in board interlocks meant
that the network of interlocking directorates lost a large part of its members. While the size of the dominant component remained fairly stable over
twenty years, it took only five years for 30 per cent of all corporations to disappear from this connected part of the network. At the same time, the number of isolates doubles. By 2001, the Dutch network of board interlocks connects only a bit more than half of the top 250 firms.

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Table 2.2: Centrality and Cohesiveness

Average distance
Edge degree per firm
(dominant component only)

1976

1996

2001

2.77

3.02

3.08

7.98

7.02

10.5

Centrality of Firms
From the point of view of the corporation, direct connections with other
boards are the most relevant aspect of the network of interlocking directorates. Sharing at least one board member creates a linchpin between
firms. The more of these connections a corporation has, the higher the local
centrality of that firm. Table 2.2 presents network information based on the
local centrality, given by the average number of edges. In 1976, corporations
shared, on average, board members with 10.5 other firms. Most of the highly central firms were financials. For financials, the average centrality lies at
16.7 edges. The two most central firms in 1976 were the Algemene Bank
Nederland with 85 board interlocks, and the AMRO Bank with 74 board
interlocks. The first non-financial firm on the list of most central firms was
Akzo, with 40 interlocks.
These levels of local centrality proved unsustainable. The removal of
board interlocks did not – at first – hamper the connectedness of the network, but local centrality did decrease. By 1996, local centrality in the network dropped to an average of eight edges. The two best-connected banks
merged into the ABN AMRO, which by the mid-1990s was connected through
52 board interlocks. In 1996, Koninklijke Hoogovens (currently part of Corus)
was the highest-ranking industrial firm with 33 board interlocks. Since
1996, local centrality continues to decline. By the turn of the century, Dutch
corporations had board interlocks with an average of seven other firms.
Still, inter-firm relations at the highest echelons remain in place. But in
comparison to previous levels of interlocking, there is an undeniable decline
in average local centrality. The ING Group, formed during the early 1990s,
outpaces the ABN AMRO as the most central firm with 25 board interlocks
by 2001 (ABN AMRO had 23). Compared to levels of the mid-1970s, firms, and
in particular financials, are progressively less embedded in the network of
interlocking directorates (appendix III ranks firms by their network centrality).
Comparing the findings over time, there is a clear difference in network
dynamics before and after 1996. Until the mid-1990s, the gradual removal of
corporate board interlocks had more effect on local embeddedness of firms

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than it had on the connectedness of the network as a whole. Full-fledged
fragmentation did not take place until the second half of the 1990s, however (vividly illustrated by the large group of isolates). By the turn of the century, the network of interlocking directorates had suffered heavy losses.
A first look at some foundational elements of the network of interlocking
directorates uncovered the ongoing process of disembedding from corporate
governance networks. The remainder of this chapter will continue to
explore particularities of the network dynamics in order to substantiate the
general thrust outlined above. The results of this query will subsequently
help us to understand and interpret why these changes are happening, and
what the driving mechanisms are. To begin with, we look at the changes in
the composition of the boards. Any fundamental changes at this basic level
are bound to influence the overall structure of the board interlocks network. After that, we continue the network analysis at the level of the interlocks. On the basis of certain properties different sorts of interlocks can be
distinguished. For instance, if corporate boards share more than one director they create a multiple interlocks. The edge between the two firms is
more intensive, as denoted by the multiplicity of the edge (i.e. the number
of interlocks between the two firms). One can also distinguish between
interlocks that are created by corporate executives, as opposed to interlocks
created by outside directors only. Both multiple interlocks and executive
interlocks are considerably more stable than other interlocks (Stokman, Van
der Knoop and Wasseur 1988). Given the centrality of banks, the contribution of financial corporations to the network properties is specifically
explored.

Corporate Boards
Corporate boards date back to the first joint stock corporation, which can be
traced back to the Dutch East Indies Company (the Vereenigde Oost-Indische
Compagnye, or VOC), established in 1602. As Frentrop (2002) compellingly
shows, this early corporate form already witnessed many of the corporate
governance issues so fiercely debated during the past fifteen years. Even in
those days, investors tried to gain influence over the management of the
enterprise. The VOC was notorious amongst shareholders for not paying dividends, while the executives (the Heeren Seventien, in particular) received
high remunerations. Consequently, a group of shareholders stood up, and
called themselves dolerende participanten, or ‘suffering shareholders’. When
their attempts to directly influence management failed, these suffering
shareholders turned to the public, and on 22 July 1622, they distributed a
pamphlet (nootwendich discours) which accused the executives of abuse of
power. The document was immediately prohibited by the parliament, and
the executives of the VOC were put under close security surveillance (speciale

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sauveguarde ende protectie). The effects were limited, and even a second document did not help shareholders much. Only when the merchants needed
additional capital for the foundation of the West Indies Company, shareholders were able to negotiate a dividend pay-out on their East Indies shares.
Paul Frentrop’s book on the history of Dutch corporate governance elaborates extensively on these (p. 88-105) and other historical parallels (Frentrop
2002). Much like present day experience, these attempts at influencing management hardly succeeded.
Why boards exist in the first place is difficult to answer, especially within the framework of rational economic actors. Indeed, as Gevurtz argues,
‘the rationale for corporate boards most favored by modern scholars – that
boards exist to monitor management on behalf of passive investors – is the
rationale that finds the least support in the historical origins of the corporate board’ (Gevurtz 2004, p. 169). Rather, corporate boards evolved out of a
tradition of regulated companies, where members each conduct their own
business. According to Hermalin and Weisbach, ‘the directors mutual monitoring of directors was critical for inducing shareholders to trust the directors with their money’ (Hermalin and Weisbach 2003, p. 10). However, a complete theory of why boards exist has not been conceived of yet, mostly
because of the changing role of boards throughout history. Here, the aim is
not to design such a theory. Corporate boards exist, and the way in which
they bind the corporate elite together in a social network is what is under
consideration here.
Stokman et al. (1988) show that, as a result of the mergers during the
1960s, the board size of the largest Dutch firms peaked in 1969 with almost
15 directors per firm on average, and gradually declined during the ten
years after (appendix I holds an overview of concentration in the banking
sector).25 Thus, during the 1970s, Dutch corporate governance is still in the
process of reorganisation as a result of the prior wave of mergers and acquisitions. The size of corporate boards dropped to somewhat more than 11
directors on average by 1976. Table 2.3 gives some insights into the composition of corporate boards. The supervisory board (raad van commissarissen)
accounted for 67.7 per cent of all directors.
During the twenty years following 1976, corporate board composition
changed radically. Most notably, the corporate elite (all the directors together) decreased with 20 per cent. Together, the top 250 firms had 2,223 directors during 1976, but twenty years later this number dropped to 1,773 directors.26 By the mid-1990s, this process came to a stop. There was a decrease of
only forty directors during the five years following 1996. The pace of the
removal of corporate directors declined significantly, even corrected for the
shorter period of time.
These findings lead us to conclude that the decrease in board interlocks
during the first period (1976-1996) is mainly an effect of the decrease in the

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number of board members. There simply were not as many people left to tie
together the corporate boards. The ‘interlockers’ (directors with multiple
positions) did not take up more positions in order to keep the board interlock network in place. The decrease in directors went hand in hand with a
decrease in board positions. As the corporate elite became smaller, so did
the average board size. The number of interlockers also dropped. During the
mid-1970s, 317 board members still had more than one position. In 1996 this
number had dropped to 252, and five years later only 183 interlockers were
left.

Table 2.3: Sample and Board Composition
1976

1996

2001

Number of directors

2223

1773

1733

Number of positions
Executive
Supervisory

2804
906
1898

2228
851
1377

2042
897
1145

As with the drop in directors, by the late 1990s the pace of decline in board
positions was tempered. After years of leaner and meaner boards, table 2.3
shows that by 2001 there were actually more executives in the top 250 than
five years before. Still, a great number of supervisory positions disappeared
from boards in the last years of the twentieth century.27 A closer look at the
companies under study shows that this drop in positions is due to the growing number of foreign subsidiaries in the sample. The increase in foreignowned firms accounts for the decline in the size of supervisory boards. In
fact, if these foreign firms are not taken under consideration, supervisory
boards had, on average, 7.8 per cent more positions in 2001 than they did five
years before.
The picture that comes out of these observations is that the reorganisation of the Dutch corporate regime commenced well before the 1990s.
Corporate boards became leaner prior to 1996, mostly at the expense of
supervisory positions. Compared to twenty years earlier, the top 250 firms
have over 500 supervisory positions less on their boards. Yet, by 1996, the
decline of the corporate elite came to a stop. The ongoing reorganisation of
the corporate board network continued, but the underlying mechanism
changed. Before the 1990s, it was an effect of smaller boards. Since the mid1990s, the dissolution of board interlocks seems to be the result of a shift in
corporate strategy. The growing attention for (good) corporate governance

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might be one of the reasons for the growing number of executives on the
boards. Yet, these executives, as we will see, hardly build board interlocks
with other firms anymore.

Multiple Board Interlocks
The more directors that two companies have in common, the more intense
their relationship. If two boards share more than one director, multiple
board interlocks exist. The number of board members the two companies
share is indicated by the multiplicity of the edge between the two firms.
Here the term multiple interlocks is used to denote an edge with multiplicity, i.e. the relationship between firms who share at least two directors.
Relations between firms that are created through multiple interlocks are
more durable because they will not vanish when one director disappears. In
some cases, multiple board interlocks reflect a durable relationship of cooperation or control between two companies. For instance, in 1976, the
Rijkspostspaarbank fell under the control of the state-owned PTT. This controlling relationship can be seen in the sharing of no less than eight directors.
During the mid-1970s, quite a large number of corporations had multiple
interlocks with other corporations. Figure 2.4 illustrates this for 1976. The
top network in figure 2.4 shows only those firms (nodes) who share multiple
directors with at least one other firm. Thus, the relationships (edges) in the
upper part of figure 2.4 consist of at least two interlocks. While quite a number of firms are isolates because they do not share multiple directors with
any of the other top 250 firms, there are clearly quite a number of firms
sharing multiple directors. The bottom network in figure 2.4 subsequently
shows only the firms that share at least three directors with one of the firms
in the top 250 in that year, as well as the edges that connect them. These two
networks generate a number of interesting observations. First, the core of
the network is obviously connected by means of multiple interlocks. And at
the centre of this network core are the two major banks from that time: the
ABN (Algemene Bank Nederland) and the AMRO (Amsterdam-Rotterdam
Bank). Both banks resulted from the mergers of the late 1960s, and in later
times would merge together to form the present-day ABN AMRO (see
Appendix I). During the mid-1970s, they are the buoys of the network, and
clearly serve two distinctive ‘clienteles’.
In general, financials are well connected through multiple interlocks. In
19 of the 24 edges carried by three or more directors in 1976, a financial was
involved. By 2001, less than half of all remaining multiple interlocks
involved a financial firm. Figures 2.5 and 2.6 show how multiple interlocks
connected Dutch corporations in 1996 and 2001. During the mid-1990s the
interlocks centred on a few key corporations. These corporations include the

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successor of the ABN and AMRO, but also non-financials such as Philips
Electronics and Hoogovens. The financials had already lost many of their
multiple interlocks by the mid-1990s. Still, almost all major Dutch corporations are part of this ‘core’ of the corporate network.
Only minor changes in the number of multiple interlocks took place by
2001. Nevertheless, there is one striking difference in the architecture. The
ABN AMRO still had a key position in 1996, yet five years later it was gone.
Instead, another major financial conglomerate, the Internationale
Nederlanden Group (ING), emerged as the key financial in the network core.
So, while the ABN AMRO shed their Dutch connections, the ING adopted a
strategy of building these interlocks.
Table 2.4: Edge Multiplicity
Multiplicity

1976

1996

2001

>3
3
2
1

7
17
97
831

0
3
44
728

0
0
33
448

Edges with multiplicity

121

47

33

Table 2.4 reports the numbers that accompany the network pictures of the
multiple interlocks. In 1976, there were still seven edges with more than
three directors. Twenty years later, no pair of corporations shares more than
three directors. By 2001, companies only share up to two directors. During
the first period (1976-1996), multiple interlocks diminish by more than 60
per cent, much more than the overall reduction in interlocks (see table 2.1).
Indeed, much of the reduction in multiple interlocks in the Dutch corporate
network took place before 1996. Thus, corporations disengaged from multiple, and hence more intensive, interlocks with other firms well before the
discussion on (good) corporate governance reached the Netherlands during
the mid-1990s, and indications so far are that financials, in particular,
changed their relational positions in the governance network.

Executive and Supervisory Interlocks
Some interlocks bear more significance than others. A common way of
attributing meaning to board interlocks is to distinguish between executive
or non-executive directors in creating the board interlock between the
firms. When a person is a non-executive (supervisory) director in two corpo-

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Figure 2.4: Multiple Interlocks in 1976. Edges Larger Than One (Top) and Edges
Larger Than Two (Bottom).

FRIESCHE COOP. ZUIVELEXP. VER.

NV INTERPOLIS

NEDERLANDSE CREDIETBANK NV

Rabobank Group

AMSTELLAND CONCERNBEHEER BV

Cooperatieve CONDENSFABRIEK FRIESLAND
ZUID-NEDERLANDSE MELKINDUSTRIE DMV BV

NEDERLANDSE SPAARBANKBOND

Cooperatieve ZUIVELVER. CAMPINA B.A.

BANK DER BONDSSPAARBANKEN NV

N.V. Nederlandse Spoorwegen

Stork N.V.

Heineken N.V.

ENNIA NV
AMSTERDAM-ROTTERDAM BANK NV

BRUYNZEEL BV

NV INDUSTRIELE HANDELSCOMBINATIE HOLL

Elsevier N.V.

NAARDEN INTERNATIONAL NV
NATIONALE-NEDERLANDEN NV

Koninklijke KPN N.V.

ALGEMENE BANK NEDERLAND NV
RIJKSPOSTSPAARBANK
Nederlandse Participatie Maatschappij N.V.
De Nationale Inversteringsbank N.V.
Koninklijke Pakhoed N.V.
NV NEDERLANDSCHE SCHEEPVAART UNIE

AGO

Ned. Fin.-Mij. voor Ontwikkelingslanden N.V.

AMFAS GROEP NV

CSM N.V.

Koninklijke Ahold N.V.

Koninklijke Van Ommeren N.V.

OGEM HOLDING NV

Verenigde BEDRIJVEN BREDERO NV

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Figure 2.5: Multiple Interlocks in 1996

Figure 2.6: Multiple Interlocks in 2001
Reed Elsevier PLC

Koninklijke Wessanen NV
Heijmans N.V.
Pon Holdings B.V.

N.V. Elektriciteits-Produktiemij. Zuid-Ned. EPZ

PCM Uitgevers NV
Océ N.V.
Coöp. Centrale Raiffeisen-Boerenleenbank B.A.
nv Nuon

Stork N.V.

Koninklijke KPN N.V.

TPG N.V.

Essent N.V.
Getronics NV

Kempen & Co N.V.

nv Bank Nederlandse Gemeenten
CSM nv

Kendrion N.V.
SHV Holdings N.V.

DSM N.V.

ING Groep N.V.

Koninklijke Boskalis Westminster nv

Koninklijke BAM NBM nv

NV Nederlandse Spoorwegen

Schuitema n.v.

Koninklijke Ahold N.V.

De Nederlandsche Bank N.V.

Koninklijke Luchtvaart Maatschappij nv

Koninklijke Vopak N.V.

Koninklijke/Shell Groep
Unilever N.V.

Heineken N.V.

ABN AMRO Holding N.V.

Esso Nederland B.V.
Akzo Nobel N.V.

Ballast Nedam N.V.
N.V. Nederlandse Gasunie
Delta Lloyd N.V.

72

Koninklijke Volker Wessels Stevin N.V.
Draka Holding N.V.

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rations, he28 creates an outside interlock. This type is the most common board
interlock. If an executive holds a position as supervisory director in at least
one other firm as well, this director creates an executive interlock. (Some
studies refer to executive interlocks as primary interlocks or officer interlocks, and to outside interlocks as secondary interlocks.) Executive interlocks are widely considered to be a more important tie. As officers in the
firm, executives might use the board interlock as a means of control or
supervision of one firm over the other. For supervisory directors, on the
other hand, it is much more difficult to pinpoint a primary affiliation (see
for instance Fennema and Schijf 1978; Mizruchi 1996; Nollert 2005; Scott
1985; Stokman, Ziegler and Scott 1985; Windolf 2002).29
Table 2.5: Executive and Outside Interlocks

All interlocks
Executive interlocks
Outside interlocks
Firms sending executive interlocks
Firms receiving executive interlocks

1976

1996

2001

1112
272
840

825
205
620

514
77
437

75
127

73
126

42
51

Table 2.5 shows the distribution of executive and outside interlocks. Please
note that if firms share multiple directors, it is possible that the edge that
connects them is created by both an outside interlock as well as by an executive interlock. Furthermore, only positions at the top 250 firms in the
Netherlands are considered. Table 2.5 illustrates that during the first period,
both executive and outside interlocks show a relative decrease of around 25
per cent. It was already noted that the reduction of the corporate elite came
mostly at the expense of supervisory directors. Here again we find that, over
the course of the twenty-five years, the total number of outside interlocks
almost halved. In contrast to the findings so far, the decline in outside interlocks continued at an accelerated pace after 1996. In only five years’ time,
183 outside interlocks vanished. Thus, the breakdown of outside interlocks
was already set in motion before the mid-1990s, but it was far from over in
1996.
In contrast to the outside interlocks, the dynamics of the executive interlocks shows a different picture all together. During the first period, the
reduction in executive interlocks follows the general trend of a reduction in
board interlocks. Roughly a quarter of the executive interlocks disappear.
After 1996, the tables turned. Executive interlocks decline at a fast rate. In

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five years’ time, 128 executive interlocks disappeared, leaving only 77 interlocks (28 per cent of the 1976 level). These findings show a remarkable
change in the way corporations are interlocked at the board level since 1996.
Remember that the number of executives grew during those last five years.
Nevertheless, executives retreat from supervisory boards.
Executives involved in interlocks usually sit on more than one supervisory board. Therefore, in comparison with companies who ‘send’ an executive
to a board, it can be expected that more companies ‘receive’ an executive on
their board. The bottom two rows of table 2.5 show that this is indeed the
case. During the twenty years following 1976, hardly any change took place
in the number of companies involved in both sending and receiving executive interlocks. It was not until after 1996 that a considerable decline set in
for companies sending an executive to another board, and an even stronger
reduction for companies receiving such an executive interlock.
The findings suggest that companies changed their strategies with regard
to sending their executives to the boards of other companies. In particular,
while interlocking directorates saw an overall decline prior to 1996, it was
only afterwards that executive interlocks were removed. It is plausible to
argue that the increased attention to corporate governance, and the growing levels of accountability required from executives in particular, contributed to firms deciding to decrease their executive interlocks with other
firms. The changing role of the executive directors in the network of interlocking directorates is in line with the expectations that arise from the
financialisation thesis, as discussed earlier in this chapter. By the turn of the
century, external controlling network relations (i.e. executive interlocks)
have been eliminated; these have been exchanged for external, horizontal
coordination relationships (outside interlocks). This development seems to
signal a significant change in the European-Rhenish sphere, as characterised by the economic organisation of the Netherlands. These changes are
partly due to the concentration of business, and in particular of finance.
After all, with fewer big banks in the Dutch landscape, there are just not as
many possibilities for executive interlocks anymore. Moreover, bankers were
amongst the first to retreat from their supervisory positions at non-financial firms. To some extent, executive interlocks have been internalised within the holding structure of the financial groups (Heemskerk 2001). While
bankers used to hold positions on the supervisory boards of industrial firms,
they now monitor and supervise the subsidiaries of the holding they govern.
This, however, immediately leads us to wonder about the centrality of financial institutions in the network of interlocking directorates.

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The Loss of Bank Centrality
Financial institutions play an important role in the network of interlocking
directorates. Typically banks are the most well-connected companies, and
bankers play an important role in connecting different parts of the network.
Many studies covering a wide range of countries found pivotal positions of
banks in these networks (see for instance Davis, Yoo and Baker 2003; Davis
and Mizruchi 1999; Fennema and Schijf 1978; Jeidels 1905; Mintz and
Schwartz 1981; Mizruchi 1982; Stokman, Ziegler and Scott 1985). Although
Dutch banks were never keen to engage in durable long-term financial relations with corporations, bankers were always important in spanning the
network of interlocking directorates. One of the predecessors of ABN AMRO,
the Rotterdamsche Bank, already had a total of 119 board interlocks in 1923;
in 1958, the Rotterdamsche Bank was able to uphold 149 board interlocks
(De Jong and Röell 2005; see also Van Beusichem 2004). By 1993, the ABN
AMRO, whose predecessors accounted for well over 200 interlocks in 1958,
had only 34 interlocks left. Board interlocks between finance and industry
show a much higher probability of restoration than other interlocks
(Helmers et al. 1975). The results in table 2.6 signal a reorientation of financials in the network.

Table 2.6: Sending and Receiving Interlocks with Financials
1976
1996
2001
Finance
Finance
Finance
Industry
Industry
Industry
Percentage of financials that:
Send executive interlocks to
Receive executive interlocks from
Have outside interlocks with
Percentage of industrial firms that:
Send executive interlocks to
Receive executive interlocks from
Have outside interlocks with

30
40
80

26
46
78

18
20
52

26
32
66

14
6
38

10
22
50

17
28
52

25
35
65

13
19
50

26
44
72

7
5
37

14
15
50

Table 2.6 shows the share of firms that are involved in interlocks within and
between finance and industry. The table reads as a matrix. Thus, in 1976, 30
per cent of the financials sent executive interlocks to other financial firms.
At the same time, 40 per cent of the financials received executive interlocks
from other financials. This implies that some financials are ‘net senders’;
their directors are on the board of a number of – in this case – financial

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firms. Likewise, in 2001, 7 per cent of the industrials sent executives to the
supervisory boards of financials, while 14 per cent of the industrials had an
executive on the supervisory board of another industrial.
Between 1976 and 1996, only small changes took place. In both 1976 and
1996, approximately one-quarter of all financials in the selection sent an
executive to the supervisory board of a non-financial company. Yet some
change is visible at the receiving end of these bank executive interlocks. In
1996, a much smaller set of non-financial firms received executives from
financials firms on their board than twenty years before (18.5 per cent in
1996 vs. 28 per cent in 1976). Thus, the reach of bank executive interlocks
decreased.
The real change in executive interlocks took place during the period
between 1996 and 2001. After a stable period of twenty years, in only five
years the share of financials that sent executives to industrials decreased to
just 10 per cent. Perhaps even more striking is that by 2001 less than five per
cent of all non-financial companies had a financial executive on their board.
This decline is a bit counterintuitive, given the growing importance of
financial expertise within the corporate boards. These findings underline
that, by the beginning of the twenty-first century, tapping into financial
expertise through executive bank interlocks is no longer a common practice.

Table 2.7: Executive Interlocks with Financials
1976

1996

2001

Executive interlocks from finance to industry
Executive interlocks from industry to finance
Outside interlocks between finance and industry

73
47
347

41
31
207

10
16
150

Total interlocks between finance and industry
Percentage of all interlocks in the network

467
42.0

279
33.8

176
34.3

The decline in executive interlocks between 1976 and 1996 follows general
tendencies of disintegration. Executives did not actively begin retreating
from supervisory boards until after 1996. During the first period 1976-1996,
a total number of 67 executive interlocks had disappeared, while during the
five years following 1996, 128 executive interlocks vanished (see table 2.5).
With the information presented in table 2.7, we can now investigate the contribution of executive interlocks between finance and industry to this overall decrease of executive interlocks. Table 2.7 shows that during the first

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period, 48 executive interlocks between finance and industry vanished.
Thus, from the total of 67 executive interlocks that were removed during
that period, over 70 per cent is due to the dismantlement of executive interlocks between finance and industry. In particular, the retreat of financial
executives from industrial supervisory boards accounts for a large part of
the drop in executive interlocks (-32). These findings show that the decrease
in executive interlocks between 1976 and 1996 was mainly due to the disappearance of executive interlocks between financials and industry, and in
particular due to financial executives who gave up supervisory positions at
industrials.
Since 1996, the ongoing and heightened dissolution of executive interlocks almost entirely wiped away the executive interlocks between finance
and industry. By 2001, only 26 executive interlocks between finance and
industry remain, most of which are due to industrial executives serving on
the supervisory board of a financial. The picture that emerges from this
analysis is one in which the reorientation of banks foreshadows the network
dynamics. After the mid-1990s, both financials and non-financials disengage
from executive interlocks. By 2001, a century of banker’s centrality had
come to an end. Banks remain important and central meeting places of the
corporate elite, but the role of financial executives themselves is greatly
diminished.

Conclusion
This chapter started by asserting that a shift in the Dutch corporate regime
would go together with changing structures of the network of interlocking
directorates. The findings this chapter presented clearly show that this has
indeed been the case. Although board interlocks are still in place, the way
in which firms are embedded in this network of interlocking directorates
changed significantly. Likewise, the architecture of the network as a whole
signals a decline of the network of interlocking directorates. The first period (1976-1996) is one of slow but sure change, driven by a decrease in board
members. The second period (1996-2001), on the contrary, shows signs of a
swift and stark reorientation by corporations, towards a more liberal market
conform corporate reality.
The decline of corporate interlocks was already set in motion by the mid1970s. Boards had to be ‘leaner and meaner’. With fewer directors on the
boards, corporate interlocks disappeared. By 1996, the network of interlocking directorates lost its strength and cohesiveness due to the removal of
multiple interlocks between firms. But it was not until after 1996 that this
untying of corporate bonds really took off. At the end of the twentieth century, the share of firms that are still connected dropped significantly. Firms
that engage in executive interlocks only actively stop doing so after 1996. In

CONCLUSION

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part, executive interlocks have migrated from between firms to within holdings, where executives of the holding company now sit on the board of the
subsidiaries (Heemskerk 2001). Financials most actively disengaged their
board interlocks prior to 1996, which foreshadowed the overall decline in
board interlocks during the late 1990s. Financials removed executive interlocks, links with other financials and multiple interlocks. After 1996 (when
‘good corporate governance’ became a well-debated issue) many others followed.
As potential means for coordination, interlocking directorates are part
and parcel of the corporate regime, and of corporate governance. The ongoing disintegration of the network suggests that there is indeed a shift in the
Dutch corporate regime, where direct forms of coordination (network) are
expelled to the benefit of the indirect coordinating mechanisms of the (liberal) market. The direction of this shift seems to be towards a less embedded,
less connected, and hence more liberal market-oriented economy. At the
same time, the chapter made clear that this development is not univocal. In
particular, the findings on increasing ownership concentration emphasise
that different aspects of one corporate regime can indeed show different
directions of change.
One of the most eye-catching changes in the network seems to be the role
and position of financial firms, and banks in particular. Not only is the corporate regime more and more shaped and redesigned based upon notions of
‘proper’ (and hence liberal) market mechanisms and competition, production in general is increasingly coordinated, dominated, and accommodated
by the financial (capital) market and its rationale. This particular development is likely to continue. During the five years following 2001, there have
been ample situations where this dominance of finance became evident. As
this lies outside the scope of this research, this observation is no more than
a call for more research on the issue. In particular, the role of holdings in
the corporate regime deserves more attention. To what extent are they functional equivalents to banks in the classical notion of Finanzkapital?
The signs of depletion shown by national board interlock networks might
be an indication that the turn of the century marks a threshold in the development of the Dutch corporate regime. However, this chapter only partially
addressed the inter-corporate network of the Dutch corporate regime.
Alongside the inter-firm relations, the corporate elite is likewise entrenched
in a network of interlocking directorates. This leaves the question open as to
how the decline of the inter-firm network has impacted on the interpersonal network of the corporate elite. Although closely related, the two networks
have a different architecture. The following chapter investigates whether
the findings for the inter-firm network, as demonstrated above, also hold for
the corporate elite.

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3

The End of the Old Boys Network

Introduction
The previous chapter showed how firms in the Netherlands have been
embedded in a network of interlocking directorates, and how this network
has been thinned ever since the mid-1970s. Here we leave behind the interfirm perspective and investigate the interpersonal component of the network of board overlap instead. Interest in the corporate elite has come from
critical sociologists rather than from economists, but this chapter does not
aim to test the hypothesis of the existence of a cohesive ruling class. We are
merely interested in the cohesion of the corporate elite and how this has
changed during the past decades as part of the transformation of the Dutch
corporate regime. As argued in the first chapter, the social networks of the
corporate elite may prove to be an important part of the informal institutional framework of the corporate regime.
The first studies which mapped entire parts of the Dutch network of
interlocking directorates (Helmers et al. 1975; Mokken 1971) explicitly interpreted these networks in terms of strategic coalitions at the inter-firm level,
rather than as a community structure for the corporate elite. Nevertheless,
their research demonstrated that the governance of corporations was
indeed in the hands of a small and well-connected group of people (see chapter 1). Network analysis of board meeting networks proved a powerful means
of mapping these social structures. In addition, it revealed information
about positions of power and influence that individual members of the network may not have wanted to be disclosed.
Interlocking directorates strengthen the cohesion of the corporate elite
in structural terms, i.e. by creating a meeting network. However, there are
other ways in which the cohesion of the corporate elite may be strengthened. When the members of the corporate elite, defined here as the directors of the largest corporations, share a common social background, and
when interaction takes place exclusively within their own ranks, it is likely
that members of the corporate elite share the same norms and values, and
share a sense of elite solidarity as well. The more people interact, the more
they will be like each other, and the status groups will be cohesive (Domhoff

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1975a, p. 90). Early group dynamic research showed that members of cohesive groups are more open to the opinions of other members compared to
non-members, and are more likely to share the views of those fellow members (Cartwright and Zender 1960; Lott and Lott 1965). Such cohesion
amongst the corporate elite can be properly described by the term old boys
network. It is important to realise that the old boys network as a socio-historical concept (a status group with common social background), is different
from the inner circle as a structural concept (the interlockers among the corporate elite). While board interlocks contribute to the cohesion of the old
boys network, interlocks do not presuppose an old boys network. The next
section first looks at the corporate elite as an old boys network. Building on
the findings of this section, the remainder of the chapter investigates how
the inner circle knits together the corporate elite. First, the concept of an
inner circle is further elaborated, as well as the role it plays in the Dutch
business community throughout the twentieth century. Subsequently, the
network analysis of the inner circle is operationalised with the aid of small
world theory. Building on this framework, we investigate how the cohesion
of the corporate elite network changed over time. Next, closure and brokerage amongst the inner circle is investigated, followed by a deeper look at the
network of people who meet each other at multiple boards. Finally, the role
of the biggest linkers and how they span the network is looked into. The conclusion brings together the findings, generating a set of question which will
be addressed in the following chapters.

The Old Boys Network
In the so-called old boys network of the corporate elite, longstanding friendships, kinship ties and elite distinctiveness mark the boundaries of a highly
resourceful set of social contacts for those who belong to these elite circles.
Notorious for its ‘incestuous’ recruitment practices, the old boys network is
difficult to reconcile with an ideal-type liberal market economy. Shared
board memberships are the cornerstone for the old boys network of the corporate elite. Within the old boys network, lifelong friendships, shared educational backgrounds and family ties constitute sets of relationships that
define membership of the elite. Even during the early 1950s, 44 per cent of
corporations had at least two family members on the board. In total, 70 per
cent of executive directors were related through kinship with another executive (Vinke 1961, p. 247). Titles of nobility and patrician family backgrounds mark the boundaries of this aristocratic elite, even though these
boundaries are not completely fixed. The social distance between ennobled
families and patrician families has always been small, in part because of the
arbitrariness with which titles of nobility had been awarded (De Klerk 1998).
Here the term aristocracy is used to mean the group of noble and patrician

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families. There was a tendency to endogamy within the Dutch aristocracy, a
strong feeling of we-ness, and an awareness of social and political responsibility (noblesse oblige) (Bruin 1987; Dronkers 2000; Dronkers and Schijf 2004;
Van den Berge and Fennema 1985). This is not to say that the aristocracy
always acts in the best interests of society as a whole, but many of them do
feel an intrinsic responsibility towards society.
When, at the congress of Vienna in 1814-1815, the Dutch republic was
united with the Austrian Netherlands to form a monarchy under the House
of Orange, the newly installed monarch commenced with revitalising the
nobility. Most of the wealthiest families of those days, including many entrepreneurial families, were awarded with titles of nobility, especially if they
had rendered services to the king (Bruin 1987; Van Steenis 1980). As a result,
nobility distinguished itself throughout the nineteenth century not only
through its social standing and political prerogatives, but also through its
wealth (Wilterdink 1984, p. 255). Wealthy families who did not adhere to the
Dutch Reformed Church (like Mennonites, Catholics or Jews) were less likely to be ennobled. However, elite families that have been on the forefront of
Dutch society for three generations or longer are considered to be part of
the patriciate (officially registered since 1910).
As a result of the economic strategy of the new monarchy, aristocracy
played a dominant role in banking, and in the governance of joint stock
companies that were founded during the second half of the nineteenth century. In 1886, 66 per cent of the interlockers were registered as a member of
the aristocracy (nobility or patrician families). Sixteen years later, their
share in the inner circle had increased to 76 per cent (Hoogenboom 2003).1
The aristocracy continued to form the majority of the inner circle until after
the Second World War. This economic elite met regularly, outside of the corporate boards as well, often in elite clubs, such as the famous Club Rotterdam
who denied access to such tycoons as shipbuilder Cornelis Verolme because
– although wealthy and highly successful – he did not belong to the proper
families (Dekker 2005). In Amsterdam, the gentlemen’s club Onder Ons
(Amongst Ourselves) was equally restrictive in its membership. During the
1920s, an Amsterdam mayor of rather humble descent, Dr. Willem de Vlugt,
hinted that he would appreciate an invitation to the club. Two prominent
members of the club and sons of ‘the best’ families in Amsterdam, Samuel
Pieter van Eeghen (partner of the prestigious Van Eeghen en Co) and his
brother-in-law Willem van Loon (the richest man of Amsterdam and important financier of the shipping industry) did not have to deliberate long
before rejecting the request. ‘If you want to make that sort of person mayor
these days, then they’d better keep to themselves in their own neighbourhoods’ (Middelburg 1996).2
Prior to the Second World War, family ties played an important role in
these elite networks (De Klerk 1998). Even in 1962, fifty per cent of corporate

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directors who sat on the board of more than three of the largest Dutch firms
were members of the aristocracy. Since then, aristocracy has lost its grip on
corporate governance. In 1969, only one-third of these big linkers belonged
to the aristocracy, and by 1976, their share had been reduced to 25 per cent
(Van den Berge and Fennema 1985). Wilterdink found that for the corporate
elite as a whole, 22 per cent of all presidents, 15 per cent of all interlocking
directors, and 11 per cent of all directors were member of the aristocracy in
1976 (Wilterdink 1984). By the mid-1990s, Dutch aristocracy provided only 10
per cent of the big linkers, and by 2001, only two patricians were left in the
group of big linkers. The fading away of the aristocracy is also visible when
we look at the network of all interlocking directors. By the mid-1990s, only
6.5 per cent of all interlockers were aristocrats, and five years later this number had already declined to 3.8 per cent.3 Long-standing elite families who
dominated corporate governance until the 1960s, such as Backer, Collot
d’Escury, Van Karnebeek, Kretschmar van Veen, Van Lennep, Röell, Van
Beuningen, Van Hoboken, Hudig, Mees, Reuchlin, and Dutilh, were ousted
from the centre of the network.
The ‘old boys’ have been replaced by ‘new boys’ (there are still very few
women on the boards of large corporations) who have embraced a meritocratic ideology, which preaches that success is due to one’s individual
human capital and personal qualities (Van Hezewijk 2003 provides a nice
insight in the world of the new boys). The upcoming meritocratic class of
nouveaux riches sees no merit in social embeddedness and societal responsibilities. They may have a sense of elite-ness, but it is an elite without traditional obligations towards the common people. ‘Their snobbery lacks the
acknowledgements of reciprocal obligations between the favoured few and
the multitude’ (Lasch 1995, p. 45).
Of course, the concentration of power through the collection of multiple
board positions can occur both in an old boys network and in a new boys
network. The difference is not in the network as such, but in the sociological profile of its members. The old boys network is formed by a social group
that has intergenerational family linkages, whereas the new boys network is
populated by a collection of successful individuals. Max Weber made the distinction between class and status groups. Class refers to a category of people
with similar economic chances, and the term status group refers to social
groups with common lifestyles and circles of people who treat each other as
social equals, who belong to the same clubs, frequent the same intimate
social events and have a high degree of endogamy. Thus, people in the same
class share an economic position, and people in the same status group share
a socio-cultural position. According to this distinction, the corporate elite
has transformed from a status group to a class-like socio-economic elite.
Michael Useem found a similar tendency in the USA. ‘Classwide principles
of organization in the business community are ascendant. Along with cor-

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porate principles of organization, they now guide business political activity.
(…) [U]pper-class principles, are largely descendent’ (Useem 1984, p. 172). The
meeting network of the corporate elite analysed below, therefore, has
already lost much of its social standing and exclusiveness. The question is
whether this demographic shift has coincided with a reorganisation of the
meeting network. Has the corporate elite lost not only its standing and
upper class background, but also its connectedness and cohesiveness?

The Inner Circle
This section will investigate to what extent the meeting network of corporate directors has suffered from similar tendencies of decline and dispersion
as in the network of corporate interlocks (chapter 2). We will also look at
how changes in the network structure may have influenced the coordinating potential of the corporate elite, defined as board members of the largest
firms. Together they command and monitor the largest economic entities,
and are therefore an important group in our society.
Not all members of the corporate elite are equally important within the
meeting network. Most corporate directors have a relatively restricted network because they sit only on one board. Within each board, there is a fully
connected group of directors, i.e. a clique within which everyone is connected to everyone else. But those who sit on more than one board form ‘bridges’
between boards. They can benefit from their brokerage position across different boards (Burt 1983; Burt 1992; Burt 2005). Following Useem, these
interlocking board members are called the inner circle, which he describes as,
a distinct politicized business segment, if a segment is defined as a
subset of class members sharing a specific location with partially distinct interests. Though members of the inner circle share with other
corporate members a common commitment to enhancing corporate
profits, their heightened sensitivity to business interests more general
than those that look solely to support individual company profits also
sets them apart (Useem 1984, p. 61).
Although Useem initially draws the boundaries of the inner circle at serving
on the boards of several large firms, he adds that this demarcation, ‘offers
neither a full description of the inner circle nor a precise definition of its
boundaries or membership. […] The multiple-directorship standard is serving only as a proxy for a far broader and more intricate set of informal social
relationships’ (ibid.). This chapter demarcates the boundaries of the corporate elite on the basis of holding multiple positions in the top 250. The following chapter, however, takes additional social circles of the corporate elite
and inner circle members into consideration. To summarise, in this study

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the corporate elite is represented by the set of all board members of these 250
largest firms, and the inner circle is represented by those members of the corporate elite that sit on the board of at least two of those 250 largest firms:
the interlockers. The inner circle forms a group of people that create a
degree of cohesion among the corporate elite. For each additional board
membership, a director’s importance for the cohesion of the meeting network increases dramatically. Members of the inner circle with more than
three positions have been called big linkers (Fennema 1982). The accumulation of board positions shows that particular directors are much sought
after, and as such, the number of board positions that a person holds is a
sign of prestige within the business community. The big linkers owe their
positions to the reputation they have amongst the corporate elite, and once
they occupy these positions, this in and of itself contributes to their social
standing. This phenomenon is known as preferential attachment and is
shown to be a central element of a wide range of complex networks
(Barabási 2001; Newman 2001).4
The identification of an inner circle within the corporate elite has been
corroborated by a number of subsequent investigations. All throughout the
twentieth century, a group between one and two hundred interlockers have
formed an interconnected network across the boards of the largest corporations in the Netherlands. From the late nineteenth century until the 1970s,
the share of members of the corporate elite that belonged to the inner circle has always been around 25 per cent. It did not decline until the 1970s,
when it dropped to 15 per cent, and then it declined further after the mid1990s: a clear sign of the loosening of the network of interlocking directorates.
Table 3.1 summarises the results of a number of studies on the composition of Dutch corporate boards, including new figures in 1976, 1996 and
2001 based on the datasets discussed in chapter 2. Interpretation of the figures in the table should be undertaken with caution, since the various studies exhibit some variation in the number of firms taken into account.
Nevertheless, there is a remarkable agreement about the relative size of the
group of interlockers who make up part of the entire corporate elite. One of
the reasons is that the interlockers amongst the corporate elite do not tend
to sit exclusively on the boards of larger firms. Table 3.1 gives the relative
size of the inner circle for the top 250, the top 125 and the top 65 corporations for 1976 and 1996. For all three samples, the relative size of the inner
circle is around 14 per cent.
The drop in the relative size of the inner circle during the early 1970s is
to a large extent the result of a concentration in the financial sector. During
the late 1960s, a number of large banks merged, bringing together those corporate boards with many interlocks. The banks that came out of these mergers initially had large boards incorporating many board members of the

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Table 3.1: Corporate Elite and Inner Circle During the Twentieth Century5

Year

1886
1902
1923
1946
1950
1954
1958
1960
1960
1962
1964
1964
1969
1969
1969
1972
1976
1976
1976
1984
1996
1996
1996
2001

Firms in
sample
142
104
201
137
141
135
131
89
67
115
86
67
70
67
86
69
250
125
65
144
250
125
65
250

Size of the
corporate
elite
771
599
1302
848
914
890
847
530
–
753
596
–
608
–
–
646
2223
1325
836
1188
1771
1095
676
1721

Inner
circle
197
134
292
198
222
232
216
146
151
204
160
161
161
158
195
159
317
185
113
203
252
147
93
183

Size of inner
circle relative to
corporate elite
25.6 %
22.4 %
22.4 %
23.3 %
24.3 %
26.1 %
25.5 %
27.5 %
–
27.1 %
26.8 %
–
26.5 %
–
–
24.6 %
14.3 %
14.0 %
13.5 %
17.1 %
14.2 %
13.4 %
13.8 %
10.6 %

(Sources: Author’s data and Helmers et al. 1975; Nobel and Fennema 2004; Schijf 1993;
Stokman, Van der Knoop and Wasseur 1988; Van Beusichem 2004; Van der Knoop 1991)

original banks, but over time, board size was reduced. Therefore, it took
some time after the wave of bank mergers during the 1960s, for the number
of interlocks to decrease (see appendix I). The decrease of the number of
interlockers, however, was not just caused by the merger movement, but
also by a shift in corporate governance. From the early 1970s onward, eversmaller boards are found, while at the same time firms grew larger and larger (see chapter 2). Table 3.1 shows that both the number of corporate directors, and the percentage of interlocking directors decreased after 1976. The

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decrease of the absolute and relative size of the ‘inner circle’ of the corporate elite has been a structural element of the Dutch corporate landscape
since 1972. The remainder of this chapter analyses how this decline has
affected network structures of the corporate elite.

The Small World of the Corporate Elite
The boards of corporations serve as meeting places of the corporate elite. In
the sample of 250 corporations, there are 250 meeting places that can be
interconnected by the interlockers. The basic structure of the network is
thus one of interconnected cliques (the corporate boards). In an effort to
highlight the character of social networks, Watts (Watts 1999a; Watts 1999b)
presents a model of a highly clustered social world, that nevertheless shows
a high degree of connectedness and small average distance.6 Due to the
small average distance such a world is a small world, in analogy with the
‘small world phenomenon’: to meet a total stranger and find out that you
have a friend in common. This small world network, first investigated by
Milgram during the late 1960s (Milgram 1967), is in fact the basic structure
of many social realities.
Watts starts his model with the so-called caveman network, a network of
groups of people that are isolated from each other (see left drawing in figure 3.1). The next step he takes is to make the network connected by taking
one tie out of every group, and rewiring these ties between the groups. The
result, the connected caveman graph, is a fully connected, yet highly clustered network (see middle drawing in figure 3.1).

Figure 3.1: From Caveman Graph to Interlocked Caveman Graph

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The largest contribution of Watts’ model lies in his next step, when he starts
to randomly rewire ties between clusters in the connected caveman graph
(not shown in figure 3.1). He shows that only a few shortcuts between the
clusters (caves) makes the average distance between any two clusters drop
significantly. If, for example, the top and bottom clusters in the connected
caveman graph (figure 3.1) would have a direct connection, the average distance between any of the points in the network would be significantly
reduced. Yet since only one tie is being rewired, the clustering in the network remains fairly stable. Furthermore, in Watts’ model, the number of
connections to any point is also stable. Watts shows that a rewiring of just
one per cent of the ties decreased the average distance by over 80 per cent.
The outcome of this exercise is a network with a high degree of cohesion
and clustering, and yet a short average distance.
In the model of the connected caveman graph, the notion of the strength
of weak ties is central. Strong ties are relations within a cluster, whereas
weak ties are those in between the clusters, connecting otherwise disconnected groups. Initially developed by Granovetter (1973), the strength of
weak ties argument postulates that weak ties are what count the most.
Weak ties are of great importance for the connectedness of the network,
because these weak ties connect cohesive groups of strong ties. In the connected caveman graph, the ties that connect the clusters are weak ties.
The stylised small world model is very informative for the analysis of the
meeting network of the corporate directors, but another adaptation needs
to be made before it fits the properties of the network of interlocking directorates. In moving from the caveman graph to the connected caveman
graph, Watts takes one line out of the fully connected sub-group (the ‘caves’)
and rewires this relationship to connect to the next ‘cave’. For the meeting
network of corporate directors, this procedure makes no sense. Directors are
always members of at least one fully connected group of persons: the board.
The connections between the boards are not established by rewiring one tie,
but by a director who is a member of multiple groups. The right-hand drawing in figure 3.1 shows the structure of such an interlocked cavemen graph.
Note that the interlockers (members of the inner circle) have considerably
more relationships than single directors. The interlockers are the gatekeepers in the corporate network. They create the connectedness of the corporate
elite.
The importance of the small world theory for the investigation of the corporate elite lies in the insight that relatively small mean distances between
corporate directors do not necessarily mean a highly integrated inner circle.
Just a few shortcuts can result in a small average distance. Average distance
does not, however, tell us much about the density of the network amongst
the inner circle. The caveman graphs are fully connected, and therefore
dense sub-groups. In the connected caveman graph, a few interlockers can

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connect the corporate elite, without significantly diminishing the density of
the clusters. As a result, although small world networks are fully connected,
they are only weakly connected. The removal of a few brokers immediately
results in a loss of connectedness within the corporate elite. The smaller the
number of interlockers who connect the network, the stronger the broker
position of the remaining interlockers. According to Burt (Burt 1992; Burt
2004), broker positions within a network create entrepreneurial opportunities for members of the inner circle.
Table 3.2 shows how the changes in corporate networks have affected the
meeting network. The size of the corporate elite decreased from 2,222 to
1,771 persons between 1976 and 1996, which is a result of the declining size
of the corporate boards during these twenty years. It caused a dramatic
decline in the total number of meetings (the lines in the network) from
21,074 to 11,354, a decline of 46 per cent. Between 1996 and 2001, the size of
the corporate elite decreased only slightly and hence there is only a slight
decline in the number of meetings: from 11,354 to 9,810.

Table 3.2: Properties of Meeting Networks
1976

1996

2001

Size of corporate elite
2,222
Total number of meetings
21,074
Number of directors in the dominant component
1,572
Percentage of corporate elite in
the dominant component
71
Percentage of meetings in the dominant component
71

1,771
11,354
1,437

1,721
9,810
1,119

81
90

65
80

As was the case with the network of firms, most members of the corporate
elite are connected with each other through their meetings at corporate
boards in one dominant component (In figure 3.1, the caveman graph consists out of six components, while the connected caveman graph forms one
component). The bottom row of table 3.2 shows that the lion’s share of all
the meetings amongst the corporate elite takes place within this dominant
component. Although the total number of meetings declined drastically
between 1976 and 1996, a higher percentage of these meetings took place
within the dominant component in 1996. In 1996, a little over 10 per cent of
the meetings took place in isolation from the dominant component, compared to almost 30 per cent twenty years earlier. The same goes for the number of directors that are part of this dominant communication network. By
the mid-1990s, more than 80 per cent of the corporate elite was part of the

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dominant component, compared to more than 70 per cent in the mid-1970s.
Thus the corporate elite as a whole has become more connected by the mid1990s, even though the number of meetings has declined by nearly 50 per
cent. In 1996, the corporate elite is smaller and there are fewer meetings,
but these changes do not affect the connectedness of the network. In a way,
the interlockers have even been able to increase the communication efficiency of the corporate elite between 1976 and 1996. It seems as if the loss of
social cohesion due to the disappearance of the aristocracy from the inner
circle of the corporate elite has initially been compensated for by a higher
connectedness of the corporate elite’s meeting network.
Between 1996 and 2001, however, the percentage of interlockers declined
further and the meeting network became more fragmented. Thus, even
though the 11 per cent of the corporate elite that sits on more than one
board (see table 3.1) could theoretically have maintained the connectedness
of the network, in actual fact the connectedness of the network declined: by
2001, 35 per cent of the corporate elite was not connected in the dominant
component. Over 20 per cent of all meetings took place outside the main
component, in boards of isolated firms. The last years of the twentieth century seem crucial in the ongoing process of fragmentation of the corporate
elite’s meeting network. The network of interlocking directorates still binds
the corporate elite together, but its integrating function is steadily disappearing. This loss of cohesion can also be seen in the average distance
between any two directors in the dominant component. By 2001, the average
distance between two directors in the dominant component was 3.9 as
opposed to 3.6 in the mid-1970s.7 The corporate elite is thus smaller in size,
less connected, and also less cohesive.8

Closure and Brokerage
The old boys network has been criticized for being a closed status group, and
in many ways, it was. Social closure exists when the persons to whom one is
related are also related to each other, and it has a number of well-known disadvantages and problems. An abundance of strong ties in combination with
a lack of ties to other groups can lead to problems of groupthink or tunnel
vision. Decision making is based on stereotypical ideas, and an overall lack
of criticism amongst members of the group who fall victim to groupthink is
evident (Hart 1990; Janis 1972). Critics commonly point out the adverse
effects of social closure as an argument against multiple directorships. ‘You
always see the same faces at the table,’ says the designer of the Dutch
Corporate Governance Code, M. Tabaksblat. ‘So many cross bonds in such a
small club is not a good thing.’9 Tabaksblat therefore suggested a limit on
the number of positions a director could take on. The reason for doing so,
he explains, is first and foremost to encourage firms to search for new direc-

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tors outside the old boys network (Commissie Corporate Governance 2003).
While there is no denying the risks and problems attached to social closure, there is also a positive side to a relatively closed network that is often
overlooked. The positive potential of social closure manifests itself at the
level of the group. James Coleman has argued that a dense social network,
what he terms closure, is fundamental for the creation of norms of behaviour (Coleman 1988). Social closure makes relational properties exceed the
level of specific relationships, thereby becoming a network property. A wellknown example is trust. Trust can be the property of a relationship between
two people, but it can only take the form of generalised trust in a situation
of closure. Closure brings about generalised trust because the people with
whom one is connected know each other and can combine to provide collective sanctions for deviant behaviour, or rewards in case of ‘good’ behaviour.
In Coleman’s own wording:
Closure of the social structure is important not only for the existence
of effective norms but also for another form of social capital: the trustworthiness of social structures that allows the proliferation of obligations and expectations. Yet, in a structure without closure, it can be
effectively sanctioned, if at all, only by the person to whom the obligation is owed. Reputation cannot arise in an open structure, and collective sanctions that would ensure trustworthiness cannot be applied.
Thus, we may say that closure creates trustworthiness in a social structure (Coleman 1988, p. 107-108).
Closure creates communities and transforms networks from mere communication structures to structures of social control. Generalised trust is a core
ingredient for the proper working of democratic systems (Putnam 1993;
Putnam 2000); trust and (living up to) obligations and expectations are crucial elements in business as well.
When norms of good corporate governance prevail in the corporate elite,
it will be difficult for any individual member to defy these norms (see for
instance Westphal and Khanna 2003). Such positive groupthink can contribute to socially responsible behaviour by the corporate elite members,
and it can prevent undesired behaviour. In principle, the effects of social closure can work in any social network, but shared background and social likeness contribute strongly to its effect. The old boys network has indeed served
as a fountainhead of trust in corporate governance. As Useem has concluded for the USA, ‘self policing has become a particularly important form of
social control within the large corporate communities’ (Useem 1984, p. 141).
If the network of interlocking directorates is no longer carried by a relatively fixed number of families and the meeting network falls apart as well, this
may lead to insecurity about the social norms in corporate governance.

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Network closure can be measured with the clustering coefficient.
Clustering measures the extent to which the contacts of a director are connected to each other. The clustering coefficient reaches one if the director’s
contacts are interconnected (in which case, he is part of a clique). The average of all the individual clustering scores gives insight into social closure at
the group level. A reduction of closure amongst interlockers in the network
signals a shift from a network that sustains community influence (through
closure), towards a network that sustains individual power and entrepreneurial opportunities (through brokerage).
As a whole, the meeting network of the corporate elite is highly clustered,
as the interlocked caveman graph in figure 3.1 illustrates. Everybody is part
of one or more fully connected groups (the boards). For most corporate directors, the clustering coefficient will be one. Indeed, throughout the 25-year
period under research, the average clustering coefficient of directors in the
dominant component hovers around 0.9, and shows a slight increase over
the years.10 Conyon and Muldoon (Forthcoming) give comparable figures for
the USA, the UK and Germany in early 2003. They show that network clustering in Germany diverges from expected values the most (given a random
distribution of lines in the network), while the clustering in the USA network matches a random distribution.11 The German network does have the
highest amount of clustering in its corporate network (0.926), lending support to the hypothesis that Germany’s variety of capitalism is more based on
inter-firm networks than that of the USA (0.871).12
Interlockers and their meetings can be singled out from the entire meeting network. Unlike the complete meeting network of the corporate elite,
this sub-network is not a priori highly clustered. As brokers of the network,
interlockers are about one handshake closer to each other than non-interlocking members of the corporate elite. Yet, the average distances are
increasing. In the mid-1970s, any piece of information had to travel 2.6 handshakes on average to reach any other interlocker, and in 2001 this went up
to 2.8. The clustering coefficient of the meeting network of the inner circle
decreased from an average of 0.58 in the mid-1970s to 0.49 by 2001. But how
are we to tell whether an average clustering of 0.49 in 2001 is high or low?
One solution is to compare the findings with a benchmark of random distribution of the lines for the corporate elite. At all three points in time, the levels of social closure are much higher than expected. In 1976, the clustering
of the inner circle is 9.3 times higher than expected on the basis of a random distribution of the meetings over the interlockers. Twenty years later,
this number is 10.4 times, and in 2001, 8.6 times the expected value based
on a random distribution. Between 1976 and 1996, the inner circle lost many
of its meetings, but still remained connected. Therefore, the actual clustering in 1996 defers more from the expected value than it does in 1976. The
decrease in connectedness means that the gap between expected values of

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clustering and actual findings closes by 2001. With the benefit of hindsight,
the network configuration in 1996 was exceptional in that it provided a
remarkably high level of connectedness. But over time, the inner circle of
the corporate elite has not only decreased in size; it began losing its social
cohesion as well.
Conversely, the opposite of social closure is brokerage. In a network with
high levels of closure, ones contacts are related with each other as well, leaving few possibilities to broker between contacts. When, on the contrary,
someone is the only connection between people, he brokers the network (or,
as Burt would say, she spans a structural hole. See Burt 1992). In the righthand graph of figure 3.1, for instance, the interlockers broker between the
boards. The loss of social closure within the network of interlockers means
that interlockers increasingly become brokers.
To measure this tendency, the concept of ‘betweenness centrality’ will be
used. The idea that underlies betweenness is that a director is central when
he is part of the (shortest) connection between two other directors. An actor
with high betweenness centrality is the ‘actor in the middle’, and such a
bridging position increases the personal influence of the director
(Wasserman and Faust 1994, p. 188-189). Table 3.3 shows the distribution of
the (normalised) betweenness. 13

Table 3.3: Distribution of Betweenness Centrality in the Dominant Component of
the Inner Circle
Betweenness
Very Low

Very High

<= 0.1
0.1 <…< 0.5
0.5 <=…< 1.0
1.0 <=…< 1.5
1.5 <=…< 2.0
>= 2.0
Totals

1976

1996

2001

89
74
51
28
12
19

53
72
78
16
12
20

27
38
46
31
17
24

273

251

183

Δ76 - 96 Δ96 - 01
–36
–2
27
–12
0
1

–26
–34
–32
15
5
4

In 1976, more than 32 per cent of the inner circle had a very low betweenness
(smaller or equal to 0.1). By the mid-1990s, only 21 per cent had such a low
betweenness, and this figure continued to drop to only 14.75 per cent by 2001.
In 2001, over 22 per cent of the inner circle scored high on betweenness (larger than 1.5), compared to about 12 per cent in 1976 and 1996. The meeting network of the inner circle has steadily become the realm of brokers.

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Multiple Meetings
Some parts of the meeting network of the inner circle are more important
than others, and this section turns to this core of the inner circle. The core
can be defined by looking at specific ties, as well as by looking at specific
directors. This section considers the first approach by investigating the multiple meetings in the interpersonal meeting network as a special kind of
relationship. Most of the corporate directors sit on one board only, and just
meet their direct colleagues. The interlockers amongst the corporate elite,
on the contrary, are members of multiple boards, and broker between different parts of the network. This meeting network of the interlockers has been
analysed above. Most interlockers only meet once, in one specific board. In
these cases, the relationship between the directors is only based on their
shared membership of one corporate board. However, when a director comes
to meet a fellow board member in several boards, that which defines their
tie is no longer one particular firm. The underlying meaning of a tie
between two people who meet at several boards is that they are both key
members of the corporate elite. These ‘multiple meetings’ constitute a network much different from ‘ordinary’ board interlocks; they are foundational in creating a group-wide identity.
Figure 3.2: Multiple Meetings in the Inner Circle, Main Component in 1976

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Figure 3.3: Multiple Meetings in the Inner Circle, Main Components in 1996

Figure 3.4: Multiple Meetings in the Inner Circle, Main Components in 2001

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Figures 3.2 through 3.4 show a graphical representation of multiple meetings. During the mid-1970s, quite an extensive network of multiple contacts
existed that served as the backbone of the corporate elite network. Figure 3.2
reveals a number of pockets and regions that are connected. A few people
occupy broker positions with their star-configured network, and a number
of directors in the centre of the network meet each other more than twice.
Comparing the three networks, we see that the core of the corporate elite
network, vividly present in the mid-1970s, has become much thinner by the
last decades of the twentieth century. By the mid-1990s, there were still a
number of multiple meetings, but only one person, R. Hazelhoff (former
chief executive officer of ABN AMRO), connects the network. Likewise, there
is hardly any closure in the network of multiple meetings. By 2001, social
closure amongst sub-networks has vanished all together, and only a few people are left in the backbone of the corporate elite. Again, one person binds
together a number of strings of connections, and without this central broker the network would be a collection of small strings. Interestingly enough,
there is hardly any robustness in the configuration and composition of the
core network over time. Indeed, the disintegration of the network had devastating effects on social cohesion. While the connectedness of the total
meeting network remained stable until 1996, the network of multiple meetings did not. The cohesion of the core network had already suffered serious
blows prior to 1996.

Big Linkers
Big linkers (those with more than three positions), are a special group of
directors. They play a central role in connecting the corporate boards and
the corporate elite. Big linkers often become spokesman of the corporate
elite. Historical research has demonstrated that these big linkers are indeed
decisive in promoting new ideas on political and economic issues, new
answers to urgent problems, and ways out of economic problems which confront several, if not all corporations (Baudet and Fennema 1983; Nobel and
Fennema 2004). So far, the findings show that the corporate elite lost much
of its density and, eventually, much of its connectedness as well. The question now is whether the big linkers as a core group in the corporate elite also
suffered from a loss of position and of cohesion. Table 3.4 shows that the big
linkers maintain their position over time. Their contribution to the board
overlap network only decreases slowly. By 1996, they still accounted for 59
per cent of all ties, and by 2001 this contribution dropped only slightly to
53.5 per cent. Yet while big linkers still account for more than half of all the
ties, their numbers have been in decline since the mid-1990s. Appendix IV
contains a list of all big linkers in 1976, 1996 and 2001.

BIG LINKERS

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Table 3.4: Big Linkers

Number of big linkers
Percentage of board interlocks
Number of positions
Number of executive positions

1976

1996

2001

68
67.5

47
58.9

32
53.5

344
35

230
22

146
2

Most of the positions occupied by big linkers are on supervisory boards.
Therefore, their contribution lies first and foremost in business communication rather than in direct control. Their position in many different firms
provides them with a unique position to monitor and relay information
from many different sources. And as ‘grand old men’, their prestige in the
business world is such that they may well represent large parts of the business community (Fennema 1982, p. 95). Therefore, it is not surprising to see
that the two efforts to construct guidelines on the issue of corporate governance were both under the leadership of big linkers. J.F.M. Peters, chairman
of the Peters Committee, which published the first ‘40 recommendations’
on corporate governance in 1997, held six positions in the 1996 network.
Similarly, the chairman of the 2003 committee on corporate governance, M.
Tabaksblat, sat on the boards of four of the largest corporations in the
Netherlands.
Furthermore, table 3.4 shows that during the mid-1970s and mid-1990s,
about 50 per cent of the big linkers had an executive position. By 2001, only
two of the big linkers still held an executive position. In 2001, these two were
P. Elverding, CEO of DSM, and K. Storm, CEO of Aegon. This observation is in
line with the findings of the previous chapters: companies refrain from
executive interlocks with other firms. This strategy has important repercussions for the group of big linkers. Nearly all of them are exclusively outside
directors. Many of these network specialists are now former CEOs of the
largest Dutch firms. They may still have the business community’s norms
and values, but their position is clearly one of authority rather than one of
power. They function as éminence grise in business, and with their large supply of prestige and authority they can – especially because they do not
pledge allegiance to one specific firm – create consensus and cohesion within the business community. They create social capital within the business
community, a sort of capital which business needs as much as it needs
financial capital. The network drawings in figures 3.5 through 3.7 show the
dismantlement of this network of social capitalists. A total of 16 directors
were big linkers in both 1996 and 2001, which indicates some continuity in

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Figure 3.5: Meetings of Big Linkers, 1976
C.L.W. Fock

H.J.E. van Beuningen
J. van Dellen
J. Bartels

E.L. Kramer

R. von Weizsacker

M.I. Toth
A. de Jong
M.C. de Lange
P.C. van der Lugt
Suryono Sastrohadikusumo
G.L. Oostergo

H.J.W. Brouwer

U.P. Proost

J. Rosenberg

J.A. Bakker

J. Brinkers

H. Langman
A.W. Hansen

LIC.G.J.J.GN. Kreusch

G.C. Vreman

F.PH.C. van de Voort
H. Hoog

R. Schuppisser

H.N. van der Vlugt
J.W. Loonen

E.K. den Bakker

G.H.M. Juls

CH. de Roy van Zuydewijn

W. Jahn

T. Boering
J.P. Matthijsse

J.J.TH. Wanders
F.J.P. van Dooren

B.G.OBE. Carfoot

A.W.G. de Wilde

G. Orechkoff
G.E.G. van der Kruijs

G. Monkhorst

B. Wilton

TH.W. Vogelaar

B.G.M. Stoopman

C.F. Scheffer

M.A.R. van der Leeuw-Wentges
TH. Brans

A.H. Heineken

TH.J.J. Jansen op de Haar

P.A. Blaisse

E.M. Mastenbroek

G.J.TH. Kleve

F. Hoogendijk

P.J. Jenneskens

B.W. Biesheuvel

E.H. van der Beugel

F.O.J. Sickinghe
H. Wada

S.C. Bakkenist

N.J.H. van der Meer
G. de Bruin

W.C. Bus

D. van Ruller
H.H. van der Velden
H.A. de Vries

A.F.A. Fluitsma

J.F. Kretzers

O.K. Poulsen

C.C. Pocock
L. Vaubel

Figure 3.6: Meetings of Big Linkers, 1996
G.M.L. van Loon

F.H.M. Grapperhaus
M. Ververs

W.H. Brouwer

A.P.J.M.M. van der Stee
K.J. Storm

Th.M. Scholten
J.V.H. Pennings

J.C.M. Hovers

J.F.M. Peters

J.J. van Rijn

L.J.M. Berndsen
A.J. Reeders

O.H.A. van Royen
A.H. Land
P.J. Kalff

H.B. van Liemt

J.D. Timmer
F.H. Fentener van Vlissingen

J.B.Th. Manschot

N.J. Westdijk
G.J. Swalef
R. Hazelhoff

W. Overmars
G. van Schaik

P. Bouw

A.A. Loudon

A.W. Veenman

J. Groenendijk
H. de Ruiter

P.A.W. Roef
W. Vlasblom

F.J. de Wit
M. Kuilman

N. Kroes
J.M.H. van Engelshoven
F.A. Maljers
A. Maas

R.J. Nelissen

N.G. Ketting

H.P.H. Crijns
P.J. van Dun

A.H.J. Risseeuw

P.C. van den Hoek
H. Langman

BIG LINKERS

J.D.R.A. Bax
M.W. Dekker

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Figure 3.7: Meetings of Big Linkers, 2001
Fentener van Vlissingen Ir. F.H.
Schaik Drs. G. van
Berghe Prof. Dr. L.A.A. van den

Pennings Dr. J.V.H.
Brentjens Drs. J.L.

Veen Ir. M.C. van

Loudon Jhr. Mr. A.A.
Kremers Dr. J.
Eustace D.G.

Liemt Mr. H.B. van

Elverding Mr. P.A.F.W.

Ververs Ir. M.

Bouw Prof. Drs. P.
Duyne Drs. J.F. van

Jacobs Drs. A.G.

Storm Drs. K.J.
Ruiter Ir. H. de

Risseeuw Drs. A.H.J.
Kalff Mr. P.J.

Zwartendijk R.

Hoek Mr. P.C. van den
Hessels Mr. J.M.

Hazelhoff Mr. R.

Boonstra C.

Land A.H.

Smits Drs. A.N.A.M.

Kroes Drs. N.
Brakel Drs. C.J.

Langman Mr. Drs. H.

Schröder Dr. J.M.
Dekker Drs. M.W.

Karnebeek Jhr. Mr. H.A. van

the composition of this core of the inner circle (see appendix IV). However,
social closure amongst the big linkers shows a drastic decline. During the
mid-1970s, social closure (as measured by the clustering coefficient) was still
0.489 amongst the relatively large group of big linkers, but by 2001, closure
decreased to only 0.288.14 With the retreat of the executives from the centre
of the inner circle, almost all big linkers are now network specialists. Their
– still significant – contribution to the meeting network of the corporate
elite must be seen from a corporate elite perspective, rather than a perspective of business alliances, because they are no longer officers in the firms.
However, they are confronted with a social network that has lost closure,
thereby creating ample opportunity for brokers to exploit their positions in
the network.

Conclusion
The Dutch corporate elite changed drastically during the last three decades.
The old boys network, as it once existed, is gone. Aristocrats hardly play a
role anymore in the governance of corporations, and the corporate elite is
no longer a homogeneous status group in society. At the same time, the
meeting networks of interlocking directors (the inner circle) have become
less connected and thinner. Over the course of time, the backbone of multiple meetings as well as the network of big linkers declined and left the net-

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work without a strong core. At the beginning of the twenty-first century,
there is still a meeting network through board overlap, but it has lost much
of its function as a structure of social closure. Corporate board members
have become individual power brokers rather than of members of the collective. The meeting network ceased to be a viable coordinating system of the
corporate elite. During the mid-1970s, one could still speak of a business
community. There was a cohesive and strongly connected social network of
inner circle members of the corporate elite. By 2001, all that is left is a loose
and fragmented meeting network that can only function as a communication device.
Social capital at the community level has made way for individual leverage through brokerage in sparse networks. By 2001, the network is not wellequipped to generate trust, and collective action becomes more and more
difficult to organise. Perhaps it is no coincidence that these developments
coincide with a crisis in the governance of a number of high profile corporations during the past years. And while the social network is disintegrating,
individual directors are able to seize increasing portions of the corporate
profits.
Over the years, the corporate elite has become smaller. Thus, fewer people
govern the largest 250 corporations in the Netherlands. At the same time,
the size of the corporation has increased tremendously, due to the concentration of business through mergers and acquisitions. As a result, those who
still occupy executive board seats have control over larger corporations. The
corporate elite has become smaller and is less cohesive, while at the same
time the power base of individual directors has grown tremendously. All
together, the corporate elite transformed from a closed and closely-knit status group, to a socio-economic class in society which maintains a professional meeting network. The inner circle seems to be less equipped to coordinate
economic action, as well as to safeguard and defend their elite position in
society.
These conclusions raise a number of subsequent questions. First and foremost, the question arises whether the corporate elite continue to meet, but
in non-corporate domains rather than in the boardrooms. The next chapter
addresses this issue. A second question concerns the normative effects of the
disembeddedness of both the firms and the corporate elite as they have been
portrayed so far. While the changes in structure closely fit the expectations
of decreased embeddedness, one would also expect that the changing network structures had a substantial influence on the way in which companies
are governed. This is the topic of chapter 5.

CONCLUSION

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4

The Corporate Elite’s Informal Networks

Introduction
The foregoing chapter investigated the interpersonal network of the directors as they are connected by their common board memberships. Following
the inter-firm analysis of chapter 2, this interpersonal perspective showed
how the changes in the configuration of the network of interlocking directorates severely hampered the cohesion of the corporate elite. The upperclass distinctiveness of the corporate elite had been waning ever since the
1960s, and now the meeting network in corporate boards is also in decline.
However, the cohesion and interconnectedness of the corporate elite is not
brought about by shared corporate board membership alone. The corporate
elite meet in many other places, some more institutionalised and formal
than others. The cohesiveness of the corporate elite is strengthened by a
multitude of relationships such as family and friendship ties, informal
interactions such as parties, social events, dinner clubs and the like, as well
as membership in numerous non-corporate boards.
According to Domhoff, there is more to the elite than merely common
interests and institutionalised forums (Domhoff 1975a; Domhoff 1975b). He
claims that the informal social bonding that takes place in private settings,
such as fraternities, business clubs, elite residential areas and holiday
resorts, that makes the corporate elite cohesive. As Domhoff writes,
it is not enough to say that members of the upper class are bankers,
businessmen, and lawyers with a common interest in profit maximization and tax avoidance who meet together at the Council on Foreign
Relations, the Committee for Economic Development, and other policy-planning organizations. We must add that they are Bohemians,
Rancheros, and Roundup Riders [three elite holiday venues he investigated] (Domhoff 1975a, p. 96).
Thus, following Domhoff, we should not limit our focus to institutionalised
organisations alone, even though these play an important role in the
Dutch network. Beyond the formal (interest) organisations there are a myri-

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ad of social relationships that constitute a largely unknown elite social network.
This chapter focuses on these informal meeting networks, and asks how
the corporate elite uses these informal networks, and whether a business
community remains within the informal realm. The dinners and the clubs,
the cocktail parties and receptions, the skybox and tennis tournaments are
a constituting part of the corporate elite and, therefore, an element of the
corporate governance network. In order to reveal this somewhat concealed
element of the workings of the Dutch business system, a series of interviews
with corporate board members was conducted.1 On the basis of this material, it is possible to analyse informal social networks of the corporate elite,
and assess whether the disorganisation of the board interlock network has
had repercussions for the informal networks. Chapter 1 argued that the
legal framework is the outcome of a political compromise on how an economy should be organised. The legal framework guides and systematises economic activities. But so do the structural (institutional) ties between economic actors, as well as the specific socio-cultural character of the corporate
elite. Social control and social exclusion (as punishment) play an important
role amongst the corporate elite (Westphal and Khanna 2003). Moral standards and norms of appropriate behaviour are ‘policed’ within social
groups. Social networks can play an important part in upholding high moral
standards, contributing to the well being of the economic system.
At the same time, social networks that are too tight can produce adverse
effects. Collusion does take place, and a low moral standard amongst the
corporate elite will contribute to malevolent practices. Firms do negotiate
cartels and anti-competition agreements (see discussion in chapter 1). But
an emphasis on the negative implications of relationships obscures the fact
that social relations are an indispensable ingredient for any market economy. Social relations and social capital can work as a lubricant for economic
activities, advancing business to higher levels of trust, which, in turn, facilitate cooperation and investments. Furthermore, in the social interaction
amongst the corporate elite, the moral framework is translated from
abstract ideas and values to rules and norms of appropriate behaviour.
Social relations are omnipresent in any marketplace, and part and parcel of
the working of any economy. Yet, very little is known about the social relationships amongst the corporate elite.
This chapter is organised as follows. The next section starts with an introduction of the interviews that are used as main empirical material for this
and the subsequent chapter. The following section contains an elaboration
of the concept of community, and investigates in which way a community
differs from a social network. After that, some common meeting places of
the corporate elite are introduced. The chapter continues with an analysis
of the role of informal social networks throughout the careers of the corpo-

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rate directors, starting at the formative years at the universities. The subsequent section discusses the importance of having a good position in the
Dutch corporate elite network when, eventually, some do indeed reach the
board of the corporation. The corporate elite is very well aware of the importance of their social capital, and its fragile nature, which the next section
elaborates upon. A number of informal dinner and debating clubs that
cement together parts of the corporate elite are discussed, as well as some
important larger scale meetings. Finally, before summarising and concluding this chapter, the question is raised whether one can still speak of a corporate community.

Interviewing the Corporate Elite
In general, social scientists seem to have more interest in the underprivileged than in the privileged, and there is an overall scarcity in sociological
studies on elites (for the Netherlands, see Fennema and Schijf 1984;
Fennema and Schijf 2004). Recent interview material that exists for the
Netherlands deals with outside directors (commissarissen) only. In line with
current popular ideas and conceptions on corporate governance, the
authors’ aim is to distil best practices and generate shortlists for success (see
for instance Bakker 2002; Keegstra 2003; Van Maanen 1999). Other studies
are of limited help in understanding the changes that took place during the
late 1990s (such as Useem 1984; Useem 1996; and for the Netherlands, Van
der Knoop 1991).2 The lack of elite research is sometimes justified with an –
a priori – assumption that it is very difficult to gain access to elite members.
However, for the current research, this has proved not to be the case.3
With interviews, particularly with a group as well educated and communicative as the corporate elite, there is always the potential problem of
obtaining ‘desirable’ answers. As one director frankly responded to a question: ‘Just let me know if this is the right answer’. Fortunately, the interviewees were not well prepared for an interview about the role and importance
of social relations in corporate governance, which reduced the amount of
automatic and ‘desirable’ answers. The extracts of the interviewees are
anonymous, in order to make the interviewees more open and lively. The
interviews provide insight into the corporate elite members’ perceptions of
change. After all, their perceptions of what has happened are the building
blocks of their own social reality. Semi-structured interviews are better suited for this purpose than a survey. First, the rejection rate of a survey among
this research population is expected to be high (Beekenkamp 2002).4
Furthermore, a questionnaire severely restricts the quality and quantity of
information one can gather. An open-ended and semi-structured interview
design made it possible to extract rich descriptions from the directors.
All interviewees were directors from the inner circle: they occupied mul-

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tiple board positions in 2001, and a total of 24 executive and non-executive
directors participated. The duration of the interviews varied from 45 to 90
minutes. With some exceptions, interviews were recorded, and the transcript of the interviews served as research material. In a few cases it was not
possible to record the interview, so the notes of the interviews were used as
research material. The extracts used in this and subsequent chapters are verbatim quotations. The quotes as they appear in the text are the author’s
translation.
A potential problem with interview-based research of the corporate elite
is a bias in the selection because the researcher tends to speak with wellknown, high-profile directors. The CEOs of the main corporations and the
grand old men from Dutch business are usually the ones who are invited for
interviews. However, the aim here was to come up with insights on the
entire inner circle. Fortunately, with the list of the inner circle members
readily available, it was possible to reduce selection bias by constructing a
sample. The inner circle was divided into four groups, based on the set of
positions board members had in 2001. This positional sampling means that
the interviewees occupy different positions in the network. The four groups
were 1) directors with two supervisory positions, 2) directors with more than
two supervisory positions, 3) executives with one or two supervisory positions and 4) executives with multiple supervisory positions. Directors were
randomly selected from these four groups, such that the final group of
interviewees reflects the population in terms of number and type of positions. In this way, it is ensured that both highly central and embedded directors, and sparsely embedded directors participated in the interviews (see
table 4.1).5 As a result of the selection method, the group of interviewees is
heterogeneous, in terms of network position, company profile and professional background.

Table 4.1: Stratified Sample of Corporate Directors
Inter- Rejecviewees tions
Outside interlocker
Central outside interlocker
Executive interlocker

Two supervisory positions
Three or more supervisory positions
Executive and one or two
supervisory positions
Central executive interlocker Executive and more than
two supervisory positions
Total

104

9
3

5
5

9

0

2
236

3
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With only two female interviewees in the sample, women are still overrepresented (8 per cent in sample vs. 4.4 per cent amongst all interlockers).
Likewise, foreign directors are still a rarity amongst the interlockers. Both
interviewees with a foreign nationality had a long career in Dutch corporations. The mean age of the interviewed directors was 61 years old. This is
close to the average age of the entire group of board members with multiple
directorships: 61.6 years. All interviews were conducted in Dutch, and took
place during the second half of 2004. The directors were randomly selected
for the interviews, yet it turned out that 15 of them meet at least one of the
other interviewees at board meetings. Furthermore, 21 of the interviewees
are indirectly connected: they both meet a third person in another board.
Appendix V shows a graphical representation of the network ties between
the interviewees.
If we look at the rejections (see table 4.1), two observations can be made.
First of all, none of the executive directors with one or two supervisory positions (group 3) declined the request for an interview. Mostly, these directors
were CEOs. Apparently, executive directors want to show that good corporate governance is important to them. In addition, people who are at the
apex of corporate power can organise their own agenda relatively easily. As
long as one does not demand an appointment tomorrow, it is quite easy for
them to schedule some time in their agenda for an interview. On the other
hand, the group most difficult to get in touch with are those with many
supervisory positions. This group is slightly underrepresented in the final
selection. As we saw in the previous chapter, these big linkers play an important role in the creation of the corporate network. Yet they are not eager to
give an interview. The reluctance of big linkers to participate suggests that
network specialists restrict their attention and energy to fellow elite members. They have no need to discuss these matters with outsiders. In fact,
interviews might even hamper their low-profile position that enables them
to broker communication in the corporate elite (see chapter 3). Together, the
interviews are very helpful for this study on the corporate elite and corporate governance. They serve as prime research material for most of the
remainder of this chapter, as well as for the subsequent chapter.

Corporate Elite and the Business Community
The paradox of the organisation of the corporate elite is that what is rational from the perspective of the individual firm, is often irrational from the
perspective of the interests of business as a whole (Vogel, quoted in Useem
1984). It is difficult – if not impossible – for those amongst the corporate
elite who have responsibilities over multiple firms to be guided by the interests of certain individual firms alone.7 And, as we saw in the previous chapter, there is still a core of the corporate elite that sits on the boards of mul-

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tiple firms. At the same time, the corporate elite, as a whole, is losing its
group cohesiveness at the institutional level of board interlocks. Moreover,
the Dutch corporate elite already lost most of its upper-class elements with
the fading away of the old boys network. Useem (1984) finds a similar tendency in the USA, where the traditional upper class has also lost its grip on
corporate governance. If the defining element of the corporate elite is no
longer a social network of established wealthy families of equal social status,
what then is the organising principle of the corporate elite in modern
times?
When loyalties to the corporate elite are taken to be faint in comparison
to one’s drive to advance the interests of their own firm, the organising principle is corporate (Useem 1984). Such a corporate elite consists of ideal directors from a shareholder point of view, as they are only concerned with the
well-being of their firm as expressed in the value of its shares. Status is not
determined by aristocratic lineage, but by the director’s position in the firm
and the firm’s position in the economy. However, even without upper-class
distinctiveness, the current corporate elite might have a sense of we-ness. It
can define its group borders by socio-economic status and position in the
corporate hierarchy of its members. Such social embeddedness of the corporate elite makes them prone to promote group-wide and business interests
that go beyond the interests of particular firms. This leads us to the following question: is the corporate elite still a national business community?
The term community is as appealing as it is confusing. Many have criticized the term for being all-encompassing and vague (see for instance Brint
2001; Stacey 1969), and the moral burden of the term community has been
the fruitful foundation of fierce debates between communitarians and liberals. Nevertheless, the term community is appealing because its intuitive
connotation and implication. It suggests a web of social relations, mutual
concern and support, a sense of belonging, and the whole being more than
the sum of its parts. But to avoid confusion, a clear conceptualisation is necessary. Community has two foundational elements: social ties and shared
identity.
First, the building blocks of a community are social relations. These may
be face-to-face meetings, communication via the internet, or joint membership of a group (affiliation networks). Social ties create the structure of the
community. Strong ties connect somebody with people who are also mutually interconnected: friends, family and direct colleagues. Weak ties, however, are ones that connect to new parts of the social network, people one does
not know very well. This is not to say that strong ties are friendships and
weak ties are not. The definition of weak and strong ties tells us nothing
about the emotional quality of the relationships. Strong ties might be with
acquaintances, and weak ties with very good friends. Both strong and weak
ties are crucial to the quality of one’s network. Hence, even in the highest

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echelons, outsiders might be surprised by the openness of some elite circles,
but this is only because the corporate elite is always looking for ‘interesting
chaps’, and weak ties with people from other areas of expertise such as academia, art, government and politics. Furthermore, relationships are not
static. They can change over time. Relationships that were created with a
specific purpose in mind might very well become close friendships, and
weak ties can transform into strong ties.
The second element of a community is a shared identity, a feeling of weness and belonging. Shared norms and values need to be taken into account,
as do rules of appropriate behaviour, as elements of a community. In general, people prefer to interact with similar people (Laumann 1966). ‘Birds of a
feather flock together’, and the like-me principle (principle of homophily)
means that people tend to be entrenched in thick networks of similar others (see McPherson, Smith-Lovin and Cook 2001). Similarity breeds connection, both for the rich and the poor, the powerful and the powerless alike,
thus it may come as no surprise to learn that the corporate elite prefers to
interact within elite ranks.8
The sociological foundation of community as a concept lies in the seminal works of Ferdinand Tönnies, and in particular his 1887 essay
Gemeinschaft und Gesellschaft (Tönnies 1887). Both are a set of social relationships between people, but the Gemeinschaft resembles more traditional,
small, localized communities (such as villages or tribes), while Gesellschaft is
Tönnies ideal-type of ‘modern’ complex society. In a Gemeinschaft social
bonds are personal and direct, there are strongly shared beliefs, values, and
emotional bonds, while in Gesellschaft social relations are impersonal, instrumental and narrow. Brint (2001) summarises the contrasting associations of
these concepts as follows:
Gemeinschaft is associated with common beliefs, Gesellschaft with dissimilar beliefs; Gemeinschaft with concentrated ties and frequent interaction, Gesellschaft with dispersed ties and infrequent interaction;
Gemeinschaft with small numbers of people, Gesellschaft with large numbers of people; Gemeinschaft with familiarity, Gesellschaft with rules to
overcome distrust, Gemeinschaft with continuity, Gesellschaft with temporary arrangements; Gemeinschaft with emotional bonds, Gesellschaft
with regulated competition (Brint 2001, p2-3).
Informal networks are particularly important as building blocks of a community. Familiarity, trust, similar beliefs and emotional bonds thrive well in
informal settings.
The network of interlocking directorates is a relatively strong, institutionalised and formalised means of elite cohesion, much more than dinner and
debating clubs for instance. However, in between the corporate boards and

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the private meetings lays yet another category of meeting places. First, there
are business and employers’ associations, which also bear certain significance for building cohesion amongst the corporate elite. Second, non-corporate boards also serve as a meeting place for the corporate elite. Both will
receive some attention in this chapter, but the focus remains on informal
relationships. The social networks of the corporate elite do not all of a sudden emerge when certain people reach the top; they are created and maintained all throughout one’s life. Therefore, this chapter explicitly looks at
the role and importance of informal networks throughout the career trajectory of corporate directors.

Business Associations and Non-Corporate Boards
Alongside corporate boards, a number of institutionalised corporate elite
meeting places exist. In particular, two sites deserve attention: business associations, and boards of cultural, charity and public sector organisations. In
the Netherlands (given its corporatist tradition), business associations provide access to political decision-makers and political information. In business associations, politicians and state officials supply information about
emerging political issues, and the corporate elite informs the political elite
about the wishes and interests of business (Rehbein and Skippari 2006).
Business organisations were designed to defend the interests of business and
employers in the associational political system of the Netherlands. They are
part of the institutionalised deliberation between government, labour and
employers, and play an important role in the alignment of ideas, and in putting forward the interests of business (Streeck et al. 2006). And notwithstanding the pressures of internationalisation, Dutch business organisations such as the VNO-NCW and the LTO, ‘still occupy the dominant place in
the national network of lobbying and interest intermediation’ (Visser and
Wilts 2006, p. 42). These interest organisations are strongly oriented towards
the national arena of politics, and did not weaken under the pressures of
ongoing liberalisation (ibid.).
Next to the formal position such organisations have in the political field,
they serve as meeting places for the corporate elite. With over 100 members
in the general board, VNO-NCW provides a rare platform for getting
acquainted with key players in all branches of industry, finance and services. As one director states:
Through these interest organizations you have a great entry to ministers, to politics in general […]. What you see is that the active people in
the networks, yes, those are the best directors, they also get esteem.
Yet, business associations are just the tip of the iceberg of a vast social net-

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work that extends well beyond these interest organisations. For instance,
access to key politicians and civil servants is also secured through the membership of numerous advisory committees. For instance, in 1996, 149 corporate directors were identified as either a member of a governmental advisory board, or as a former member of government. One-third of this group sat
on more than one registered advisory board (up to as much as five separate
governmental advisory bodies). Seventeen of the interlockers were registered as member of such an advisory board.9 Business and employers’ associations play an important role in defending and formulating business interests in the political arena. But the relationships amongst the corporate elite
extend well beyond these rather functional ties.
One step down the ladder of formality in the non-corporate meeting networks of the corporate elite we find the boards of non-profit organisations.
Given their large experience with management and governance, corporate
directors are well sought after to be members of non-profit boards as well.
And with the decline of the network of interlocking directorates, these
meeting places may well gain in importance. A chief financial officer of ING
admits that with the increasing conflicts of interests it becomes very difficult for him to take outside directorships, and that as an alternative, he
chooses to invest some time and meet in the boards of cultural organisations (Duursma and Weeda 2001).
Cultural institutions such as museums and concert halls, but also hospitals, research institutions and – increasingly so – universities have corporate
directors on their board. Certain boards are highly prestigious, such as the
Amsterdam Concertgebouw, the Rijksmuseum and the Rembrandt
Foundation, while others are more traditional, such as the World Wildlife
Fund and the Johanniter Order10 (Van Hezewijk 1986). Membership brings
directors into contact with prominent politicians, businessmen and
bankers. Instead of membership on a governing council or board, one can
sponsor the Concertgebouw instead, and gain access to exclusive, restricted
clubs. ‘Important contributors’ (at least 50,000 euros) become members of
the Johannes Brahms Circle, which includes members such V. Halberstadt,
honorary secretary of the Bilderberg Conferences, A.A. Loudon, a former
CEO of Akzo and former chairman of ABN AMRO, and bankers such as former ABN AMRO CEO P.J. Kalff and former ING executive and chairman of the
Dutch socio-economic council A. Rinnooy Kan. The Gustav Mahler Circle is
reserved for the select few who provide ‘very generous contributions’ (at
least 100,000 Euros). Membership is restricted to certain trust funds that are
able to donate these amounts, as well as to people such as Heineken heir C.L.
de Carvalho-Heineken (who sponsored new chairs in 2002 for two million
euros), and former Unilever CEO F.A. Maljers. The younger generation might
be invited for the Van Gendt circle, where the minimum contribution is
only 20,000 Euro (Dekker and Van Raaij 2006b). These distinguished circles

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bring together key people in the corporate elite. However, cultural and nonprofit boards only form a part of the corporate elite social meeting network.
Most of the social network extends beyond the eyes of the public and beyond
the institutionalised meetings discussed so far. Therefore we now turn to
the informal meeting network, starting with the formative years.

The Formative Years
The formative years are crucial in laying the foundations for a network and
concomitant social capital that lasts one’s entire life (Bourdieu 1989; Scott
1982). For some amongst the elite, family relationships already constitute an
important part of the informal networks. Contrary to many surrounding
countries, the Netherlands does not have a well-defined elite educational
trajectory. In Great Britain, the articulation of aristocratic social capital
takes place in public schools and ‘Oxbridge’ colleges. These educational
institutions are indispensable for the proliferation of characteristic
lifestyles, condensed in the ideal of the gentleman, and the recruitment of
new upper-class members (Hillige and Fennema 1992). In France, the grandes
écoles stand at the basis of an elite that occupies most of the top positions in
government and the corporate world, and the USA has its Ivy League universities. Although some Dutch universities do have the reputation of being
elitist, there are no equivalents to the French, British or American elite trajectories. Dutch universities have always been on equal par in terms of quality and standing. Up until the 1960s, a university degree in and by itself was
a ticket to the elite. In those days, only a relatively small number of young
people, most of them from well-off families, entered universities. Because of
the small scale and the high probability of elite positions, the university
automatically functioned as a meeting place for future elite. After the 1960s,
universities became more democratic, serving a much larger population.
By the early 1950s, two-thirds of the corporate elite stemmed from upperclass social circles (Vinke 1961, p. 239). Furthermore, not more than a quarter of all executive directors, and almost some 40 per cent of supervisory
directors had an academic education (ibid., p. 242). Since then, a university
degree has become increasingly important. Beekenkamp (2002) investigated
the social background and career patterns of the chairmen of supervisory
boards of the top 250 firms in 1976. He found that at over three-quarters of
all chairmen had enjoyed higher education (university or hoge school). Most
of them had a background in law or economics (ibid. p. 63). By 2001, all but
a few interlockers and chief executive officers had an academic background
(author’s data).
Student fraternities have traditionally played an important role in the
creation of the Dutch old boys network (Hillige and Fennema 1992).11
Following the upsurge of Dutch nationalism that came with the separation

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from Belgium in 1830, student societies organised themselves in corpora.
Federal corpora were inspired the German student fraternities and had a militaristic slant. Fraternities occupied a central place in the lives of students
and academia at large until the mid-1960s. Many professors were alumni of
the fraternities, and in the lecture rooms of some law faculties, special
front-row fraternity seats were available, where ‘nihilists’ (as non-members
were called) were not allowed to sit. The initiation ceremonies and hazing of
freshmen strengthened their internal solidarity and the exclusive image of
fraternities. The – often violent – hazing served to imbue freshmen with the
mores of the fraternity, the unwritten rules and norms of behaviour of the
elite. Students were trained to deal with stress, critique and humiliation,
and learned not to give up before they reach their goal: never take no for an
answer. All these traits are very helpful for reaching top elite positions
(Hillige and Fennema 1992).
The added value of these fraternities was in the lifelong relationships
that were created. Furthermore, forging allegiance to unwritten norms of
elite behaviour gave these youngsters an advantage in their corporate career.
Hierarchy formed the basis of the esprit de corps and seniority was the most
important organising element. This way, members learned to deal with the
dialectics of brotherhood and hierarchy. They learned to bluff, to put others
down, and to charm people. In addition, within sheltered student organisations, there was ample opportunity to take the first steps in organising and
governance. In rather complex organisations, especially the yearly elected
senators of the corpora were able to gain experience in managing a large
organisation.
During their years at a fraternity, students developed a sense of eliteness
and superiority. As an elite, they were bound by different rules than ‘ordinary people’ were. Their privileged place in society (Quod licet Iovi, non licet
bovi)12 went hand in hand with the idea of noblesse oblige. Lifestyle and
behavioural rules were of the utmost importance, and a series of unwritten
rules of speech and attire meant that members could almost instantaneously recognise each other as gentlemen of high standing. The shared lifestyle
and mores meant that even members of different cohorts still shared a
social bond (Hillige and Fennema 1992).
More quantitative-oriented research on the role of student fraternities
and elite position attainment underwrites the important function of building lifelong social networks and learning the codes of the elite. One out of
eight corps directors in the period 1920–1960 found their way to top positions in the corporate, political and administrative elite (Hillige and
Fennema 1992). Amazingly enough, these figures are the same for the 1920s
and 1960s cohort. From the 1960s onwards, non-traditional student organisations were established, but their leading members had fewer chances for
success: only three per cent found their way to the elite. Conversely,

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amongst the oldest and most traditional fraternities of Leiden and Utrecht,
one out of five reached top positions (ibid.). However, this high score is mainly because the fraternities in Utrecht and Leiden enjoyed an overrepresentation of aristocracy amongst their ranks (Dronkers and Hillige 1995).
Traditionally, Utrecht is the university of nobility, and Leiden is the backyard of the patriciate. Or as Utrecht corps members used to say: in Leiden
they act decent, in Utrecht they are decent.
Membership in one of these specific student organisations is not a sufficient condition for reaching an elite position, nor is it a necessary one. In
1976, only 40 per cent of all chairmen who enjoyed higher education were
alumni of a student organisation (Beekenkamp 2002, p. 67). From the mid1960s onwards, traditional student fraternities had to deal with increasingly lower numbers of membership due to anti-authoritarian attitudes
amongst students and increased competition from new student organisations.13 The universities were no longer the playground of the privileged few,
but aimed at educating larger parts of the population. However, the majority of the corporate elite at the turn of the century was raised either in times
of enduring importance of the student organisations, or during the early
days of growing unimportance. As most of the corporate elite were members
of the student fraternities, they were acquainted with the norms and rules
of behaviour of the elite during these formative years.14

Patterns of Recruitment
After their years at university, the potential corporate elite members start
their business career. The social network created during these formative
years is very helpful in getting a job. It is not so much the close friendships
that are of big help when entering the corporate career, but rather the weak
connections with people already in high positions in corporations.15
Granovetter (1973) already showed that weak contacts are twice as effective
as strong contacts in getting a job. In the Netherlands, the traditional career
trajectory of corporate executives is one of long-term employment within
one firm. Of all supervisory chairmen in 1976, only one-fifth made a career
change (Beekenkamp 2002). In fact, 16.3 per cent of the chairmen of the top
250 firms had never worked outside the company they chaired (ibid., p. 75).
As one director very clearly states:
The risks of staffing the top with outsiders are very, very high.
Much of the added value of long-term employment stems from the social
networks that are created during one’s career. The executives-to-be gain,
amongst other things, insight into authoritative structures and the business
culture of the firm. Relations with co-workers are part and parcel of the spe-

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cific knowledge they acquire. This large body of firm-specific knowledge is
what gives candidates from within the firm an advantage over those from
outside the firm when competing for executive positions (Becker 1962;
Becker 1993). The career trajectory is well balanced between general and specific knowledge, since as an executive or director they need to have a good
overview of the firm. There needs to be a balance between, on the one hand,
involvement with the specific job, and on the other hand, exposure to a
wide range of diverse departments, plants and international branches of the
corporations. This balance renders the employee with enough job-specific
skills and knowledge of the different parts of the firm, while at the same
time creating general loyalty to the corporation as a whole, rather than to
any one of the corporate departments or divisions in particular. It also leaves
them with ample opportunities to create large social networks within the
firm. There is a strong agreement that long-term employment is indeed the
typical Dutch career pattern amongst the corporate elite.
Most firms try to recruit people from their own rank and file for the
top positions. I think it is quite rare for people to come from outside
the firm. Firms have a habit of recruiting internally, unless, let’s say, a
disaster occurs; people burn out. If that were to happen without a suitable successor, then firms do tend to look outside their own organisation (CEO of large industrial firm).
Board members were positive about the internal career trajectory. There is a
general feeling that it is ‘just good’ to have insiders at the top of the corporate hierarchy. After a longer career in the company, the intended board
member knows the company well.
It is good to have top people emerging from within the firm. And who
are very well aware of the idiosyncrasies of the firm (supervisory director and chairman of several large firms).
A long career within one firm can be understood as a sign of allegiance to
the corporation. At the same time, senior officers are able to judge whether
this person is the right man for the right place.16 The interviewees showed a
great deal of agreement on this matter.
I would prefer internal promotions, let’s say moving up within the
firm and eventually reaching the top. In such cases, the risks are much
lower, because you know the people, and the people know him. He has
proven his performance, otherwise he wouldn’t have reached the top.
He must enjoy the trust of the organisation, the trust of the customers,
trust of banks, you name it (former CEO and chairman of two firms).

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During his career trajectory the executive-to-be has the chance to prove himself, to show what he is worth. But, equally important, an executive needs to
enjoy a high level of trust. Trust is a relational asset that resides in the social
network of which one is part. And for an executive, it is crucial to enjoy trust
from bankers and other stakeholders, as well as loyalty from within the
ranks of the firm itself.
The importance attached to trustworthy durable relations seems to be at
odds with the idea of a (international) market for corporate directors. In the
‘War for Talent’, firms are supposed to compete with each other for the best
‘high potentials’, and the best recruits are not necessarily those that already
work within the director’s own firm or country. When asked, the interviewees showed themselves to be familiar with the idea that there is a lack of
talent for corporate leadership in the Netherlands, but they firmly disagree.
The corporate elite not only favours insiders over outsiders, there is also confidence in the corporate leadership capacities of the younger generation of
Dutch executives.
Everybody complains that there are not enough successors for top positions. I honestly believe this is exaggerated. I believe this to be the arrogance of the ruling class (CEO of large industrial firm).
Only two of the interviewees agreed with the statement that there is a lack
of talent. The corporate elite is aware that the call for a more transparent
and liberal-market-driven recruitment process neglects the sunken investment that long-term employees have. Thus, an internal career trajectory is
still conceived of as a very good means for selecting corporate directors. By
and large, people from outside the firm are considered to be a potential
problem, rather than an asset.

Putting the Network to Use
The Dutch corporate elite is a rather orderly group of people. As one supervisory director commented on his contacts in the board network:
You see them often, the one a bit more than the other. But they are all
people who are part of the network. […] But these people all know each
other, are more or less aware of how things are with this person and
with that person. It is not really a very conscious process, but it is
stored somewhere. It is part of that way of life.
At the same time, we should not overestimate the quality of the relationships. It would be an error to assume that all members of the corporate elite
are friends. They do recognise that they are part of a shared network, but

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many relationships are just ‘nodding acquaintances’ and people can – and
do – make mistakes:
A little while ago I met somebody […] He thought that I was somebody
else. He took me for the CEO of the Rabobank. So a somewhat difficult,
painful conversation started to evolve, until at one moment you say:
‘Listen, I think you’re mistaking me for somebody else.’ It shows how
superficial it sometimes is. When you hear yourself think: ‘Oh man, I
know this guy but what is it that he does again?’ (CEO of large industrial firm).
The social network is an asset for the corporate elite. They can use the dyadic
relationships they build with particular people for their own benefit, and at
the same time they can earn the trust and loyalty of the business community. As in any social network, there is some limited knowledge of ‘friends of
friends’ amongst the corporate elite. But even though people are only vaguely aware of networks beyond their own group of contacts, this does not preclude them from using their networks (Adamic and Adar 2005; Watts, Dodds
and Newman 2002). For example, if a director wants to establish contact
with a certain foreign banker, he can search his own network on the basis of
properties of his contacts. This search might lead the director to a Dutch
banker, to a director from a corporation doing business in Russia, or to
somebody who sits on the board of a Russian firm.
In a passive manner, the network serves as a communication device, from
which one discovers new information and learns about each other’s points
of view. Information travels through the networks and is disseminated further by every meeting. In a more active manner, there are times when one
needs to cash in on one’s social capital and use the contacts he has. One can
effectively mobilise resources that reside within one’s network. The corporate elite does indeed contact friends and acquaintances for specific needs.
Bankers are particularly popular, as they can supply finance and financial
services. They are well-sought contacts, even in times when the capital market is of growing importance in financing corporate operations.
In general I think that there are quite a number of benefits to having
a large group of people who are to a greater or lesser extent affiliated
with firms that are relevant for your work, and if you know the chiefs
from a number of banks. When you have a problem financing something, and you need a quick solution, then it is convenient if you can
just pick up the phone and call Mr A or Mr B and explain the situation
directly. That speeds up the communication (CEO and supervisory
director).

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When it comes to issues such as finance, it is particularly helpful if the companies’ executives are on a first-name basis with the banker(s) who needs to
decide whether or not to extend the loan or provide a financial service. In
some instances, a pre-established relationship can be used to the mutual
benefit of both parties involved. As one director explains:
Look, if there are conflicts, or when things are just not going very well
between two firms, it is convenient for the two bosses to know each
other. They can say: ‘well, it doesn’t seem wise to fling our attorneys at
each other. Why don’t we meet up and see if we can find a solution?’
You see, in that sense it is useful (CEO and supervisory director).
In this way, social ties help to reduce conflict between corporations, or at
least settle conflict much more easily. These ties help to reduce uncertainty
and risks within the corporate regime. The social network has a function for
the corporate elite, and for those who do reach the highest echelons of the
corporate hierarchy, an extensive social network is indispensable. This need
for networks is nicely illustrated by the case of a board member who was not
endowed with the proper set of relations because he spent large parts of his
life abroad. When he came back to the Netherlands to take up a position at
a corporate board, the first thing he did was build a network. In the relatively small Dutch corporate elite, it did not take long to meet everybody who is
somebody:
I didn’t know a soul. So I did the cocktail scene for two years, just to get
to know people. After two years I knew the whole of the Netherlands.
That is to say, I knew the people who press the buttons. Bankers and
top people (former CEO and chairman of two firms).
As an outsider, he needed to know who’s who in the corporate elite. And the
informal ‘cocktail-circuit’ serves just that purpose. Here he had the possibility to meet all the people who were important to him. At first, cocktail parties served their purpose very well, because he could meet many new faces.
After a while, he decided to invest more time in smaller-scale meetings in
private settings. After two years time, when he was acquainted with the corporate elite, he changed his network strategy.
After two years, when I knew them, I abruptly ended the cocktail party
scene. And when we meet nowadays, we meet each other at dinner parties with a particular subject, with speakers who please me.
After establishing acquaintances with the corporate elite, he goes on to
deepen certain relations. For this purpose, he uses dinners and events where

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particular relevant topics are discussed. He takes a functional approach in
both the cocktail network and the dinner clubs. Only a minority of all relationships go beyond the normal, formal business tie.

Tournaments, Conferences and Funerals
Large meetings create a particularly fruitful site for networking. At one
event, people can maintain existing ties, meet new people, and forge new
bonds. These larger meeting places are sites where different elites (cultural,
political and economical) interact. The opera, concerts, and the like are all
being used as a meeting place for the corporate elite. Financial advisors and
consultants invite their clients to ballets and concerts. In this way they
exploit their bridging function between corporate boardrooms, and as such,
provide an extra service for their clients. Some corporations sponsor sports
events, such as the ABN AMRO tennis tournament, where everybody who is
anybody in the Dutch corporate elite is present, even if they do not like tennis.
If you enjoy watching tennis, and you are invited by say ABN AMRO,
well sure you accept. And if you don’t like tennis at all, but you would
just like to see some people, there is no disgrace in that. […] And if it is
good for the company, you shouldn’t miss that opportunity (CEO and
supervisory director).
A personal distaste of tennis does not prevent a member of the corporate
elite from attending this tournament. It is an excuse to meet people, and
board members are very aware that these events provide good opportunities
for building and using their social capital. These public meetings are a
splendid opportunity for bringing people together and are an optimal playground for the brokers in the network. Brokers can swiftly bring people
together and make acquaintances.
Even more interesting sites for the corporate elite are large, yet private,
meetings. These are rare, as they are very difficult to organise. The key asset
of private meetings is that no one will report on what is said and done. The
most successful of these meetings during the past 50 years have been the
Bilderberg Conferences, originally set up to enhance transatlantic business
relations. Named after the Dutch hotel that hosted the founding conference
in May 1954, the Bilderberg Conference has strong roots in the Netherlands.
One of the key organisers was Unilever executive P. Rijkens, and the secretariat has been a Dutch matter for a long time as well, with initially E. van
der Beugel and later V. Halberstadt at this post. Furthermore, the late Prince
Bernhard (spouse of the Dutch queen) served as chairman of the Bilderberg
for many years. Given the large number of multinational corporations in the

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Netherlands, a relatively large number of Dutch (corporate) elite members
attend this conference (some 120 Dutch people have attended the conferences so far, many of whom more than once). At the yearly meetings, a large
number of key persons from predominantly business, but also from government, labour and the media, convene for a weekend in a private and sheltered resort. The key ingredient of this meeting is that no one reports on
what is said during these talks: it is a private meeting. Discussing key
themes of the contemporary global political economy, the transnational
elite find themselves able to search for a common denominator amongst its
members, learning about the ideas and views of key persons. One long-time
participant of the Bilderberg conference told me that these meetings are
about:
Current affairs of a general nature. What will be the influence of
China? What are the effects of this or that problem? It is about learning how different people look at the same problems. So we get input:
what they think is important, dangerous and so on. But this has no
direct effect on the agenda of the board. You take notice of the general thrust, and maybe you are better informed to assess different possibilities […] take into account previously unexplored issues that might
influence policy.
Through deliberations and discussion, these meetings influence policies all
over the globe, and add to the cohesion of the transnational elite. These
meetings differ from, for instance, the World Economic Forum, organised
annually in Davos. The explicit aim of the WEF is to influence and legitimise
public policies, and it does so in a relatively transparent way (Graz 2003). In
a study on the intertwinement of global-oriented elite policy groups and
firms, Carroll and Carson (2003) find that a few dozen cosmopolitans, mainly based in Europe and North America, knit the corporate policy network
together. Corporate policy interlocks contribute in an important way to
global-elite integration (ibid.), although transnational corporate networks
have not yet reached levels of intertwinement comparable with those of the
national networks (Carroll and Fennema 2002).
At the national level in the Netherlands, large-scale private meetings are
rare. The corporate elite is relatively small, and there are ample opportunities to talk and meet each other. In the USA, the corporate elite meet in holiday retreats such as the illustrious Bohemian Grove, the Rancheros
Visitadores, and the Roundup Riders (Domhoff 1975a). In the Netherlands,
however, few events such as these take place. Recently, the drawing of a new
and relative intrusive corporate governance code by the Tabaksblat committee stimulated big linkers A.A. Loudon and H. Langman to initiate a meeting
of the presidents of all large and medium-large listed firms. At these ‘Hilton

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Sessions’, the key players of the corporate elite came together to discuss the
repercussions of the governance principles. Apparently, the members of the
Dutch corporate elite can and do organise themselves in times of turbulence. However, local versions of the Bilderberg conference serve no purpose,
as the elite already meet regularly in the boards and in the informal network.
Incidentally, there is one special kind of large meeting that brings together the entire elite in the Netherlands. It happens only rarely, but those who
are invited are ensured direct access to the entire Dutch elite. The best
places for networking in the Netherlands are the weddings and funerals of
the Dutch royal family.
Take the whole scene of concerts, performances, and events; that’s
where you meet. These meetings are vehemently used to talk about certain issues. In the church with [the wedding of] Maxima [spouse of the
crown-prince of the Netherlands], there is not that much talking going
on. But before and after, there is. Take the royal funerals for instance,
that really is the meeting circuit. The fall of the first Balkenende government was one big church matter. You could see it happening.
Likewise, with Prince Claus recently. You see that people arrive there
very timely, three hours in advance. It gives you ample opportunity to
talk with everybody (supervisory director).

The Fragility of Social Capital
At the group level, social capital refers to the capacity to obtain collective
goals through collaboration; it is a way of overcoming the collective action
dilemma (Fennema 2004). Social networks create social capital for the
group, because social intertwinement advances the willingness to collaborate for collective goods. At the level of the group, social capital takes the
form of (generalised) notions of trust and shared interest. High levels of trust
at the group level result in norms of generalised reciprocity, which can be
an asset to the group as a whole.17 The strength of the network lies in this
generalised reciprocity.
Corporate elite members showed themselves to be well aware of the fragile nature of this kind of social capital. When somebody draws too much on
the common goods of the network, he risks losing his credentials (see
Bourdieu 1986, p. 248-249). Thus, board members treat their social capital
with care, and one does not simply return favours. ‘I scratch your back, you
scratch mine’ is not the way corporate board members capitalise on their
social contacts. Tit-for-tat strategies are widely considered to be out of the
question.

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You can never just say, listen, if you do this for me, then I’ll do that for
you. That is not the way it works, not the way it works. [...] You should
not ask for favours (CEO, and supervisory director of several firms).
The corporate elite does extend their financial, human, social and cultural
resources to fellow elite members. But they do not do so because they expect
direct reciprocation, but because they trust somebody else would convey the
same favour upon them, should they need it. In the corporate elite, social
capital is of a generalised nature and a property of the group rather than of
the dyadic relationships. The network should be used exclusively to enhance
and support what is in the shared interest of the group, or for business.
Listen, people find it annoying when you approach them merely for
your own interests, or for the particular interests of your firm. That,
people find annoying. But what’s wrong with just meeting up with
each other?
I asked him whether he followed up with new contacts he made at informal
dinners:
Sure, you do that with everybody you meet there. But you need to be
careful with that of course. In general, people don’t appreciate it if you
contact them for a favour that lies outside the professional sphere.
People find it unpleasant. You shouldn’t do that.
Prestige, esteem and contacts are scarce goods. Trust and reputation are
relational assets that take time to develop and grow, but can be easily
destroyed.
Once useful ties exist, these need to be maintained. To this purpose, there
is an active telephone network amongst the corporate elite for example.
When M. Tabaksblat was working on the Dutch Corporate Governance code,
he steered clear of cocktail parties, tired of always the same questions. But
he did receive numerous private phone calls from his fellow directors who
wanted to influence the code (Dekker and Van Teeffelen 2003). Yet again,
they use their contacts with great care:
You draw on them with care. I never just call people saying ‘let’s do
some catching up’. I usually have a very concrete reason, a cause, for
calling somebody. There are a lot of telephone calls being made, but
you should never do so without reason. Always reliable.
Trustworthiness is key when using social capital. The corporate elite uses
their contacts with care and with caution, and only when they really need

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it. It is not wise to be greedy and exploit the network. Board members clearly know how to carefully manage the social contacts they build up.
And if there is something that I really need help with, I know how to
call them. But you try to do that as little as possible. It doesn’t look that
good if you use it too much.
The corporate elite use their networks with care, but they certainly know
how to use them. While directors have a good overview of their acquaintances, they play down the idea that these networks depict positions of power
and influence.
I appear on one of those lists of the 100 most powerful men, which is
based on these kinds of things, and on the market value of the firms
that I am affiliated with. And should this be so ...? I don’t know. And
then I think to myself, oh boy, what am I to actually do with all this?
(Former CEO of large industrial firm, chairman of several firms).
This is typical for the way the corporate elite looks at their networks. As discussed in chapter 1, those who are part of an elite usually stress their lack
of agency as an individual, rather than the influence they have as a group.
They do meet a lot of people, and there certainly is a network. And surely
they know how to use their network. But for an important part, the social
network works on a macro level, which is not so tangible for any individual
member. Furthermore:
Social networks have both a personal and a professional character. And
that makes you very conscious of the way you decide to deal with your
relations. You do not violate the trust of the networks but you do use
them.
Private small-scale meetings are essentially different from the ‘cocktail circuit’. In a small circle of trusted others, members have the opportunity to
have open talks and discussions about all possible themes and subjects,
without the fear of being quoted in the newspapers the next day.

Dinner and Debating Clubs
Informal meetings are particularly important for creating a feeling of weness, a feeling of belonging to a certain group. Next to the sheer existence of
a social network, a feeling of we-ness is an element of a community. Many
social relationships amongst the corporate elite have a business character.
The officer of one firm relates with the officer of another firm, both with

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the interest of their respective corporations in the back of their minds.
There are, however, certain meeting places that extend well beyond these
instrumental, business-oriented relationships. A wide range of informal,
out-of-sight dinner and debating clubs strengthens the mutual ties, and creates a feeling of we-ness. These secretive meetings are used to convene about
issues that concern the corporate elite. By doing so, these meetings lead to
‘informal companionships’ between the captains of industry. Unlike receptions, people meet because they have shared interests and because they
develop friendships and affinity with each other. Friendship creates a reason to meet, beyond the advancement of personal or corporate interests.
For instance, I am a member of a study group on political economics,
and the people in this group – they suit each other. I am also a member of an urban network, and these are also people who have more
than the need to exchange and discuss information.
These informal meetings are highly useful, because:
Often… issues frequently come up in which you think, as a CEO: ‘Well,
maybe I should, this time I don’t want to talk with my own colleagues,
but with somebody else from a different corporation.’ You know: ‘How
would you solve this? What problems have you encountered?’ This can
include a wide variety of topics. Corporate governance, or one’s relationships with one’s supervisory directors.
The goal of business associations is to influence politics and policy directly.
To some extent associations also serve as a place to discuss issues, but only
at a later stage. They cannot fulfil the need for frank and open discussions
with one’s peers. The dinner and debating clubs are unique because of their
closed and secretive nature. Members are reluctant to talk about these meetings, and will never reveal particularities about the discussions.
One of these clubs I am a part of, is a group of chief executive officers
from different areas. There are four meetings a year, and they are very
informal. Twice a year we have a lunch meeting, and the other two
times we have dinner. It is a bit more like a group of friends. On the
one hand you meet these people professionally, and on the other hand
you meet them there. This makes it much easier to have contact. There
are many people who are a part of this network. Apparently this is not
known, and that’s how it should remain.
The dinner and debating clubs are designated as ‘The Eight’, ‘The Ten’, or
the ‘Club of Eleven’ with references to the number of members, or ‘Eighty’

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and ‘Sixty-Five’, the year when the clubs were founded. Some have peculiar
names such as De Vogeltjesclub (the Birdsclub), De Pijp (the Pipe), De Schoorsteen
(the Chimney), De Tafelronde (the Table Round) and the Heeren Seventien (referring to the board of the Dutch East Indies Company).18 The Vogeltjesclub has
quite a number of prominent corporate elite members, such as R. Groenink
(ABN AMRO), A. Scheepbouwer (KPN), J. van der Veer (Shell) and G. Kleisterlee
(Philips) (See Bogaarts and Schwartz 2005). The Vogeltjesclub is a bit special, as
it is organised by Minister of Economic Affairs. It is a place where the corporate elite has the opportunity to influence government policy, yet no notes
or reports are made about the meeting. Likewise, the Minister of Agriculture
invites the CEOs of firms in his sector three or four times a year to a so-called
‘captains meeting’.
Although membership to De Pijp (about sixty members) is only open to
CEOs of large Dutch firms, membership is for life. This ‘Once a member,
always a member’ policy signals that these networks are not only instrumental for business, but also highly personal. These clubs consists of groups
of individuals who happen to share the same occupation; they are not only
a functional meeting place for officers from firms. Thus, while former
Ahold CEO Van der Hoeven lost his prestige and popularity with both the
general public and the corporate elite when mismanagement and fraud
were uncovered at this firm (De Jong et al. 2005a; Smit 2004), he still
received invitations to these meetings. De Pijp meets about three or four
times a year, usually in castle De Wittenburg, the reception room of the corporate elite. These informal clubs do not have statutes or formal rules, but
operate under unwritten rules. Positions such as chairman and secretary are
not appointed or elected, people are asked informally. Balloting committees
guard the exclusiveness of the clubs.
Dinner clubs are not always fully closed meetings. In a popular and often
used form, the club is semi-open: the core members invite somebody from
outside the realm of the corporate elite for each session. This way, the club
serves both the purpose of maintaining strong ties, as well as creating weak
ties. At every dinner a certain topic is under discussion, and each of the
members brings one guest to the table who is knowledgeable on the subject.
This concept is common in the corporate elite. However, foreign directors do
not integrate into these strongholds of the Dutch corporate elite. In
response to their failure to integrate, the Minister of Foreign Affairs now has
a separate meeting with foreign CEOs of Dutch firms.
The importance of these dinner clubs and societies for corporate governance in the Netherlands lies in their function as consensus-making
machines. The corporate elite uses these clubs to discuss changes in the
Dutch corporate regime. By learning the views of one’s peers, and discussing
the issues at hand in an open and frank manner, a certain consensus steadily emerges. This is not to say that everybody agrees upon every issue.

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However, through these meetings, a certain agreement on the benevolence
or threat of certain changes and developments is eventually reached.
Informal business meetings are at stake with these foundational concepts
of disclosure and accountability. Thus, informal meetings of the corporate
elite thrive best under conditions of anonymity and secrecy. And the
increased importance of transparency in the business world only means
that these semi-private meetings have to be sheltered even more.

Yachts and the Skybox
Next to clubs, the corporate elite also bond through joint social activities.
These activities are different from clubs as they are primarily used to
strengthen relationships, rather than to talk about business. Through bonding and social activities, initial relationships of acquaintance are strengthened and transformed into friendships.
Next to the ‘professional relations’ that are part of those networks,
there is always – as with any network – a part that is informal. You have
come to know people, you went out sailing, and so on.
Directors are very persistent in their claim that people try to avoid talking
about business at these informal social events. They talk about all sorts of
things, and together they enjoy the good things of life. At the same time, the
people they mingle with are important contacts from a business perspective
as well.
We go sailing, and aboard the ship we talk a lot about all kinds of
issues. We enjoy a nice bite to eat; it is a different way of relating to
each other. I used to do this with civil servants…, yes, these are highly
interesting things.
This director used the informal setting of his yacht to consolidate and
strengthen ties with civil servants, a very important group for his corporation. The sailing boat provides shelter from nosy journalists, and it allows
bonds of personal affinity to emerge. Afterwards, these bonds serve as a
lubricant for business. A similar venue for consolidation of the network is
the skybox at a football club, where a lot of networking takes place. On the
one hand, the host consolidates the relationship he has with his contact,
while at the same time his guests can get acquainted with one another and
build weak ties. Again, these meetings are not usually used to talk directly
about business but rather are used to consolidate existing relationships.
Because, it is often exaggerated what is on the table there. Because, you

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see, you are there with a number of people. So you don’t just sit there
and talk about everything. You would be crazy if you did. So what it is,
you have a laugh, you have a good time, you watch the game and have
a chat about it afterwards. That’s it, and everybody goes home. There
are no secret alliances there, unfortunately not.
According to this director, people would rather talk about football at that
moment instead of business. Nevertheless, the board member does not
invite people to his skybox without reason. He wants to strengthen and
maintain his relationships with these people. It is likely that the invited person will develop a positive predisposition towards the board member.
With an increased call for transparency by shareholder proponents, these
informal meetings are increasingly problematic. One board member complains to me that his guests do not want to join him anymore in the corporate skybox:
Well, so you invite people to watch a football match. Ajax–NAC, what
is more innocent than that? Nowadays, directors, aldermen, they don’t
want to be seen with us in a skybox anymore. They think it might be
interpreted as if we are discussing certain issues…
The suggestion of collusion and direct coordination alone is sufficient in
and of itself to damage the image and trustworthiness of both organisations
and directors. And not only business contacts fear the atmosphere of crony
capitalism in the skybox:
[…] there are people you know very well, privately, and they go on and
say: ‘well, I find it a bit difficult to sit with you in that box’. Well, fine.
Leave it. I can see their point, but well... so be it.
The skybox is such an uncomfortable setting since it is a private meeting, set
within a large public event. It is much easier to invite people to a yacht than
it is to invite people to a VIP room at a well-known football club. In earlier
times, the risk of ‘exposure’ was not so grave.19 Traditional notions of societal hierarchy warranted a certain degree of manoeuvring for the elite
towards the public. In modern days, however, journalists critically scrutinise
the elite. Media have grown rapidly over the past thirty years, and, as a
result, the political information available to the public is enhanced both in
scope and in depth (Fennema 2003). Citizens will not accept high levels of
inequality any more. The rules of the public debate have transformed into a
contemporary, deliberative spectator-democracy, such that it includes reciprocity, public disclosure and accountability (Hajer 2000).

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Is There Still a Corporate Community?
As this research has shown so far, the social interaction network of the corporate elite is in decline. At the same time, an informal network remains in
place. So the question is whether directors see themselves as part of a community. The sense of we-ness, of belonging to the same group, is essential for
the formation of a community. There are various ways in which a shared
identity can be strengthened. Rituals, hazing, investment of resources,
renunciation of pleasures and so on, increase the distinction between those
inside and those outside the community. For many elite groups, a common
background and ties of kinship strengthen the feeling of we-ness. Norms of
attire and behaviour serve to distinguish ‘our kind of people’ from others.
The old boys network was clearly such a community. Many of the directors
corroborated the previous conclusions on the fading away of the network of
interlocking directorates. The disappearance of big linkers and multiple
meetings in particular (see chapter 3), has also changed the character of the
network.
One board member explained to me why he does not consider his corporate network to be a community:
It is related to the number of times that you meet somebody. And
that’s the case in such a network as well. As you can see, there are only
a few people that I meet more than once.
The decline of the network, and in particular of multiple meetings, has
repercussions for the shared identity amongst the corporate elite. In these
days, the corporate elite is bound together by sharing the same position. The
corporate elite believes that in the present days and times, their mutual relationships do not constitute a community anymore. Many directors responded to the question of whether or not there is a community in the negative:
Not really, no. It is more that we share the same fate.
However, the closer the relation in terms of occupation and industry, the
greater the sense of community. For instance, between the stock-listed companies, some directors do observe a form of community:
Well, maybe between listed firms, perhaps. Oh well you do meet people regularly, of course. You run into each other everywhere, but a real
community-like thing…well, in any case I am not part of that. And I
don’t feel part of it.
A shared identity stems almost exclusively from their joint occupation.
Directors feel an affinity with people in the same position. The more similarity in positions, the greater the sense of we-ness becomes.
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Well I don’t feel part of a club of some sort, with a social code or something like that. I do think that it is different for other people. I don’t
feel that. But you do notice that you are all facing the same problems,
so you discuss these issues. This makes you feel you are in the same situation. But that is different from a social caste or something like that.
The loyalty of the corporate elite does not lie with the Dutch corporate community at large, but is divided over smaller groups of like-minded directors.
As we saw, there are clusters of strong ties and friendships, reinforced by private informal meetings. In as much a sense of community is still present, it
is
not so tangible. It is made up of personal contacts, usually not formalised. […] It is a community based on informal contacts.
The informal network remains important in moulding ties of affinity and
shared identity. But all in all, the picture that emerges is one of a national
corporate community that does not exist anymore.
I believe it is more a network rather than a community. I don’t believe
people have a strong mutual sense of belonging in this regard. A real
community of directors, no, it does not exist. There is a network, people who know each other well. But we should not overestimate the
friendship between these people.
The social meeting network at large remains functional. Yet it is not so
much a network of friends but a network of professional directors. The informal network still adds bonds of affinity to parts of the corporate elite network, but does not add up to a business community. Tönnies’ late-nineteenth century essay predicted what happened to the Dutch corporate elite
a century later. The corporate Gemeinschaft transformed into a Gesellschaft,
with only a few strongholds of communal bonding left. There is still a meeting network and common occupation, but nothing more.

Conclusion
The findings of this chapter call for some nuance in the thrust of the argument so far. The formal network analysis of the inter-firm and inter-personal networks shows an ongoing, and even accelerated, decline of the corporate network and elite cohesion. Although not yet fully gone, the networks
are disintegrating. The investigation of informal networks of the corporate
elite this chapter presented is partly in congruence with these previous findings. The informal network of the corporate elite is fragmented, and rem-

CONCLUSION

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nants of the old boys network can only be found in small private dinner and
debating clubs. Informal meetings add to the connectedness of the corporate elite, but not to the extent that the corporate elite feels part of a community. Yet, at the same time, informal relationships prove to be an integrated part of the assets a corporate director draws on. Although fragmented,
informal meeting networks remain important for the corporate elite. While
the more institutionalised network of interlocking directorates is in decline,
informal and private meetings remain in place. The elite can settle and prevent conflicts, accelerate communication, compare ideas and insights with
peers, deepen existing relationships and fraternise in small clubs through
the network.
Building and using social networks already starts at young age. Some corporate elite are born into elite families, and have a head start in terms of
social and cultural capital. Future corporate directors from middle-class
families begin integrating into elite networks during their university years.
Young people learn to respect, obey and appreciate the unwritten rules of
the elite through student associations and especially the fraternities in particular. The social capital they build up does not reside exclusively in their
relationships with fellow students, but also in the norms, customs and
habits with which they have become familiar. In order to reach the top of
the corporate apex, extensive and high-quality social networks are important. At the top of a corporate career, a fine-grained set of social relations is
indispensable.
At large meetings, such as receptions and tournaments, the corporate
elite can effectively network with their weak ties. Alongside the rather functional and business related ties, the corporate elite also builds on pockets of
strong, informal ties. Furthermore, corporate elite members meet each
other in dinner and debating clubs. These clubs serve as consensus-making
machines. These smaller clubs of like-minded people provide the opportunity to discuss common problems, new ideas and also evaluate people openly.
These meetings create social cohesiveness, and the material presented above
suggests an ongoing ubiquity and functionality of these meetings. The corporate elite fraternises at private social activities. Top directors uphold their
friendships in small private circles. Together, the informal social network
adds to a feeling of we-ness. This belonging, however, is not extended to the
entire corporate elite, but rather to the small groups in which members of
the corporate elite meet. As a result, there is no longer one large business
community, but rather a large set of small circles, interconnected in the
weak network of cocktail parties.
The previous chapters argued that the dismantlement of board interlocks
is indicative of a shift towards a more liberal-market-oriented corporate
regime. After all, corporations are less embedded in networks of (durable)
relations, leaving less opportunity for coordination other than through the

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liberal market mechanism of competition. The persistence of the informal
network suggests that there is still enough room amongst the corporate
elite to convene, communicate and coordinate economic activities. In this,
the Dutch corporate regime still deviates from the model of a liberal market
economy. However, it is highly unlikely that any actual economy will ever
fully resemble a LME. Rather, we are interested in the extent to which corporate regimes resemble a LME vis-à-vis each other. And informal networks, as
portrayed in this chapter, are likely to be found in any economy. Instead of
being a distinctive property of particular corporate regimes, informal networks are, in all probability, part and parcel of every corporate regime.
Appreciating the role of these informal networks in the governance of corporations will help us to understand the pace and direction of (institutional) change.
The shift in the Dutch corporate regime as it is taking place does, however, have repercussions for the informal network. The legitimacy of these
associations and clubs is waning. Notions of transparency and accountability are difficult to reconcile with the use of social networks that transcend
the eye of the public and media. While it is now quite unacceptable that a
bank executive sits on the supervisory board of one of his clients, there is no
indignation whatsoever over an out-of-sight meeting between chief executive officers of the largest firms. As already mentioned, informal networks
of the corporate elite have long been considered with a great deal of suspicion. But wishing these meetings would go away will not work, since the corporate elite shows a great deal of appreciation for their informal networks.
Given the non-corporate nature of many of these meetings, there is not as
strong an incentive to retrench from these interconnections as there is, for
instance, with executive board interlocks. And as long as the visibility of
informal networks remains low, the corporate elite keeps using them for the
advancement of business and group interests.

CONCLUSION

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5

Formalisation of Governance

Introduction
So far, the focus of this book has been on the (re)configuration of networks
as a proxy for the social embeddedness of corporations and the corporate
elite and as an opportunity structure for coordination. This approach rests
on the assumption that (changes in) the structures of corporate board overlap and elite interaction bear significance on the way in which corporations
are governed. This chapter provides insight as to how the shifts in governance networks impacted the way the corporate elite govern and supervise
the corporations. The question this chapter tries to answer brings us back to
the issue of shifting corporate regimes. The basic question is whether and
how the Dutch corporate regime is losing its characteristic Rhenish form.
Insights from the previous chapters suggest that the Dutch corporate
regime is shifting from relational capitalism towards a more liberal marketoriented capitalism. The disentanglement of corporations from their interlocking directorates and the retreat of executives from this network in particular are indications that Dutch business is organising itself along AngloAmerican principles. The old boys network, long a bastion of elite integration, is falling apart. In the current, more liberal-market-oriented economy,
brokerage has replaced social closure as the dominant characteristic of the
interpersonal network configuration. Corporate directors have become
enterprising individuals rather than members of an elite group. At the same
time, the existence of informal elite networks showed that social networks
remain part and parcel of the everyday life of the corporate elite. Yet inner
circle members maintain that the Dutch corporate community has disappeared.
Corporate governance was introduced in chapter 1 as a concept with
legal, relational and socio-cultural components, and it was argued that the
embeddedness of firms and directors within social networks might be an
elementary piece of the puzzle of institutional change. Following Culpepper
(2005), it was argued that while structural conditions create the possibility
for change, they do not trigger change, nor determine the outcome. Rather,
as network structures change, the unwritten rules of the corporate elite

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might change. A shared belief shift takes place when the corporate elite redefines their shared perceptions and common norms, allowing institutional
change to take place. This chapter aims to uncover these shared perceptions
of the corporate elite by using the interviews introduced in the foregoing
chapter.
Any marketplace needs a set of rules and regulations in order to function
properly and effectively (see chapter 1). Aside from the law, which draws a
bottom line in many cases, norms of appropriate behaviour are important to
the functioning of any market economy as well. They mark boundaries of
what is deemed to be desirable by the corporate elite. However, the corporate
elite is increasingly losing its autonomy vis-à-vis investors and society.
Unwritten rules of behaviour are no longer considered to be a valid disciplining mechanism. Rather, a system of common norms needs to be explicated in documents and codes of conduct. Long-standing notions of what
should and should not be done in business have to be renegotiated and
spelled out in formal codes.
This formalisation of norms is a novel development in Dutch corporate
governance, since directors traditionally had a fair amount of leeway in conducting their business. During the mid-1980s, a document became available
that lists recommended behaviour for outside directors (‘The supervisory
director: recommended rules of behaviour’, Glasz 1986). Yet, the author
made it explicit that this publication was an attempt to formulate a framework for new supervisory directors, such that they familiarise themselves
with common norms of behaviour and practices. By no means did these recommended rules of behaviour serve to formulate a set of binding rules. By
the 1990s, however, the tables turned. The call for transparency forced the
corporate elite to formalise norms of proper governance in codes of conduct.
Thus, in 1997, a list of forty recommendations for good corporate governance was drawn up by a committee of experts, chaired by former Aegon
CEO and collector of outside positions J.F.M. Peters (Commissie Corporate
Governance 1997). Five years later, an evaluation (NCGS 2002) made it crystal clear that these ‘recommendations’ had not resulted in any significant
change (see also De Jong et al. 2005b). Consequently, a more stringent – but
still principle-based – code of corporate governance came into being: the
Tabaksblat code (Commissie Corporate Governance 2003). By means of such
codes of conduct, proper forms of corporate behaviour are spelled out. All
around the globe, corporate governance codes were drawn up (the website
of the European Corporate Governance Institute provides a list of all codes:
http://www.ecgi.org/codes/all_codes.php).
In the next section, the perceptions and experience of the corporate elite
themselves are used to gain insight as to the way in which corporate boards’
functioning has altered. Three potential triggers for this change towards formalisation are subsequently discussed. First, the internationalisation of cor-

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porate boards changed the character of governance and of the corporate
elite. Second, the tenure of executives is further investigated as a trigger for
change in the way in which directors relate to their firms and colleague.
And third, the increased accountability and risks are taken into account as
a driver for the formalisation of governance. The formalisation of governance leads to codification of formerly informal common norms. This is
investigated by looking at corporate social responsibility. In particular, the
section investigates how the relational configuration of the corporate elite
plays a role in this reinstitutionalisation of corporate norms. Finally, before
ending the chapter with a conclusion, the increasing remuneration packages of the corporate elite are discussed. Building on the foregoing sections,
it is argued that remuneration has become a form of status attainment for
the corporate elite.

Formalisation and Competition
The growing attention for formal codes of corporate conduct signal a more
general trend of formalisation, perhaps even in the way corporate directors
relate to each other. In order to gain insight into the atmosphere of Dutch
corporate boards, all interviewees were provided with a handout that resembled figure 5.1. The figure contains a space with two dimensions. The first
dimension spans the range between a cooperative atmosphere on the one
hand, and a competitive one on the other. The second dimension runs the
gamut from a formal meeting to an informal meeting. The interviewees
were asked to indicate how, in their view, the board meetings they attended
could be positioned on the intersection between the two dimensions. A univocal result in favour of one of the possible atmospheres would indicate consensus amongst the corporate elite.
Figure 5.1 shows the results of this enquiry. Bear in mind that the
answers are an ordinal scale; the directors had only three possible scores per
dimension. Therefore, there are only nine possible combinations. The
squares refer to executive board meetings (Raad van Bestuur), and the triangles to the meetings of the supervisory board (Raad van Commissarissen). The
two circles refer to one-tier boards. The circles close to the axis are neutral
on that respective dimension. Since all board members interviewed had
served on at least two boards, there can be multiple observations per person.
All nine combinations within this scheme were mentioned more than
once, except for the option ‘neutral-competitive’, which was only mentioned
by one respondent. Clearly, big differences exist between the different
boards. Yet notwithstanding the variety in observations, one-third of the
interviewees felt that the board they are a part of is best described as cooperative and informal.

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Figure 5.1: Styles of Board Governance

To some extent, these observations should be interpreted as a socially
preferable answer. One supervisory director of a number of firms anticipates
a normative judgment when he explains his position:
What strikes me is that in all the boards I sit on [...] [the atmosphere] is
not competitive. No, it is not formal at any of them. [...] And I really
mean that. I’m not just saying this because I like doing it. It is not a
normative position, it is actual fact.
A dominant proportion of the corporate elite still has a preference for the
co-operative, informal style of board meetings. According to the interviewees, only one out of six corporate boards have a competitive atmosphere.
Many of the directors emphasised that competition amongst members is the
worst thing that could happen. It is up to the chairmen to reduce competition amongst board members.
Yes, there is always one who tries to be competitive. But you have to
keep them on a short lead: they are bad news. You always have these
people who want to be mentioned in the minutes of the meeting. The
best thing to do in such cases is to draw up the minutes in such a way
that they no longer include names (former CEO and president of a few
large firms).

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And another executive director adds:
Staying away from polarisation, that is typically Dutch. We tend not to
polarise. […] So you have to be firm, and you have to be critical, but you
don’t do so as if you were the constable of the corporation. You do it
with respect for the executives. […] Professional collegiality with
respect for each other’s position. That is typically Dutch: not very hierarchical.
The interviews suggest that there is still a general preference for rather
informal and cooperative settings.
The findings presented in figure 5.1 are, of course, a static representation.
And without a comparison over time, sound judgements cannot be made
about whether or not change has taken place. However, the interviews do
give additional insights as to the developments and changes taking place
within board atmospheres. While no consensus exists on the level of competition, the interviewees agree that board meetings are becoming more and
more formal. The predilection for an informal meeting notwithstanding,
many directors feel that the atmosphere in the boardroom is more formal
than before.
Formalisation is an over-arching element of the shift in corporate governance sweeping through the Dutch corporate elite at the turn of the century. But what caused this formalisation? It seems too easy to state that the dismantlement of corporate elite social networks resulted in more formal corporate governance. Rather, the disembedding of firms and directors made
the changes, as they took place, possible. Next to the dismantlement of the
networks, there are three distinct, yet related, developments that triggered
the formalisation.
First, the dismantlement of corporate social networks went hand in hand
with an increasing and ongoing internationalisation. Foreign directors
increasingly flock to the boards of Dutch corporations. This heterogeneity in
national backgrounds has an impact on the feeling of we-ness amongst the
corporate elite, as the next section will argue. Second, the tenure of corporate directors, in particular executives, has decreased over the past years.
Directors are increasingly held responsible for the (relatively short-term)
performances of corporations, which contributes to the formalisation of corporate governance. Third, and related to the second point, the widely shared
observation of an increased formalisation of board practices is in and of
itself the result of more stringent rules and norms of accountability as formulated in codes of conduct.
The next sections investigate these three developments and their influence on the formalisation of corporate governance. After dealing with the
causes, we turn to the consequences of the formalisation of governance, and

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in particular to the formalisation of a common norm system. On the one
hand, writing down rules of appropriate behaviour might prove to be the
first step in making firms and directors to act responsibly. Therefore, ‘corporate social responsibility’ (CSR) will be examined as a case of the formalisation of norms of appropriate behaviour. However, a side effect of formalisation is that it implies a shift from principle-based governance towards rulebased governance. The importance of principles (or norms) in corporate governance becomes strongly related to the extent to which these principles are
formalised. A case in point is the remuneration of the corporate elite, which
resists formalisation. Fierce criticism from society notwithstanding, the
income of corporate directors has increased spectacularly in recent years.
This increase can be directly related to the disintegration of a common
norm system among the corporate elite.

Internationalisation of Boards
Traditionally, Dutch firms have relatively large numbers of foreign corporate directors. Binational firms such as Unilever (Anglo-Dutch), and multinational firms such as Philips, accounted for a fair share of foreign representation on Dutch boards. Consequently, during the 1970s, Dutch firms were relatively central within the international network of board interlocks (Carroll
and Fennema 2002; Fennema 1982). As such, the Netherlands is comparable
to ‘small industrial systems’ such as Switzerland and Sweden (Ruigrok and
Van Tulder 1995). Due to the small home market, the narrow supply base in
the country of origin, and the weak bargaining position of corporations visà-vis labour, firms in these industrial systems are encouraged to expand
internationally. By the turn of the century, 79 per cent of sales for the largest
listed firms in the Netherlands took place across the borders, a percentage
which is much higher than the European average of 61 per cent. Similarly,
64 per cent of shares were in foreign hands, compared to a European average of 31 per cent (Heidrick and Struggles 2003). However, by the mid-1990s,
global corporate players were strongly connected to their home market. By
and large, the boards of international-oriented and operating firms in
Japan, the USA, France, Italy and Germany were filled with natives. ‘The
international composition of the management board in many cases still
seems to be in an “infant stage”’ (Ruigrok and Van Tulder 1995, p. 157).
The inflow of foreign board members in the Netherlands mainly took
place during the 1990s. Still in 1987, only four per cent of Dutch board members had a foreign nationality (mainly at the binational firms). Ten years
later, this number had increased to 12 per cent (Van Hezewijk 2001). In 1996,
one out of four board members of the 25 largest listed firms in the
Netherlands were foreign, and by 2002, half of all executives and 40 per cent
of all supervisory directors were non-natives.1 By 2002, all but one of the 25

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largest listed firms had at least two foreign directors. Overall, larger firms
attract more foreign directors. But still, trends of internationalisation can
be found as well among the top 45 listed firms, excluding the bi-national
firms Shell, Unilever and Fortis. In 1990, only 4.6 per cent of these firms had
foreign directors, while by 1999, 11 per cent had foreign directors among the
highest ranks (Heijltjes, Olie and Glunk 2002). Foreigners have replaced
Dutch directors in both executive and supervisory positions. Interestingly,
this inflow of foreign directors over the last years of the twentieth century
is the result of increased levels of merger and acquisitions, rather than an
emerging international market for corporate directors. Only a few foreign
board members were recruited from outside the firm (Heemskerk 2004a).
Contrary to their Dutch colleagues, foreign board members typically do
not hold multiple positions. The substitution of foreign directors for Dutch
directors therefore adds to the decline of the national network of interlocking directorates. At the same time, the inflow of foreign directors makes corporate boards more heterogeneous. In the process of internationalisation,
most of the corporate elite’s common background and upbringing are lost.
The disappearance of the old boys network swept away much of the social
similarity and cohesion of the corporate elite, and the inflow of foreign
directors finishes this process. The pace of this process is a bit hampered
because foreign directors are usually not the extreme opposite of a typical
Dutch director. A supervisory director reflects on this, stating that,
You see, the Americans I know, they are not at all like the Americans
you would picture if you think about entrepreneurs. They are just
friendly, nice people who are not solely concerned with the profitability of the corporations, but who also think in terms of continuity, who
take employees into account. [..] You see, the German supervisory directors that I deal with are completely different from Belgian supervisory
directors. And in Belgium there is a difference between directors from
Wallonia and Flanders. I must say, it isn’t as much fun as it used to be.
Due to the heterogeneity in board composition, board meetings are not as
pleasant and cosy as they were before for the remaining Dutch board members. With English as the official language, and more and more non-Dutch
members, boards lose their national distinctiveness. With one or two foreigners on a board, their impact remains small, but when the balance shifts
further, significant changes in the boardroom atmosphere take place. A
truly internationalised board needs several foreign directors:
If you have one foreigner on your board, it becomes much more difficult. Because, the Dutch, they have this way in which they conduct
their affairs. And you simply can’t go against that. But with five for-

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eigners the situation is different. So you are mistaken if you think that
you have an international board if two out of twelve directors are foreigners. It really has to be… it doesn’t have to be more than half, but it
should be a significantly large faction (director at multiple multinationals).
Dutch corporations are increasingly governed by people who do not have a
special interest in the Netherlands. The ongoing process of internationalisation could therefore be the final blow to the already waning Dutch business
community. The inflow of foreign directors onto the boards of the largest
firms drives away the remaining pieces of corporate elite-wide cohesiveness,
reminiscent of the old boys network. As a result, relationships amongst the
directors become more formal. And because most foreign members of Dutch
boards have an Anglo-American background (Heemskerk 2004a), they add to
the installation of Anglo-American practices and ideas in Dutch corporate
governance.

The Jostle for Board Seats
A second development that adds to the formalisation of corporate governance is the decreasing tenure of executives. While corporate directors used
to hold their seats for years on end, executive board members are increasingly the subjects of the ‘exit culture’ of shareholder capitalism from the 1990s
onward. Executives whose firm did not live up to investor expectations were
sent away. This decrease in tenure is a global development. In the period
between 1995 and 2000, the worldwide rate of CEO turnover increased by
300 per cent, and remained at that level for the next three years (Lucier,
Schuyt and Handa 2004). In 2003, the median tenure of Dutch corporate
board members was only three years long (VEB 2003). As a result, the high
turnover rate jeopardises the internal, and long-term, executive career trajectory (see chapter 4). As one chief executive officer explained:
Over the past few years there have been quite a lot of firms that consumed top managers at a high rate. To some extent, an Anglo-Saxon
settlement culture has emerged. I do think, when I look around me in
the Netherlands, that there is enough management potential. But in
saying so, it should be noted that in a number of ways … you see, if you
really get such a burn-out culture, when you use up too many [executive directors], the question is whether it will regenerate as quickly.
High turnover causes high demand for new directors. Typically, within a
firm, only a certain number of people are considered suitable and available.
Furthermore, prospective board members could take on a job at another
company, reinforcing the need for outsiders.
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Within the setting of shareholder capitalism, getting ‘fresh blood’ on the
board is widely considered as a positive move. Outsiders (i.e. executives without significant previous employment with the firm) are believed to be more
dynamic, charismatic and equipped with vision. According to Khurana
(2002), corporate leaders (especially CEOs), are increasingly expected to be
charismatic leaders. He argues that behind the growing numbers of outsiders in corporate executive boards, there is an irrational quest for charismatic chief executives. Dutch board members confirm that in the
Netherlands, outsiders are becoming more popular as well:
Yes, I do feel that this is happening more often. That people are
brought in from outside, to bring about so-called big changes; a shift
in culture (former CEO and chairman of several firms).
The call for more open recruitment patterns, and the appraisal of investors
for outsiders created an awkward position for sitting board members. On
the one hand, they need to comply with the demands made by investors and
financial institutions. At the same time, they feel very uncomfortable with
the situation, and fear the increased risk associated with the new recruitment practices. Many corporate directors struggle with the traditional
career trajectory:
[…] sometimes you have to face the fact that your intended successor
drops out, because he is recognised elsewhere as somebody with capabilities and talents, and he is able to get a top position there sooner. At
the same time, you can’t give him any guarantees that he will get the
top position here. This brings you in a situation where you have to take
in somebody from outside to fill the position. […] which is usually considered a positive move by the market. ‘Outside blood’, they say. And
now and then this might be useful indeed, but certainly not always.
And, well you know, with outside people. The grass is always greener
on the other side of the fence, and people from outside always look
more attractive (former CEO, chairman and supervisory director).
In his perception, ‘the market’ reacts positively when a company hires an
outsider. Because of this appraisal, young professionals and runner-up executives have opportunities outside the company where they received their
training. Although outsiders can be very helpful in times of turmoil, they
are not able to sustain their position for a longer period of time. For longterm performance, executives need firm-based cultural knowledge and
social capital. Figures on European CEO turnover show that 44 per cent of
the CEOs that left their company in 2003 were ‘outsiders’. 70 per cent of this
group were, in fact, forced to resign; a high rate compared to ‘inside’ directors (Lucier, Schuyt and Handa 2004, p. 14).2
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The career trajectory of the corporate elite is becoming unstable. While a
preference for in-house recruitment and training remains, boards are
increasingly forced to recruit from outside their own ranks. Applauded by
shareholders, outsiders are supposed to be of great value to a firm. And in
many cases, they surely are. But the increased possibility of shifting from
firm to firm has its impact on the loyalty of executives towards their firm.
Where Berle and Means (1932) pointed out the consequences of a shift from
management by owners to management by hired professionals, we now see
that large parts of the managerial cadre is even more detached from the corporations they control. Job opportunities and job insecurity go hand in
hand, stimulating corporate elite members to focus on their individual
interest, rather than group-wide or corporate interests.

Accountability and Risks
The third contribution to the formalisation of governance lies in the
increase in accountability and liability of the corporate elite. Executives, as
well as supervisory directors – whose positions and accountability have been
undefined territories for long – are increasingly held accountable and liable
for the actions of their firm. Scandals of fraud and mismanagement
(Worldcom, Enron, Ahold, Parmalat, etc.) that plagued the corporate elite
around the turn of the century made many directors aware of the risks of
informality and the need for accountability as well. As one CEO of an industrial firm explains:
We have all become more formal, and everybody is much more aware
of their own role and responsibilities.
The board members all agree that change was indeed necessary. Many
underline problems, particularly in regard to supervisory boards. The supervisory board used to have the role of advisor. An invitation to join a supervisory board was a sign of prestige within the corporate elite. One director
reminisces that twenty years ago, it was not normal to ask critical questions
at all.
I still remember the time when supervisory directors were reading the
documents during the meeting. Fourteen or fifteen supervisory directors, half of whom did not bother to show up at all during the meeting. Well, that’s just not possible anymore. As a supervisory director,
you have to participate in all kinds of committees, and there you better make sure that you have read your documents damn well. And the
amount of information you receive is simply too much to work your
way through whilst enjoying a drink. And if you don’t read everything,

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you will be found out immediately and everybody will know that you
failed to read them. Everybody remains polite, but they won’t take you
serious anymore. No, you’d rather have a supervisory director who asks
annoyingly critical questions (executive at a multinational corporation).
Nowadays, the ideal supervisory director is a stern friend, who is able to give
critical comments. And in reaction to the failures in corporate governance,
directors want to show that they are involved in the business of the corporation; that they are not to blame. Formalisation of governance practices is
one answer to the growing demand for accountability. A former CEO and
chairman of multiple boards comments:
The changes in liability, and the recent changes in corporate governance are such that you are forced to do things more formally.
As one way of defining responsibilities, the installation of board committees
helps – if not forces – directors to focus and pay attention.
[…] everybody is much more aware of their own role and responsibilities, I reckon. […] A supervisory board has its own responsibility and its
own supervisory role. And this is being formalised; there is an audit
committee, a remuneration committee, etc. (CEO and supervisory
director).
Board members make clear that the recent attention to corporate governance has had real implications for their daily lives as executives and supervisors. Board members are caught inside a glass cage these days.3 Board
members feel that they are in the spotlight, and this position is a rather dramatic change from how things were before:
I believe that where we are now, everything is becoming more formal
and more businesslike. More critical questions are raised, more often
the finger is put where it hurts most. […] I think that everyone is more
sharply aware of one’s role. Consequently, the degrees of freedom of a
supervisory board, and equally so for an executive board, are limited
(executive and supervisory director).
The degree of freedom for board members has diminished. In other words:
the corporate elite cannot easily get away with problems, mistakes and
shareholder- unfriendly behaviour in general anymore.
As a result of increased personal accountability, board members become
more averse to risk. This leads to the awkward situation that supervisory

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directors temper the entrepreneurial spirit of the executives. Since risk is a
crucial element in managing a company, increased accountability can lead
to problems for a firm. One chief executive officer describes the situation as
follows:
Well, the change […], that everything becomes more formal. I think it
is because all these things that have happened, right, over the last few
years. Supervisory directors will now – not that they didn’t pay attention before – pay even more attention. Also to make sure that they
can’t be blamed themselves of course.
Directors try to hedge increased risks and responsibilities. In the corporate
governance regime that is unfolding, directors can no longer hide behind
the collective of the board. It is no longer a group who acts together, but
directors who act as individuals on a board. Every person who sits on a board
must be able to defend themselves, because at any given time, shareholders
or the media can knock on his door and ask him to account for his company’s policy. The same CEO thinks that
a hint of fear has sneaked in. That people are reluctant to take risks. On
the one hand this is a good thing: I am a better supervisor. But it also
has negative aspects. If the result is that companies are less likely to
engage in enterprise, then it is a bad thing.
In response, he was asked whether he thinks that the balance has been lost.
I do think that over the past two years the balance has tipped a bit too
much in favour of risk-avoiding behaviour. That will gradually come
back, probably. But what I hear and experience is that there is a large
difference with a few years back with regard to the extent to which
supervisory directors dare to accept risks. And taking risks is, of
course, part of doing business.
Taking risks is an elementary part of doing business. But outside directors
are more eager to hedge their personal risks than to assure a fruitful company policy. Supervisors are in the defensive mode. In these days of
increased media scrutiny, it is no longer sufficient to do the correct thing or
act in the right way; one has to be seen as doing so. Appearance and visibility become more important than prudent behaviour. In reaction to these
developments, board members continue to stress that they are not omnipotent, and that there is a limit as to what can be expected from them. As
supervisors, they just cannot avoid allowing mistakes to slip through:

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The ideas that circulate that a supervisory director is some kind of
super inspector who, when provided with enough power, can steer the
company clear of every obstacle, is just naive. Whether you operate
within the American system or within the European system [a supervisory director] can only allocate a small part of his time to the corporation. And he will always be less informed than the executives; this is
unavoidable. [...] To give him more and more power, hoping things will
change for the better, I just don’t buy it. I don’t buy it (CEO and supervisory director).
The corporate elite express concern about the developments in Dutch corporate governance. They recognise the importance of increased responsibility,
but they do not necessarily see the benefits. Leaving behind the informal setting of the board meetings has its downside, and the corporate elite is keen
on pointing this out. The formalisation of corporate governance,
doesn’t mean that the decisions are better. As a consequence, they
might even be formulated too strict, so that people don’t really know
how to deal with them. On the contrary, in an informal discussion, all
the nuances and related issues will be discussed briefly as well. ‘Did
you think about this, did you consider that?’ And only then will the
formal decision be made (former CEO and chairman of several firms).
Much against the liking of the corporate elite, corporate governance has
become more formal. The inflow of foreign directors, the decrease in tenure
and the call for accountability has caused a formalisation process within
corporate governance.
The formalisation of corporate governance effectively implies an incremental shift from a principle-based system towards a rule-based system. In a
number of areas, the common norm system of the corporate elite is formalised in codes of conduct and reported in the annual report. One of these
areas is corporate social responsibility, the topic of the following section. In
other cases, however, the common norm system becomes blurred and principles are lost. For instance, this is the case in the field of remuneration,
addressed in the subsequent section.

Corporate Social Responsibility4
Codes and lists of best practices serve to re-institutionalise expected behaviour now that the means for social control have largely vanished and the call
for external accountability increased. In a number of areas, informal behavioural norms amongst the corporate elite are replaced by formal codes of
conduct. An exemplary case for this process is the rise of ‘corporate social

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responsibility’ (CSR). Basically, CSR conveys the message that there is more
to corporate governance than a focus on profits. Yet it does so without
attacking the basic premise of shareholder supremacy. In short, the argument is that investing in stakeholder relations and acting socially responsibly will, in the long run, add to the profitability of firms. CSR acknowledges
that companies should deliver a positive contribution to economic, social
and environmental development (OECD 1999; Van Ballegooijen 2005).
Companies should integrate social and environmental concerns into their
business operations and in their interactions with their stakeholders on a
voluntary basis (SER 2001, p15).
CSR is effectively an attempt to reconcile social justice and legitimacy
with a shareholder orientation of a liberal-market economy. A publisher
summarises it well in an advertisement for the book Corporate Social
Opportunity (Grayson and Hodges 2004). ‘Don’t be misled by the word social in
the title’, it reads. ‘This is a book about how to improve corporate performance and gain competitive advantage’. In a somewhat surprising and dialectic way, the rise of shareholder interests led to the renaissance of stakeholder orientation. In the Rhenish form of capitalism, the diverse interests of
labour, capital and management form the basis for corporate policies and
strategies, both at the firm level and at the level of the Dutch corporate
regime (see chapter 1). In a shareholder-oriented system, however, the interests of the suppliers of capital triumph over other interests. Labour and
management are supposed to serve the interest of the shareholders, which
is, proponents argue, a benefit to all. In a way, CSR emerged as a reaction to
the one-sided focus on shareholder interests.
There have been ample attempts to uncover any relationship between
financial performance and corporate social responsibility from the 1960s
onward. The results, however, are mixed at best. A number of studies find no
positive or negative relationship whatsoever (Arlow and Gannon 1982;
Aupperle, Carroll and Hatfield 1985). Other studies argue a positive relationship does exist, but the empirical results they offer are weak and without
consistency (Balabanis, Phillips and Lyall 1998; Cochran and Wood 1984), or
find that prior performance is more closely related to CSR than subsequent
performance (McGuire, Sundgren and Schneeweis 1988). Some findings
show that investing in firms that act socially responsibly leads to superior
portfolio performance (Derwall et al. 2004), yet other scholars argue that
positive findings are due to misspecifications in the modelling of the relationship (McWilliams and Siegel 2000). There is no telling whether firms
perform well because they are implementing CSR practices, or that well-performing firms are the ones that implement CSR practices. The impact of CSR
policies on corporate performance is thus highly debateable and questionable at least. This observation stirs the question why corporate directors
would implement such a policy: since no clear economic rationale is pres-

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ent, it seems to make no sense to spend resources on drawing up and implementing CSR policies. Yet, corporations are increasingly involved in CSR
(KPMG 2005).
In a way, corporate social responsibility is similar to hygiene. It is a minimum standard, or bottom line, that everyone should adhere to (Meijer and
Schuyt 2005). If this bottom line is met, nobody will talk about it, but if it is
not, the firm will receive bad publicity and, potentially, problems will arise.5
Thus, firms are slowly becoming receptive to critique from committees and
activists.6
To some extent the popularity of CSR can be understood if one takes possible harm into account. The conflict between Royal Dutch/Shell and
Greenpeace about the disposal of the oil storage and tanker-loading buoy
‘Brent Spar’ in 1995 is a case in point. On the basis of expert opinions, Shell
decided to sink the platform in a deep trench in the Atlantic Ocean.
Greenpeace fiercely objected, and instigated a consumer boycott against
Shell in Germany. With the pressure on Shell reaching extraordinarily high
levels, Shell decided to give in and dismantle the platform in Norway. This
incident has been a warning to the corporate elite ever since. The strength
of public opinion is not to be underestimated, and the debate cannot be won
on technical grounds alone.
The mixed results of attempts to uncover a relationship between CSR and
financial profitability, together with the examples such as that of the Brent
Spar debacle, leaves the Dutch corporate elite divided on the issue. No agreement exists about the importance and relevance of CSR. There are promoters
and sceptics of CSR among the corporate elite. On the one hand, there are
those who do not take CSR too seriously. These sceptics do not see the added
value CSR can bring to the success of a company and generally think about
it in terms of a hindrance. According to them, companies promoting CSR are
only paying lip service.
All firms must act socially responsible. Yes, there is a lot of lip service.
Socially, what does that mean? What would you have done differently;
is there any other way you might have done it? No, corporate social
responsibility is not an issue (director at a predominant business-tobusiness firm).
Sceptics feel that CSR is a hype, and that the concept is merely used as a marketing tool. As one supervisory director bluntly stated:
This bullshit about CSR, it is mere fashionable twaddle. It is a notion
of an ephemeral nature.
They clearly state that profit and continuity are the most important objectives.
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Again, a corporation is about profit and continuity; you can debate it
for hours on end but that will accomplish nothing. All that fuss about
social issues and corporate governance is exaggerated (supervisory
director).
For sceptics, decent behaviour is no more than abiding the law. They stick to
a ruled-based concept of governance, where everything that is not prohibited, is an opportunity. In as far as sceptics are receptive to the phrase social
responsibility, they relate this to their employees and the human resource
strategy of their firm.
The second, and larger group, are promoters, who state that CSR contributes to total welfare and that all companies should practice it.
In my opinion a firm is a social organism, and a firm must provide an
optimum contribution to the workings of society. This is accomplished
by making products and providing services which are of actual use to
people, and doing so in a manner that is considerate of other people
and your surroundings. That’s the position you should take in life
(supervisory director, without experience as corporate executive).
Promoters believe that CSR contributes to the value of the company. They
make the distinction between complying with legislation and CSR.
If something is formalised in legislation, then I don’t consider it part
of CSR (former CEO and supervisory director).
These directors point out that their companies aim to comply with legislation, but at the same time, set higher, self-regulating standards in the form
of codes of conduct.
First, we have a number of core values. Secondly, we have a code of conduct. From the higher echelons, we point to a number of issues of
which we say, this is what we should adhere to. Issues such as corruption and the environment. It is about stating that you should at least
comply with laws and regulations everywhere, but that in fact you
should do a bit better than that (CEO and supervisory director).
The openness and formalisation of principles of proper behaviour makes it
possible to implement a corporate-wide strategy based on these norms. At
the same time, documents and reports are used to show outsiders that CSR
is taken seriously. The implementation of CSR policies and strategies is a
struggle of the firm in a ‘multi-stakeholder dialogue’. Promoters recognise
that implementing CSR goes well beyond ‘box ticking’.

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You can’t comprehend business principles of sustainable development
in texts and rules. You must try to translate it into the culture of your
organisation. If they are merely rules, you run the risk of form over
substance (former CEO, chairman and supervisory director).
The Dutch corporate elite is divided on the issue of CSR, but can we discern particular characteristics between promoters and sceptics?
Chapter 3 argued that those directors who are central in the network
of board interlocks have a certain role in the distribution of new ideas
and norms. In particular, big linkers play an important role as ‘ambassadors of business’. Business-wide interests, as opposed to the interests
of particular firms, particularly inspire these members of the corporate elite. The daunting task they face is to change the belief system of
the corporate elite – the common norms – and to persuade the corporate elite that CSR is in the interest of business at large. In order to get
this message across, central actors need to commit themselves to this
new agenda. This shift is already on its way, as one supervisory director observes:
What I observe is that previously, topics such as the environment were
regarded with sneers and snickers. That’s gone now. [...] One is not
taken seriously if they don’t know anything about the environment, or
working conditions. [...] You don’t get any esteem in your network if
you don’t have an opinion about that, if you don’t act on it.
Peer pressure and social embeddedness appears to be of importance for the
way in which the corporate elite positions itself towards topical issues such
as the environment. This observation raises the question whether the position of a director in the corporate elite network has influence on the susceptibility to, in this case, corporate social responsibility?
In order to investigate the relation between network position and attitude towards CSR, the centrality of the directors is coupled to their position
on CSR. Degree centrality is a measure for the number of one’s connections.
Directors with a high degree of centrality are more embedded in the social
network. Table 5.1 shows the distribution of network centrality for sceptics
and promoters of CSR policies.7 Sceptics do not meet many other directors.
All interviewees with more than average levels of centrality are supporters
of CSR. Sceptics are marginally embedded in the Dutch business community, while promoters are relatively more embedded in the Dutch business
community. These findings are in line with the expectation that central
interlockers push the agenda of CSR. A closer look into the group of promoters reveals another interesting aspect. Promoters can be found amongst all
ranks of centrality. This observation indicates that CSR is steadily endorsed
across the corporate elite.
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Table 5.1: Network Centrality and CSR
Centrality (degree)
Marginally embedded
Embedded
Well embedded
Highly embedded

Sceptics

Promoters

Total

2
4
0
0

4
2
6
5

6
6
6
5

(0-29)
(30-45)
(46-79)
(80-105)

The differences among the corporate elite on the issue of CSR, together with
the previous findings of declining social networks, makes us wonder about
the shareholder orientation of interlockers. How prone are the interviewees
to support shareholder orientation over stakeholder orientation, and subsequently, how does this relate to network position and support for CSR? A set
of questions during the interviews were asked to reveal whether interviewees were exclusively oriented towards shareholders, or whether they considered the interests of a wider set of stakeholders. A thorough investigation
of the answers of the interlockers made it possible to divide the interviewees
into two groups: stakeholder-oriented directors and directors that focused
primarily on shareholders. As it turned out, both groups were of equal size.
The corporate elite is indeed divided, and should not be considered to be a
homogeneous group. Whereas one group adheres to a stakeholder orientation, a similar group feels that corporate strategy should be exclusively
aimed at serving shareholder interests.
As a next step, we can create a cross tabulation of relationships between
directors’ perceptions of CSR and their management orientation (table 5.2).
It comes as no surprise that all but one of the directors who state that they
adhere a stakeholder orientation also promote CSR. Similarly, all but one of
the CSR sceptics holds a shareholder orientation. There is, however, a divide
amongst the promoters of CSR. While the majority of the promoters has a
stakeholder orientation, a large minority has a shareholder orientation.

Table 5.2: Management Orientation and CSR Preference
Management orientation
Shareholder
Stakeholder

148

Sceptics
5
1

Promoters
6
11

Total
11
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We know that sceptics are not highly embedded in the board overlap network, but promoters can be found across all levels of centrality. This observation warrants a closer look at the promoters. Table 5.3 looks exclusively at
the promoters of CSR, their centrality and management orientation. It
reveals a striking finding. Almost all of the promoters are stakeholder-oriented; only one group stands out. These are the highly embedded promoters, who meet over 80 people in the network of board overlap. While most
promoters are stakeholder-oriented, promoters with highly central positions in the network are in fact shareholder-oriented. Apparently, the most
central interlockers combine a support for CSR with a shareholder orientation. They do not question shareholder supremacy; yet do see the need to
complement a univocal focus on shareholder return with CSR.

Table 5.3: Promoters of CSR: Network Position and Stakeholder Orientation

Marginally embedded
Embedded
Well embedded
Highly embedded

Stakeholder
4
1
6
1

Shareholder
–
1
–
4

Corporate social responsibility is now widely considered to be a wise cause
of action by many members of the corporate elite. Central interlockers promote CSR, in conjunction with a shareholder orientation. At the same time,
the findings also suggest that directors with fewer connections in the corporate elite are also less susceptible to these new norms of appropriateness.
The popularity of CSR must be understood as an attempt to reconcile a
shareholder orientation with social responsibilities. The support of many
central actors within the corporate elite ensures that CSR is now part and
parcel of the norms of appropriateness of large parts of the corporate elite.
Codification and formalisation of these notions of proper behaviour are considered necessary and are seen as an opportunity. This sense of urgency,
however, has not been the case in fields where norms and principles play an
important role. The following section investigates the – in many ways opposite – case of increased remuneration of the corporate elite.

Remuneration as Status Attainment
Contrary to CSR, the (increase in the) income of the corporate elite defies
regulation. In the period between 1996 and 2003, conservative estimations
speak of a 60 per cent increase in remuneration, while less conservative

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reports speak of a 110 per cent increase (Fennema and Heemskerk 2005). The
median total cash income of the directors of the largest firm in 2001, as
reported by the employers’ association, was between 820 thousand and one
million euros (Hay/Towers Perrin 2001). In 1983, the median total cash
income of board members of the largest Dutch firms was 232 thousand
guilders (NCD-HAY 1983); 166 thousand euros at the present day value.8 To
put this in perspective, if the corporate elite followed the general increase of
wages under collective agreements, the median total cash income of an
executive would have been approximately 239 thousand euros by the turn of
the century. The actual income is about three and a half times larger. The
spectacular growth in income is difficult to understand if one sees wages as
an outcome of a liberal market mechanism where price is determined by the
interplay of supply and demand. Could supply of managerial skills lag so far
behind demand?
During the 1980s and particularly during the 1990s, remuneration
became an instrument to provide directors with incentives. A well-balanced
mix of short-, mid- and long-term incentives is intended to guide and discipline top executives to act in the best interest of the shareholders. This innovation caused the increase in remuneration. A positive relationship between
these innovative remuneration packages and firm performance is usually
presupposed. However, recent research puts serious doubts on this claim.
Bebchuk and Gribstein (2005) investigated the increase in remuneration of
top executives of 1,500 firms in the USA during the period 1993 to 2003, and
showed that the average CEO income increased by 166 per cent. Only 40 per
cent of this increase can be explained by firm growth and increased firm
results, and a similar gap between pay increase and performance of 20 per
cent exists for the group of top five executives. Therefore, Bebchuk and
Gribstein conclude that the increase in pay must have reasons beyond accelerated firm performance.
It might be worth pointing out that the amount of capital appropriated
by the corporate elite amounts to a very significant level, at the expense of
investments in the firm, employees and shareholders. At the level of individual firms, the remuneration of top executives has no significant impact on
the dividend per share, which removes the incentive of shareholders to act
against these high levels of income. However, for the economy as a whole,
this is not the case. During the period 1993-2003, a total of six per cent of
the net income of the firms in the USA was remitted to the top five executives of these firms (Bebchuk and Fried 2005). Furthermore, if payment
failed to fully discipline the corporate elite as it is supposed to do, increased
remuneration might be conceived of as a sign of the power position of corporate directors. A strange situation emerges: one in which shareholders
believe that corporate governance practices with respect to remuneration
serve their interest, yet it is actually a reflection of the increased power position of managers vis-à-vis shareholders.
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The openness and transparency about executive pay, forcefully put forward by shareholder activists, drive the increase in income. According to
best practices in corporate governance, transparency is crucial, and remuneration is no exception. Thus, listed firms are obliged to report the remuneration of their top executives. But as an unintended consequence,
increased transparency strengthens the upward trend of remunerations.
One director, a chairman at several firms, elaborates on how different the
situation today compared to earlier times:
We never mentioned income. But then we couldn’t compare them. We
didn’t know what they earned at DSM or somewhere else. Sure, at the
Royal/Shell a bit more than we did, likewise with Philips. But so what.
They were larger. But now the media makes it incredibly easy. They
simply list them in the papers. And there you have your ranking. Who
gets most, who is second, and third and fourth. It was inevitable,
because the public demanded it. But the results have been disastrous;
it created a rat race (former CEO, supervisory director and chairman).
An increase in executive payment for company A leads the directors of firm
B to demand a pay raise as well. After all, they do not want to earn less than
their peers (and by definition, 50 per cent of al directors are paid below the
median). When it comes to top executives, everyone seems to perform better
than the average, legitimising the continuous increase of income.
The mechanism of mimetic desire leads to a rat race. The corporate elite are
not so much occupied with the total amount of their remuneration, but are
rather occupied by the relative amount they earn in comparison to colleagues and competitors. One officer at a remuneration consultancy company describes the issue well:
When a director feels he is doing his job well, he figures that his market value has increased. And he wants to see this translated into
money, although he doesn’t need it of course. A million euros salary
has nothing to do with additional purchasing power. It is all about
esteem, status and the pecking order.9
Due to the increased (external) democratisation and the formalisation (or
professionalisation) of the corporate elite, members have but one way of
relating to each other, and that is in monetary terms. Social background
and cultural capital are less important for a corporate career than they were
a few decades back. The current corporate elite is no longer recruited from
Dutch aristocracy or elite circles anymore. The composition of the corporate
elite is much more heterogeneous, and this democratisation stimulates the
fear for a loss of status. Seen from this perspective, the increased remunera-

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tion directors receive is a form of ‘social hedging’ against the (perceived)
increase in risk.
The remuneration is a form of social hedging, in the sense that the corporate elite tries to safeguard itself from a drop in status by adopting stock
options, golden parachutes and large pension schemes. In this manner,
social standing is replaced by income, family name by pay slip. The corporate elite no longer see their revenues as a compensation for their labour,
but as an expression of their status position amongst the corporate elite.
Income is not the result of supply and demand on a labour market, but of
the result of an ability to appropriate corporate profits.
It is already known that wages are not solely the outcome of demand and
supply. Even Adam Smith argued that, ‘wages of labour vary according to
the small or great trust which must be reposed in the workmen’ (Smith
1776/1993, I.10). High trust jobs such as that of physician, lawyer or attorney,
and surely also that of CEO of a very large firm, come with high levels of confidence. Therefore, Smith argues, ‘some trades, e.g., that of a banker, may be
necessarily confined to persons of more than average trustworthiness’ (ibid.,
footnote b16). ‘Such confidence could not safely be reposed in people of a
very mean or low condition’, Smith argues. ‘Their reward must be such,
therefore, as may give them that rank in the society which so important a
trust requires’ (Smith 1776/1993, I.10.22). The current problem, however, is
that a one-to-one relationship between payment and ‘rank in society’ no
longer exist. While corporate executives are increasingly smart in extracting
wealth from ‘their’ firms, the social standing of their occupation is dwindling.
Consequently, the meritocratisation and disembeddedness of the corporate elite has unexpected side effects of mimetic greed. The transparency
about the income of top executives did result in the shaming and naming of
corporate directors. But the corporate elite does not seem affected by this.
They do not feel that the critique is justified. After all, so many foreign directors receive even more income. And external pressure on the corporate elite
from the media and shareholders has shown to be ineffective. Effective
social control of the corporate elite has to come from within circles of the
corporate elite, because directors are, first and foremost, oriented towards
their peers.
Large parts of the corporate elite have now come to accept extremely high
remunerations as legitimate action. Legitimacy is ‘a generalised perception
or assumption that the actions of an entity are desirable, proper or appropriate within some socially constructed system of norms, beliefs and definitions’ (Suchman 1995, p. 574). What is considered to be legitimate, and
hence appropriate, is always formulated within social circles. In corporate
governance, appropriate and legitimate actions are labelled best practices.
The search for common ground through best practices leads to very homo-

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geneous practices of, among others, corporate governance. Firms often regulate and design their internal affairs such that it resembles other relevant
corporations (Bender 2004). This isomorphic behaviour, due to best practices,
adds to the legitimacy of a performance-based remuneration program, and
means that the corporate elite can easily ignore the discrepancy between
pay raise and performance. Meanwhile, the discrepancy between the income
of the top executives and the rest of the firms’ employees continues to grow,
as does income inequality in society at large.
Remuneration has become a means of social hedging, as well as an index
of social prestige. With the business norm system undermined, it is up to
supervisory boards to prevent a crisis of legitimacy. They, however, are not
well equipped to police executives. Some supervisory directors explicitly
oppose the current developments:
We should get rid of a lot of these remuneration structures we introduced. […] These huge variable parts of the income work counterproductive. […] We are now pushed to the Anglo-Saxon side, and I am not
happy with the current remuneration structure, nor with the way it is
composed, nor with the absolute amounts.
But when asked what would happen if supervisory directors step in and
lower the remuneration, this director, a chairman of several large firms and
a member of remuneration committees himself, responded:
Well, then you’ll have a big fight on your hands with the executives
you are trying to cut back.
The corporate elite is not able to control the strong increase in remuneration anymore. The main reason for this is that corporate directors follow
individual strategies, rather than group strategies. If the corporate elite is to
play a role in limiting the division between the corporate elite and society,
a change in the belief system is needed. The corporate elite needs to recognise that there must be a legitimate relationship between the income of the
top executives and the income of employees within their firms (and hence
society).

Conclusion
As this chapter shows, the corporate elite has changed its behaviour and way
of doing as a result of the ongoing changes in corporate governance. The formalisation of the corporate norm system into codes of conduct and best
practices has affected the governance of corporations. The most important
change in the boardroom atmosphere is an increased formality of meetings.

CONCLUSION

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With the inflow of foreign members, and the disappearance of multiple
meetings amongst members of the corporate elite, boards are not that ‘cosy’
anymore. Board members are becoming enterprising individuals, rather
than members of a cohesive elite group in society. Increased levels of
accountability, as well as higher levels of turnover amongst corporate executives add to the feeling of risk. Board members are keen to stress the potential harmful impact of these developments on corporate strategy. Changes in
governance do not take place because of the impact they have on the profitability of individual firms, but due to isomorphic strategies of firms, and
a corporate elite that adapts to changing norms of appropriate behaviour.
Corporate Social Responsibility can be seen as example of the codification
of the norms system. So far, the Dutch corporate elite remain divided on the
issue of CSR, yet those who occupy central positions in board overlap networks are mostly supportive. For the most central directors, their support of
CSR goes hand in hand with a shareholder orientation. These findings leave
us to conclude that, even in times of a diminished social network structure,
there is still a role for big linkers and central interlockers. These central
actors, however, do not appear to influence the ongoing increase in remuneration amongst top executives. Mimetic greed steers the growing income
of directors, and the corporate elite as a group is unable to stop this development.
The disintegration of governance networks (see chapters 2 and 3) led to
the weakening of the corporate norm system and of the possibilities for
social control. Informal networks remain in place, but are fragmented
(chapter 4). The result is a reduced ‘self-cleaning capacity’ of the corporate
elite, which made the call for codified codes of conduct more pressing.
Furthermore, the decline of network structures reduced the possibilities for
coordination and concerted action. The Dutch corporate elite is less able to
control the changes in corporate governance as they are taking place. The
formalisation of governance does not take place because the corporate elite
choose to formalise it, neither is it because they believe formalisation is in
their best interest. Board members are confronted with a changing environment, and feel that they are forced to ‘go with the flow’. Seen from this perspective, the Dutch corporate elite is ‘out of control’.

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6

Conclusions

Decline of the Corporate Community
The network of interlocking directorates, mainstay of the national business
community, is now disintegrating. After decades of stability, the turn of the
twentieth century marks a watershed in the configuration of the corporate
elite’s social network. Throughout the century, national business communities shaped and sustained corporate governance traditions and practices in
industrial capitalist economies. For long, the corporate elite enjoyed a large
degree of autonomy. Strong and durable relations between directors and the
suppliers of capital ensured an influence of capital through ‘voice’, as
opposed to an influence through the market mechanisms of ‘exit’. With relatively clearly defined goals and purposes (continuity and employment), stable relations between finance and industry, and between business and politics as well, the corporate elite was in a luxurious and influential position.
But by the turn of the century, the national business community in the
Netherlands had largely disappeared.
The break down of corporate interlocks was already set in motion during
the mid-1970s. Smaller boards led to a smaller corporate elite, which was not
able to sustain the relatively dense network of interlocks that was present
during the mid-1970s. Slowly but steadily, corporate board interlocks disappeared. Initially, this disappearance did not affect the connectedness of the
network. What did happen, however, was that multiple interlocks (carried
by more than one director) decreased in the period up to 1996, rendering
the network less cohesive. The decline of corporate board interlocks did not
result in a less connected national network until after 1996. In 1976 and
1996, 80 per cent of the top 250 corporations was part of the network of
interlocking directorates, but by 2001 this number had dropped to only 55
per cent. The number of interlocks created by executives dropped in even
greater number after 1996. Thus, the two periods under study show remarkable different dynamics. The first period (1976-1996) is one of gradual
change, driven by the decrease in board members. The second period (19962001) shows signs of stark reorientation by the corporations, towards a more
liberal market-like corporate reality.

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The old boys network as it once existed, is gone. The corporate elite is no
longer a status group with common social background. Dutch aristocrats
have lost their central position in the corporate elite network, big linkers
(those with more than three positions) lost terrain, and directors meet each
other less and less in more than one board. The largest corporations in the
Netherlands are no longer ruled by a closed group of elite persons, with a
shared social background and strong ties of kinship. The corporate elite is
no longer a status group, but increasingly a meritocratic economic elite in
society. They are related to each other not because of heritage, family background, and shared social circles, but because of a common occupation. In
that respect, the old boys network has disintegrated.
Apart from this, one can also analyse the corporate elite with the use of
the structural concept of inner circle. The inner circle is the group of directors with multiple positions on the boards of the top 250 firms. Quite different from the socio-historical concept of an old boys network, the inner circle does not presuppose any ties or social cohesion expect for the fact that
this group of directors have in common that they all sit on multiple boards.
Building on the same foundation of board overlap, the interpersonal network of corporate directors showed signs of decline similar to the inter-firm
network. During the mid-1970s the inner circle still integrated the corporate
elite through a cohesive and well-connected social network. But at the beginning of the twenty-first century, the network has lost much of its previous
social closure, and only a loose network of professionals remained. The
social networks are not as closed and inclusive as before, and interlockers
increasingly act as brokers between clusters of directors. All in all, the network of interlocking directorates has lost much of its potential for coordination. Corporate board members increasingly act as individuals, instead of
members of the corporate elite.
The decrease in board interlocks did not coincide with the dismantlement of informal meetings. Social relationships and networks remain lubricants for economic action, and corporate directors consider them to be
indispensable. The social capital of the corporate elite does not lie exclusively in the contacts and relations they have, but for an important part in the
norms, customs and habits they have become familiar with. Throughout
their careers, social relationships play an important role, and having
reached the corporate top, a fine-grained set of social relations is indispensable. The elite still settles and prevents conflicts, disseminates information
and ‘best practices’, and tries to form consensus on topical issues through
the informal network. But contrary to the times of a vivid and well-connected inter-firm board network, the corporate elite now has to do so in concealment and secrecy. The informal network of the corporate elite like a sea of
functional and business-related ties, with islands of strong pockets of likeminded directors. By the turn of the century, there is no longer one, large

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Dutch business community. There is a set of small yet tightly integrated elite
circles, interconnected through a network of cocktail parties and dinner
clubs.
Corporate governance is affected by the changing network configuration.
Most importantly, governance became much more formal. Both interpersonal relationships between board members and the boardroom atmosphere
became more formal (quite often against the will of corporate elite members). This formalisation is partly the result of an increased call for transparency and accountability that came with the shareholder activists’ movement, as part and parcel of ‘good’ corporate governance. Along with higher
standards of accountability came higher levels of risk, a development which
is negatively assessed by the corporate elite. Increased risks, together with
the loss of a durable social standing in society, created the need for social
hedging against the loss of status.
The ongoing individualisation of corporate directors and the dismantlement of the corporate elite social network undermined the corporate norm
system, which used to be based on unwritten rules (mores). Part as a remedy, part as a reaction to the quest for formalisation and transparency, the
norms and values that (should) guide corporate governance are now formalised in codes of conduct and best practices. In effect, the informal common norm system is re-institutionalised and formalised. Corporate social
responsibility proved to be a good example of the attempt to formalise proper norms of corporate conduct. At the same time, it underlined the enduring importance of the socio-relational foundation of institutional change.
Still by the turn of the century, the codification of CSR (and hence the reinstitutionalisation of the common norm system) is promoted by the most
central directors in the – by now rather sparse – network of board interlocks.
Central directors remain ambassadors of the Dutch corporate elite, actively
engaged in drawing up codes of good corporate governance. But the ‘selfcleaning capacity’ of the corporate elite remains severely hampered by the
decline of the corporate community. Central directors are, for instance, not
able to restrict the ongoing increase in remuneration amongst top executives. Mimetic greed steers the growing income of directors, and the corporate elite as a group is unable to stop this development. All in all, the collective institution of a cohesive corporate elite has been disorganised by a selfinterested subversion of both firms and corporate directors. Thus, while a
part of the corporate elite is still organised in an informal social and noncorporate network, the network of board interlocks is no longer a foundation for the national business community. Firms are no longer as embedded
in social relations as they used to be, and the Dutch business community as
a Gemeinschaft is gone.
This final chapter rejoins the findings and insights of the foregoing chapters in order to understand the characteristics of the institutional change

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that swept through the Dutch corporate regime in the last decades of the
previous century. The chapter is organised as follows. The next section asks
how the Dutch corporate regime actually has been affected by these developments as depicted above. After that, the chapter moves to the question
why the network changed. In particular, we are interested in endogenously
(from within) and exogenously generated change, and how the two mechanisms interact. Following this, change in the Dutch corporate regime will be
analysed as a form of incremental institutional change, providing insights
into the nature and causes of the changing network structures. The last section concludes with suggestions for further research.

The Dutch Corporate Regime
Previously a Rhenish corporate regime, the Netherlands is moving now
towards a liberal-market-oriented type of capitalism. In the period between
1976 and 2001, corporate boards and the corporate elite became increasingly disembedded from the social networks they were entrenched in. The
decrease of connectedness, centrality and closure in the network reduced
the possibilities for coordination between firms and between directors.
Furthermore, the formalisation of corporate governance practices strengthens the decrease of coordination. With the discussion on ‘good’ corporate
governance gaining ground, and with an ongoing call for shareholder influence from the 1990s onward, board interlocks are increasingly seen as a hazardous liability. Executives retreat from the supervisory boards, and big linkers become rarities. The dynamics of the corporate governance network as
analysed in this book point to a move away from organised capitalism,
towards a more liberal-market-oriented economic system.
At the same time, there is continuity and resilience to change as well. The
interlockers interviewed for this study were not very keen to change their
behaviour or their practices. Pragmatic as they are, board members want to
please institutional investors and other shareholders, but the largest part of
the corporate elite does so with doubts as to where this is all going to end.
The informal meeting network of the corporate elite also proved to be
resilient to change. While the institutionalised network of board interlocks
declines, alternative meeting circles remain well appreciated. The corporate
elite continues to meet at non-corporate boards, but even more so in the private and informal meeting network. Albeit fragmented, the informal networks still brings together key decision-makers of the Dutch economy.
As a case study, the current research is not designed to answer the comparative question whether convergence or divergence is taking place
between different corporate regimes. And as mentioned before, while the
ideal-type models of a coordinated and a liberal market economy are two
well-defined and static modes, the empirical reality certainly does not pro-

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vide such rigor. With these caveats in mind, the material presented in the
foregoing chapters does suggests that, to a certain extent, convergence is
taking place. In many respects the inter-firm network of board interlocks in
the Netherlands shows developments similar to those of the corporate network in the USA, particularly with regard to the reorientation of banks and
the retreat of executives from interlocks (Davis and Mizruchi 1999;
Heemskerk 2004b). This suggests that different corporate regimes across the
globe do adapt along similar lines when they are faced with the pressures of
internationalisation. Corporate regimes that fit a liberal market economy
more closely (such as the USA and the UK), were at the forefront of pressures
to reform their corporate governance. First, in the more liberal-market-oriented economies the capital markets played a more dominant and disciplining role. In countries where capital markets traditionally played a smaller
role, pressures to engage in shareholder-friendly reforms remain low. This
was the case in the Netherlands, where firms and the corporate elite were
well shielded from the influences of capital markets by means of the many
defence mechanisms that were at their disposal. Firms slowly and reluctantly began to dismantle their defence mechanisms and granted shareholders
a bit more influence, only after the upsurge of the debate on corporate governance. Second, in more liberal market oriented corporate regimes, the corporate elite presented less of a counterweight to the institutional changes.
In the Rhenish countries, the dense networks of the corporate elite sustained a shared belief system which counterbalanced exogenous triggers for
change. Next to the case of the Netherlands as displayed in this study, the
German situation illustrates this well. For a long time, the German corporate elite withstood attempts to reform the institutional framework of their
corporate regime. But in the early years of the twenty-first century, the
shared belief system is crumbling away as the foundational elements of
strong capital ties and corporate board interlocks are in decline.
The resilience of the informal corporate elite network in the Netherlands
does not necessarily hamper the trend of convergence, as these webs of relationships are present in corporate regimes across the globe. Convergence
might come about because the configuration of the corporate networks is
increasingly similar across corporate regimes. Expanding transnational networks of board interlocks and other corporate elite interaction networks
will add to this process of convergence. However, it remains a question
whether corporate board interlocks remain a legitimate way of creating
durable relationships between firms. The strong negative assessment
attached to board interlocks in the shareholder-oriented perspective on
business systems will put severe restraints on the emergence of international interlocking directorates.
What does the decline of the corporate community mean for the discussion on corporate power? With the disappearance of the old boys network,

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and the dismantlement of large parts of the board interlocks, the configuration of the concentration of corporate power changed dramatically. In
these days, concentration of corporate power stems not from the collection
of board positions by a select group of corporate directors. Rather, the concentration of corporate power lies in the ongoing process of mergers and
acquisitions. While corporate directors are more and more engaged with
one firm only, the firms they control have grown tremendously over the past
decades. Hence, the positional power they derive from being at the apex of
the corporate hierarchy has similarly increased. As a result, the corporate
elite is now much more a group of individuals, who all for themselves have
much more power than their predecessors had thirty years ago. Increasingly
disembedded from social networks, the main issue now is how to make sure
these powerful individuals act in the best interests of all corporate stakeholders.

Good Corporate Governance and the Corporate Elite
The importance of good corporate governance became evident when, by the
turn of the century, a series of corporate fraud cases were revealed. Inspired
by the shareholder-oriented, narrow view on corporate governance, corporate directors were increasingly held accountable for their (mis)conduct.
However, corporate fraud and corporate mismanagement are not without
precedent. For instance, in 1879, the African Trading Company (Afrikaansche
Handelsvereeniging) collapsed under circumstances not much different from
the current cases of Enron and Ahold. The ‘CEO’, Lodewijk Pincoffs, successfully concealed the deplorable financial state of his corporation in the company accounts. When the fraud was eventually discovered, Pincoffs left the
firm suffering a debt of 9,501,006.82 guilders (Lichtenauer 2003). This
approximates to 86 billion euros of present value,1 making this debacle four
times greater than that of Enron and almost six times greater than that of
Parmelat. Clearly, corporate fraud and accounting scandals are not restricted to our day and age, and we will see more of them in the future. The question is which checks and balances are best suited to limit the damage that
directors can afflict on corporate stakeholders without destroying entrepreneurship, employment and wealth.
In his Theory of Moral Sentiments, Adam Smith reflects on this issue. Smith
points out that ‘the man who sometimes misleads from mistake, is widely
different from him who is capable of wilfully deceiving. The former may
safely be trusted upon many occasion; the latter very seldom upon any’
(Smith 1759/2000, p. 497). How are we to distinguish a director who makes a
simple mistake from those directors who ‘from inadvertency, from precipitancy and rashness’ deceive (ibid.)? A crucial element of good corporate governance is a mechanism which distinguished between those who simply

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make mistakes, and those who deceive. For a part, frankness and openness
can help to establish trust, to create leeway for manoeuvring and even room
for some mistakes. This does ask a particular attitude from the director, an
attitude much different from a mere self-interested one. ‘We trust the man
who seems willing to trust us’, Smith writes. ‘We see clearly, we think, the
road by which he means to conduct us, and we abandon ourselves with
pleasure to his guidance and direction. Reserve and concealment, on the
contrary, call forth diffidence’ (ibid.). Thus, transparency in practices and
preferences is key to good corporate governance. Already, transparency is
broadly considered to be an important, if not essential element of good governance. From a shareholder oriented perspective, openness and transparency ensure the disclosure of information, which enables investors to make
informed decisions. At the same time, directors are now held personally
accountable for the way in which they fulfil their tasks in governing and
supervising corporations. But the question remains what to do about those
directors who are so caught up in the goal of generating ever-growing shareholder value that their actions and decisions lead the corporation astray?
One of the main arguments developed in this book is that the corporate
elite network can have a role in disciplining the directors. The corporate
elite network can be the foundation for a shared belief system which guides
proper conduct, and which is enforced through peer pressure. As such, the
decline of the corporate community, as demonstrated in the previous chapters, strengthens the problems faced by all corporate stakeholders in disciplining the corporate elite. The recent incidences of corporate fraud and
mismanagement were instigated by the pursuit of high, short-term growth
rates and shareholder value, and further fuelled by ‘perverse incentives’ of
extremely high remuneration packages. Such a corporate elite at the mercy
of untamed market forces and ruinous competition does not serve anyone’s
interest.
What good corporate governance is really about is a healthy mix of conservatism and entrepreneurship, safeguarded by checks and balances, and
the common sense of the corporate elite. With the decline of the corporate
community, the corporate elite seems to have lost most of its common sense.
The national business community is no longer a touchstone for proper
behaviour. In a way, globalisation has been a blessing for the less conscientious among the corporate elite. They compare themselves, and their companies, with their international peers, judging their behaviour not by the standards of the society they live and work in, but by comparing the outcomes
of their behaviour with that of random others whose situations are more
appealing. The corporate elite is adrift, as a large part of the directors are
guided by self-interest alone.

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Why Did the Network Fall Apart?
The case of the Dutch corporate regime corroborates Streeck and Thelen’s
argument that ‘liberalization proceeds without political mobilization, simply by encouraging or tolerating self-interested subversion of collective institutions from below, or by unleashing individual interests and the subversive
intelligence of self-interested actors bent on maximizing their utilities’
(Streeck and Thelen 2005, p. 33). Since the changes in the corporate regime
go hand in hand with extrinsic (such as high remuneration) and intrinsic
(such as larger firms to control) benefits for the board members, the new
arrangement surely served the interests of corporate directors well. In part,
this answers the question what triggered the dismantlement of the interfirm and corporate elite network. Many micro steps at the level of the actor
add up to changes at the macro level, resulting in incremental, non-linear
change. In the case of the Dutch corporate regime as studied here, both
firms and directors are actors. Hence, some steps at the micro level are made
by firms, and others by people. The logic of both corporate strategies and
personal strategies and choices play a role, which makes the modelling of
these network dynamics extremely difficult.
The decline of the corporate network was not initially the result of a
deliberate strategy of the corporate elite to realign the Dutch corporate
regime with international ‘best practices’. The reduction of multiple positions amongst the corporate elite did not became an explicit goal in the
reform of the Dutch corporate regime until 2003, when the Tabaksblat committee presented its code for good corporate governance. Only recently, corporate board interlocks are widely considered to be a sign of ‘bad’ corporate
governance. This is fully in line with the observations made in the first chapter: formal institutional change (such as codified rules and regulations) usually adapts to already changed patterns of behaviour, practices and informal
institutions.
At the same time, there is no indication that the Dutch corporate elite
hangs on to an ideal, typically ‘Dutch’ institutional setting, either. To the
contrary, foreign directors flood Dutch boards, English has become the common language, takeover defences are pulled down, and firms previously
associated with some national pride have been sold to the highest foreign
bidders (such as KLM to Air France, Hoogovens to British Steel (Corus), Fokker
to Daimler). The corporate elite could have delayed this flow of foreign influences. Given the position occupied by the corporate elite within the Dutch
corporate regime, they could have withstood reforms, and shielded the
Dutch corporate regime from change. It is difficult to assess how successful
such a strategy would have been in the long run, but the point is that the
Dutch corporate elite did not block the shift in the corporate regime. To the
contrary, they have been willing executioners. For the corporate elite,
change in the Dutch corporate regime seemed perhaps questionable, yet

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undeniable. Because of the incremental nature of the change, there was not
one decisive moment that demarcates the shift in the corporate regime. The
small changes in and of themselves might not be recognised as very significant, yet together these small steps result in a shift in the corporate regime.
And important moments can only be recognised with the benefit of hindsight.
Perhaps the most important pressure that triggered the increasing appreciation for shareholder interest, and consequently for formalising the
notions of what good corporate governance entails is internationalisation of
business and finance. Already in the first chapter ‘globalisation’ was flagged
as a prime exogenous driver for change. Internationalisation of business
reached high levels by the last decades of the twentieth century. With
increased international competition among firms comes a similar process
of competition among corporate regimes, where more efficient forms thrive
over less efficient ones. Corporate regimes compete with each other for production, headquarters of firms, and for international investors.
Of course, corporate regimes are not acting entities in and of themselves,
but corporate strategies and national policies are often formulated with reference to the corporate regime. For instance, throughout the 1990s, the
Dutch government lowered corporate taxes in order to stimulate firms to
relocate to the Netherlands (the policy targeted large holding firms in particular). Likewise, corporate regimes with a two-tier governance model such
as the Netherlands and Germany are considered to receive a ‘discount’ from
investors, who would rather invest in companies with a one-tier model.
Thus, when in 2004 Royal Dutch/Shell was heavily criticised for the way they
reported their oil reserves, the Dutch-Anglo firm decided to please their
shareholders and international investors by giving up their long-standing
and rather complicated bi-national corporate structure and converging to
one firm under British corporate law, applying ‘best practices’ such as a onetier board (with headquarters remaining in The Hague). In this sense, the
liberal market mechanism in finance does work as a disciplining mechanism, and mature and growing financial markets are an important exogenous driver for change in corporate regimes.
However, it was only when these growing exogenous pressures were met
by a more and more receptive group of directors that real change occurred.
First, the corporate elite network slowly but steadily lost its elite distinctiveness and much of its social inclusiveness. Board members became a group
of people with similar occupations; powerful individuals, rather than a powerful group in society. Second, this individualisation of the corporate elite
continued with the increasing rate of network corrosion during the 1990s.
The loss of social closure and inter-firm relations reduced the number of
opportunities for collective action on behalf of Dutch Big Business. This rendered the corporate elite less able to steer and control the changes in the

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corporate regime. The corporate elite became unable to resist the exogenous
pressures on the corporate regime any longer. The loss of elite cohesiveness
and the changing power balance amongst corporate stakeholders culminates in a new shared-belief system of the corporate elite. Already, the
shared-belief system supports ongoing internationalisation, and more and
more it will appreciate competition over other forms of coordination. As
such, the individualisation of the corporate elite is in and by itself a part of
the change towards a more liberal-market-oriented system where (durable)
social relations have no role to play.

Exhaustion and Displacement
The shift in the Dutch corporate regime can be understood as an exemplary
case of incremental institutional change, where liberalisation proceeds
gradually and continuously, apart from short-lived episodes of turmoil
(Streeck and Thelen 2005). The incremental nature of institutional change
makes it easy to understate the magnitude and significance of these dynamics. Streeck and Thelen identify five manifestations of incremental institutional change: displacement, layering, drift, conversion and exhaustion
(Streeck and Thelen 2005). Where institutional displacement occurs, new
institutional arrangements are introduced or recovered. Layering is the
process by which new elements are attached to existing institutions, gradually changing its status and structure. Institutional drift occurs when institutions remain unchanged in the face of evolving external conditions.
Conversion is the redeployment of old institutions to new purposes. Finally,
the fifth type of change is exhaustion: the withering away of institutions
over time. In the case of the Dutch corporate regime, there seems to be congruence between exogenous and endogenous change on the one hand, and
specific forms of incremental institutional change on the other hand. In
particular, exogenous change portrays displacement, while endogenous
change portrays exhaustion.
Corporate governance reform is an international affair, and the pressures
on Dutch firms to co-align their practices and corporate behaviour with
international best practices serve as an important exogenous driver for
change. This specific type of change works through the mechanism of displacement. Invasion and assimilation of foreign practices is part of displacement. Invasion of foreign practices takes place through the increasing number of foreign directors on Dutch boards, as well as through the growing
number of foreign subsidiaries, and increasing numbers of foreign shareholders. At the same time, assimilation of foreign practices takes place as
well, most importantly in the form of compliance with international best
practices. Streeck and Thelen add that displacement ‘requires active cultivation by agents whose interests are better served by new arrangements’

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(Streeck and Thelen 2005, p. 22). In other words, the direction of change
needs to be cultivated in the shared belief system of the corporate elite. This
underscores our earlier observation that exogenous and endogenous
changes work in tandem.
All together, the Dutch network of interlocking directorates suffers from
exhaustion. The disintegration of the inner circle, and the disappearance of
the old boys network shows that the institutional arrangements that
remained in place for a long time are now exhausted. Board interlocks transformed from harmless, potentially useful inter-firm relations to a risk factor
and sources of uncertainty. As such, interlocks now receive a discount in a
cost-benefit analysis. Where interlocks could previously benefit a firm, without any recognisable costs, the tables have now turned. Board interlocks, as
well as big linkers, are not in line with ‘best practices’, and as such have
become a liability. Surely board interlocks are still useful as a communication device, and even as a means of control. However, the legitimacy of using
board interlocks for such purposes is gone, given the predominant shareholder orientation. The network of corporate board interlocks had been in
decline for some time already, before it became ‘exhausted’ by the turn of
the century.

Migrating Corporate Networks
Next to exhaustion and displacement, one can argue that to a certain
extent, the material presented in the previous chapters reveals some conversion as well. With the corporate board interlock network exhausted, the elite
meetings partly migrate from the corporate boards to non-corporate boards,
as chapter 3 argued. In the wake of increasing shareholder influence, the
formal institutionalised interpersonal board meeting network lost its legitimacy. In reaction, corporate directors accept board positions at cultural,
philanthropic, health and non-corporate boards. This non-corporate meeting network is redeployed as an alternative for corporate board interlocks.
The social network of the corporate elite has for long been a combination
of formal and informal meetings. The network of board overlap played an
important role as a formalised means of creating cohesion among the corporate elite. Renowned corporate directors were able to seize central positions in the board overlap network, further strengthening their positions of
ambassadors for business. Still during the mid-1970s, this mixed formalinformal corporate elite social structure was dominant. The formal institutionalised part of the corporate elite network has been in decline ever since.
In a somewhat contradictory manner, board interlocks, although formally
institutionalised, used to be mostly informal means of contact. The corporate
elite related to each other in an informal manner (see chapter 5). However,
the nature of board interlocks (as well as the nature of corporate governance

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in general) became increasingly formal, as board interlocks and multiple
positions of directors received more attention from the 1990s onward. As a
consequence of the formalisation of corporate boards, and the disintegration of the network of interlocking directorates, the corporate elite network
now manifests itself almost exclusively in the private and non-corporate
arena.
This migration from the corporate networks to non-corporate and informal meeting places creates a problematic situation from the perspective of
good governance and the perspective of democratic accountability. Before –
when interest was limited – inter-firm relations were visible and transparent (for those who bothered to look). While board interlocks were not always
reported, they were always possible to uncover. Nowadays – when inter-firm
ties are under heavy scrutiny – the corporate elite network is predominantly an informal network, shrouded in secrecy and concealment. This development raises doubts for the future of corporate board interlocks. As long as
these links are regarded with suspicion, board interlocks will be in decline.
When, however, a change of ideological scenery, together with a shift in the
power balance between shareholder, stakeholder, employers and clients
occurs, board interlocks might return. After all, the underlying informal
corporate elite network will not vanish.
Economic action is profoundly embedded in social structures in both
coordinated and liberal market economies, in Rhenish and Anglo-American
capitalism. Here, corporate governance was studied from this relational
approach, to uncover how elite social networks have changed as a part of the
shift in the corporate regime. The changing network configuration was not
only a token of changing economic relations, it also enabled institutional
change from within. Now that the visible and institutionalised social networks are no longer acceptable economic relations, chances are that corporate boards will indeed be less related and embedded, and that consequently, firms will act increasingly on arms-length distance (independently). Such
a conclusion, however, obscures the importance of social networks at all levels in the economy, not in the least at the levels of firm governance.
Therefore, a relational approach in studying governance, firmly rooted in
vast empirical material, remains of the utmost importance if we want to
understand the workings of our economies and societies.

Suggestions for Future Research
The relational research approach of this book made it possible to touch
upon elements of the Dutch corporate regime in the search for shifts in corporate governance. A number of issues, however, remain unexplored. This
final section holds some recommendations for further research, building
upon the findings and conclusions above. Four additional areas of research

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are discussed which could not be sufficiently dealt with in this book. On the
one hand, some issues that were already briefly looked into deserve more indepth study. On the other hand, the restrictions of the current research
design leave a number of issues open that might provide interesting paths
to pursue.
To start with, the most daunting, yet most rewarding, path of research
would be to engage in a more expanded qualitative study on the corporate
elite. Especially interesting would be to investigate the clubs and private
meetings of the corporate elite, as they are of enduring importance in corporate governance. This, however, might not be feasible given the strong
emphasis on anonymity and secrecy that makes these meetings interesting
for the corporate elite. However, the same questions one might ask for the
informal meetings are equally interesting for board meetings. Questions
remain as to how directors relate to each other, what the effects of a heterogeneous composition of a board actually are on the collaboration, and how
decision making takes place. In the light of the current study, a qualitative
study might focus on the uneasy relationship that was found to exist
between the changes in corporate governance as they occur, and the preferences of the corporate elite. Only participatory observations can really open
up the black box that corporate boards still are today. And the changes in
governance that corporations and their directors currently face might make
them more receptive to open the doors of their offices and the boardroom
to social scientists. Such a research trajectory, daunting nevertheless, would
greatly enhance our understanding of how corporations are controlled.
Second, more concrete and probably more feasible research projects
might be inspired by recognising the restricted attention to the role of government in this book. One of the valuable lessons from the varieties of capitalism literature is the importance of institutional complementarities that
may exist between institutional fields such as labour relations, capital markets, education and government (Hall and Soskice 2001b). Given the interdependence of institutional sectors, the role of government in the corporate
regime should not be underestimated, certainly not in a country with corporatist political traditions such as the Netherlands. The Dutch ‘polder
model’ is strongly based on consensus. Strong ties between business and government have always existed, and remain intact even today. Chapter 4
already discussed the institutional linkages between business and government through advisory committees to government and parliament.
Nevertheless, the extent to which relations between business and government change needs further investigation. Looking at inter-firm relations
only, the Dutch corporate regime is moving towards a more liberal-marketbased style of capitalism. This would imply that the relationships between
business and government are shifting as well, moving towards more arm’slength relationships. However, over the past few years there has been politi-

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cal debate about the concentration of political power due to the collection
of positions at governmental and parliamentary advisory committees (see
for instance Duyvendak 2004). The question would be how the role of business in this network of advisory committees has evolved from the 1970s
onward.
A third line of research, already touched upon above, lies in the burgeoning networks of the corporate elite that exist due to meetings in non-corporate boards. The observation that these non-corporate boards gain in importance as meeting places of the corporate elite should be corroborated by a
network analysis of these boards. Furthermore, it is to be expected that
these non-corporate boards are populated by different elites in society. As
such, these particular networks might contribute to the cohesion of a
national elite. While corporate elite networks are losing their national distinctiveness, national elite networks may remain in these alternative circles.
Finally, the current study was deliberately limited to one country only.
Although the study was designed so that increasing foreign influences
would not be disregarded, the main focus was on a national corporate elite
network. A logical next step is to investigate the emerging European corporate elite network. We might see developments not unlike the emergence of
national corporate networks. For instance, in the early twentieth century
the Dutch regional networks of Rotterdam, Amsterdam and Twente gradually merged together in the national business network (Schijf 1993; Van den
Berge and Fennema 1985). Similarly, a European network might be emerging from the national networks. In the EU, an emerging network of corporate interlocks and other elite meeting places would coincide with a coherent legal framework, making it an interesting object of study. Up until now,
the differences between the wide variety in European corporate regimes
made it impossible to construct one European corporate law, but the relentless effort of the European committee will undoubtedly once result in uniform legislation. The strengthening and growth of a cohesive European corporate elite might be an important factor in this process.
The objective of this book was to investigate change in the Dutch corporate regime from a relational perspective, and to understand why institutional change takes place. However, this is but one part of a larger question,
which asks why institutions exist, why they change, and why some of them
survive over time and other whither away. Perhaps this book inspires some to
consider corporate elite networks as a worthwhile research object. For now,
it remains a question of whether board interlocks will survive the wave of
globalisation that swept corporate regimes over the past decades as legitimate and effective means of coordination. At the same time, this study
points to an enduring importance of social embeddedness in corporate governance. The corporate elite will remain a crucial stakeholder in the governance of corporations. As such, the broad perspective of corporate gover-

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nance as endorsed in this study might be of help in understanding the relation between corporations, the corporate elite, and their role in the society
in which we all live.

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Appendix I

Mergers and Acquisitions in Banking

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1859: Eibergen Neede eo, Spaar- Inleg en Depositobank
1722-1886: Loopthuys Bank
1824 - 1964 : Nederlandsche Handel-Maatschappij

Pagina 172

1914: Loopthuys Bank

1939: Acquisition by NHM
1

1877 - 1922: Lotichius

1919: Lotichius & Co's Bank

1922: acquisition NHM

1866 - 1936: Geldersche Credietvereeniging

1936: acquisition by NHM

1916 - 1950: Van Ranzow & Co's Bank
1901 - 1930: Groninger Bankvereeniging Schortinghuis & Stikker
1861 - 1964: Twentsche Bankvereeniging B.W. Blijdenstein & Co1916: De Twentsche Bank

1930: Acquisition by Twentsche Bank

2
3

1884: Van Mierlo & Zoon

4
1914 - 1933: Hollandsche Bank voor Zuid Amerika
1919 - 1933: Hollandsche Bank voor de Middelandse Zee

1933 merger into Hollandsche Bank Unie (HBU)

1919 - 1935: Hollandsche Bank voor West-Indië

1935: acquisition by HBU

5

1720: R. Mees & Zn. (orig. Cordelois & De Vrijer)

6
Beels & Co

7
8

1762: Hope & Co
1946: Mesdag & Zoonen's Bank
1948: Groeneveld's Bank

9
10
11

1903 - 1952: Haagsche Commissie Bank
1888 - 1925: Nederlandsche Bank (-en Credietvereeniging) voor Zuid-Afrika
1898 - 1925: Transvaalsche Handelsbank

1925 - 1954: merger into Nederlandsche Bank voor Zuid-Afrika

1888-1940: Amsterdamsche Liquidatiekas

1940: Amsterdamse Goederenbank

13
14

1928-1969: Kennemer Bankvereniging
1869: Gebroeders Kingma
1875 - 1942: Boissevain & Co./Pierson & Co.
1879 - 1942: Heldring & Pierson
1692: Simon Vlaer

1919: Kingma's Bank

15
1942: Merger into Pierson, Heldring & Pierson.
(official merger 1958)

1748: Vlaer & Kol

16
17

1899 - 1981: Hondius, C.J.
1853: Credietvereeniging 1853

1920: Hondius & Zoon NV

18
19

1918: Bank-Associatie

1834 - 1937: Wertheim & Gompertz

1937 1948: Collaboration incasso bank with
Amsterdamse, 1956 full acquisition
1934 acquisition
1930: acquisition Amsterdamse

1891 - 1948: De Incasso Bank
1917-1934: Friesche Bank
1902 - 1930: Helmondse Bank
1871-1964: Amsterdamsche Bank
1863 - 1964: Rotterdamsche Bank

20
1900-1911: Deposito- en Administratiebank
1916: Nationale Bankvereniging
1913: Zuid-Nederlandsche Handelsbank

Merger, (1911-1947 as Rotterdamsche Bank Vereniging)
1920, merger

Merger

1863 - 1967: Nederlandsch-Indische Handelsbank

21
1918: Nederlandsche Landbouwbank

1947:Nederlandse Credietbank (NCB)

22

1921: Slavenburg & Co. Since 1924 Slavenburg's Bank
1850: S.H. van Groningen

1897: merger into Sallandsche Bank

24

1879: Verwey & Ankersmit
25
1883: Levensverzekering Maatschappij Utrecht

1920 Algemeene Maatschappij tot Exploitatie van Verzekeringsmaatschappijen
27

1863 - 1963: De Nationale Levensverzekering Bank

1922: Crediet- en Effectenbank
1914-1927: Algemeene Centrale Bankvereeniging voor den Middenstand. Since 1927 Nederlandsche Middenstandsbank
1917-1978: Girokantoor der Gemeente Amsterdam

28

1918 - 1986: Postcheque- en Girodienst

31

1881- 1986: Rijkspostspaarbank
1845 - 1963: De Nederlanden van 1945

32
33
1945: het bankbedrijf van Grenswisselkantoren

898-1972: Coöperatieve Vereeniging van Raiffeisenbanken en Landbouwvereenigingen. From 1903 Coöperatieve Centrale Raiffeisen-Bank
1898-1972: Coöperatieve Centrale Boerenleenbank

35

1909-1975: Boeren-Hypotheekbank

36

1919 - : Handelmaatschappij H. Albert de Bary & Co. NV

37

1913: Cöopertatieve Zuivelbank

38

1814- :De Nederlandsche Bank NV

39
1914 - :Bank voor Nederlandsche Gemeenten

40

1916: Staal & Co

41

BRON: NEHA: BedrijfsArchieven Register Nederland

172

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1969 Acquisition by ABN
1964: Merger NHM and Twentsche Bank
into Algemene Bank Nederland (ABN)

1

1991: Merger ABN and AMRO

2 1950: Acquisition By Twentsche
3
4 1952: acquired by Twentsche Bank
1968: Acquisition by ABN
5
6

1966: merger into

1969: merger into Bank

7 1955-1960 Acquisition
8

Mees & Hope

Mees & Hope

9 1955: Merged into Mesdag & Groeneveld's Bank
10
11 1952: acquisition by Nederlandsche Bank voor Zuid-Afrika

1975

1993:Merger in MeesPierson

Bank Mees & Hope
Independent part

Subsidiary of ABN AMRO yet
Independent

of ABN
1997: Mees Pierson
Sold to Fortis

1954 Merger in Nederlandse Overzee Bank (1954-1969)
13
14

1981: Part of ABN
1971 Acquisition Bank Mees & Hope
1975 Acquisition AMRO
but independent

15
16
1967 with P, H & P.

17
1973: Bank Hondius & Zoon NV

18
19

1983: Acquisition AMRO

1964: Merger Amsterdamse and Rotterdamse
into Amro Bank

20
1991: Merger ABN and AMRO
1960 Acquisition by Rotterdamse

21

1987 acquired by CLB Nederland

22

1967: Oyens & Van Eeghen

25

1999 part of Fortis

Since 1983 Credit Lyonnais Bank Nederland
1975: acquisition Slavenburg
From 1995 Generale Bank
Nederland
1974: acquisition

24

1990: AMEV / VSB
1981: Centrumbank
70 local Saving Banks(spaarbanken)

27

1983: Verenigde Spaarbank
1990: Fortis (due to merger with belgian AG Group)

Acquisition by NMB 1966, yet independent

28

1989 - 1991: NMB Postbank Groep
1978 Merger PCGD

Since 1991: Internationale Nederlanden Groep (ING)
1986: merged into Postbank

31
32
1963 - 1991: Nationale Nederlanden (insurance)

33

1991: Merger with Nationale Nederlanden

1950: GWK Bank
1972: Rabobank
35
1975: Rabohypotheekbank N.V

36
Many local saving banks

1987: Samenwerkende Nederlandse Spaarbanken

1997
SNS Reaal Groep

Since 1964 Deutsche Bank de Bary NV

37

1967: Bankgiro Centrale

Since 1996 part of Interpay

from 1969 Friesland Bank

38
39
40
1954- : Nederlandse Waterschapsbank NV

1994: acquisition by AVCB / Achmea Groep

41

APPENDIX

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Appendix II: Glossary

Aristocracy
Betweenness

Big Linkers
Centrality

Class

Closure

People who are listed as members of the nobility or
patriciate.
Betweenness measures the frequency with which a
node (for instance a director) is positioned on the
shortest path between pairs of other nodes in the
network. Nodes that occur on many shortest paths
between other nodes have higher betweenness than
those that do not. Betweenness is a measure of centrality.
Directors with more than three positions on the
board of the largest 250 firms.
The extent to which a node is central in a network.
There are several measures for centrality, such as
betweenness (see above) and degree. Degree centrality, or local centrality, measures the number of connections of a point. In the network of interlocking
directorates, there are two ways of measuring degree
centrality. The first is by counting the number of
board interlocks per firm (including multiple interlocks), the second is by counting only the number of
other companies with which a firm shares directors
(i.e. counting the edges).
Following Weber, a class is a category of men who
have in common: (1) a specific causal component of
their life chances, in so far as (2) this component is
represented exclusively by economic interests in the
possession of goods and opportunities for income,
and (3) it is represented under the conditions of the
commodity or labour market.
The extent to which one’s contacts are contacts of
each other. A network with full closure is a clique,
where everybody is connected with everyone else. In

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this book, closure is measured by the clustering coefficient.
Clustering Coefficient The clustering coefficient of an actor is the density
of its open neighbourhood.
Cohesion
A network is cohesive if there are frequent lines,
many points with a lot of connections, and relatively short and numerous paths between pairs of nodes.
If a network is not cohesive, then it is vulnerable to
the removal of a few nodes or lines (Wasserman and
Faust 1994, p. 114). Cohesion can be measured with
several network properties, such as average distance,
centrality and number of components.
Component
A component of a network is a maximal set of nodes,
such that there are no other points of the network
which are connected to one of its points. Typically,
networks consist of a few small components and one
single, large, dominant component.
Connectedness
The extent to which nodes in a network are connected with each other, particularly in a dominant component. It measures the inclusiveness of a network.
Corporate Elite
In this study, the corporate elite is defined as all
members of the corporate boards of the largest 250
firms.
Corporate Regime
The term corporate regime is used to denote the customary and statutory practices, enforced in public
and private practice, which determine both the way
in which corporations are ruled, and how they relate
to other firms and institutions in a certain area.
Degree
The number of nodes that are adjacent to a node, i.e.
the number of nodes a particular node is connected
to. See also centrality.
Distance
The distance between two nodes is the length of the
shortest path connecting the nodes. See also handshakes.
Dominant Component The largest component in a network. Usually a network consists of one very large dominant component, and a few very small components. See component.
Edge
An edge is a connection between two points in a network. In the network of interlocking directorates, an
edge between two firms is created if they share at
least one board member. In the interpersonal meeting network, an edge is created if two directors are
both members of at least one particular board.
176

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Embeddedness

The degree to which actors are involved in a cohesive
group.
Executive Directors
Directors who are employed by the firm. Also called
inside directors. In the Netherlands, members of the
Raad van Bestuur are executive directors.
Executive Interlocks/ Board interlocks which are created when an execuTies
tive director has a position on a board of another
firm.
Graph
A graph is a set of nodes, joined by lines, and is as
such a model for a social network. Graph theory is a
branch of mathematics that allows to one to analyse
networks as graphs.
Handshakes
A ‘handshake’ is another way of denoting a tie in an
interpersonal network. The number of ‘handshakes’
is the distance between two nodes in a network. A
direct connection is one handshake, an indirect connection (a friend of a friend) two handshakes, and so
on. See also distance.
Inner Circle
The inner circle consists of all corporate directors
that sit on more than one board: the interlockers.
Together, interlockers knit the corporate control
centres of the economy together and form, as such,
the inner circle of the corporate elite.
Inside Directors
Directors who are employed by the firm. Also executive directors. In the Netherlands: members of the
Raad van Bestuur.
Interlockers
Directors with more than one board position. These
directors create interlocking directorates.
Interlocks
When two firms share a director, their boards are
interlocked. In the network of interlocking directorates, the tie between two firms is an interlock.
Interlocking
Corporate boards (directorates) that share board
Directorates
members.
Isolates
Nodes in a network without connections to any of
the other nodes, for instance, firms that do not
share board members with any of the other top 250
firms.
Multiple Interlock / When two firms share more than one director, they
Multiplicity
are connected through multiple interlocks. The
number of interlocks between two boards is called
the multiplicity of the edge.
Network
A set of nodes and lines.
New Boys Network
The term new boys network is used to denote a net-

APPENDIX

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work of board interlocks where the directors do not
stem from the higher strata of society, and no longer
form a status group, and yet a fair degree of network
closure still exists.
Old Boys Network
An old boys network is a particular corporate elite,
where board interlocks coincide with a common
social and educational background, family ties and
lifelong friendships.
One-Tier Board
A board that includes both supervisory and executive directors. Common in Anglo-American countries. A one-tier board differs from a two-tier board,
where executive directors meet separately from
supervisory directors. This is the common model in
the Netherlands, with a separate Raad van Bestuur
and Raad van Commissarissen.
Outside Directors
Members of the supervisory board or Raad van
Commissarissen. Non-executive directors or supervisory directors.
Small Worlds
The ‘small world phenomenon’ is the common experience when one meets a stranger, and learns that
they both have a friend in common. A small world is
a (social) network with high levels of clustering
(compared to a random network), yet with a small
average distance (comparable to a random network).
Status Group
According to Weber, a status group is a plurality of
persons who effectively claim a special social esteem
for themselves, and deny access to others. The old
boys network is a status group (in particular, a
hereditary, charismatic descent group).
Supervisory Directors Members of the supervisory board or Raad van
Commissarissen. Non-executive directors or outside
directors.
Supervisory
Board interlocks created when a director who is not
Interlocks
an executive sits on two boards.
Two-Tier
In a two-tier board, the executive directors meet separately from the supervisory directors. This is the
common model in the Netherlands, with a Raad van
Bestuur and a Raad van Commissarissen. The two-tier
board differs from a one-tier board, common in
Anglo-American countries.

178

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Appendix III

List of Top 250 Firms in the Netherlands
1976
nr Name

1 NV Koninklijke Nederlandse Petroleum
Maatschappij
2 Unilever NV
3 Koninklijke Philips
Electronics NV
4 Koninklijke Ahold NV
5 Shv Holdings NV
6 Koninklijke Kpn NV
7 NV Koninklijke KNP BT
8 Heineken NV
9 Koninklijke Luchtvaart
Maatschappij NV
10 Dsm NV
11 Hagemeyer NV
12 Randstad Holding NV
13 Hollandsche Beton
Groep NV
14 Cebeco-Handelsraad B.A.
15 Stork NV
16 NV Nederlandse
Spoorwegen
17 NV Koninklijke Bijenkorf
Beheer Kbb
18 Unigro
19 Océ Van Der Grinten NV
20 Ballast Nedam NV
21 Pon Holdings BV
22 Koninklijke Pakhoed NV

Sector

Board
Size

Inter- Between- Closure
locks
ness

Manufacturing

8

Manufacturing
Manufacturing

21
22

2
23

2.223
157.995

0.000
0.296

Other
Trade
Utilities
Manufacturing
Manufacturing
Other

15
15
34
12
13
14

24
34
14
24
29
23

562.748
278.031
65.119
481.659
181.599
174.266

0.221
0.323
0.333
0.300
0.304
0.337

Manufacturing
Trade
Other
Manufacturing

16
10
1
11

26
9

391.665
11.436

0.212
0.679

4

3.833

0.000

Trade
Manufacturing
Utilities

29
16
21

2
28
38

178.000
274.948
825.711

0.000
0.269
0.240

Trade

10

14

108.206

0.318

Trade
Manufacturing
Manufacturing
Trade
Trade

7
12
11
4
9

1
13
13
5
22

0.000
323.357
212.843
2.272
239.282

0.269
0.282
0.700
0.240

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1976
nr Name

23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

Sector

Vnu NV
Other
Internatio-Muller NV
Manufacturing
Csm NV
Resources
NV Verenigde Bedrijven
Manufacturing
Nutricia
Daf Trucks NV
Manufacturing
Bp Nederland Holdings NV. Resources
Merck Sharp & Dohme BV Other
Ibm Nederland NV
Utilities
Siemens Nederland NV
Manufacturing
Hunter Douglas NV
Manufacturing
Koninklijke Gist-Brocades NV Manufacturing
Cooperatieve Cehave U.A. Manufacturing
Koninklijke Bam Groep NV Manufacturing
Heijmans NV
Manufacturing
Basf Nederland BV
Manufacturing
Fina Nederland BV
Trade
Meneba NV
Manufacturing
Wilma BV
Trade
Gamma Holding NV
Manufacturing
Ford Nederland BV
Trade
NV Holdingsmaatschapij Other
De Telegraaf
Van Leeuwen Buizen
Manufacturing
Groep BV
Acf Holding
Manufacturing
Koninklijke Boskalis
Manufacturing
Westminister NV
Heijdemij NV
Real Estate
Koninklijke
Utilities
Van Ommeren NV
Grontmij NV
Manufacturing
Vredestein NV
Manufacturing
Nagron Nationaal
Investment
Grondbezit NV
companies
Elsevier NV
Other
Hal Holding NV
Utilities
NV Bank Nederlandse
Financials
Gemeenten

180

Board
Size

Inter- Between- Closure
locks
ness

10
10
8
11

20
19
23
2

308.213
138.370
131.733
2.793

0.307
0.368
0.357
0.000

9
8
18
11
9
15
9
6
6
6
6
5
15
6
9
13
10

15
10
5
3
5
7
14
1
19
4
5
5
8
7
22
9

70.398
12.386
0.000
3.539
0.000
74.171
137.871
0.000
92.315
16.833
3.987
0.000
7.698
293.919
102.436
40.494

0.418
0.611
1.000
0.333
1.000
0.524
0.462

6

5

22.319

0.600

8
12

4
20

2.393
306.463

0.333
0.307

8
10

7
27

221.367
121.113

0.133
0.357

10
6
10

16
6
5

148.566
27.775
52.055

0.318
0.400
0.600

13
12
18

21
29
10

195.378
332.234
811.004

0.310
0.240
0.139

0.379
0.500
0.700
1.000
0.714
0.714
0.374
0.778

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1976
nr Name

Sector

55 De Nederlandsche
Financials
Bank NV
56 Delta Lloyd
Financials
Verzekeringsgroep NV
57 Nederlandse
Financials
Waterschapsbank NV
58 De Nationale
Financials
INVersteringsbank NV
59 Banque Paribas
Financials
Nederland NV
60 Friesland Bank NV
Financials
61 Kas-Associatie NV
Financials
62 NV De Indonesische
Financials
Overzeese Bank
63 Dai-Ichi Kangyo Bank
Financials
Nederland NV
64 Bank Of Tokyo-Mitsubishi Financials
(Holland) NV
65 NV Nederlandse Gasunie Resources
66 Rabobank Group
Financials
67 Gemeente-Energiebedrijf Utilities
Rotterdam
68 Papierfabrieken
Manufacturing
Van Gelder Zonen NV
69 Electriciteitsbedr
Utilities
Groningen En Drent
70 Verenigde Dura
Manufacturing
Bedrijven BV
71 Eerste Ned.
Manufacturing
Cement Ind. NV
72 Gemeentelijk
Utilities
Energiebedrijf Dordrecht
73 Gemeentelijk
Utilities
Energiebedr. ’S-Gravenhage
74 GemeenteUtilities
Energiebedrijf Amsterdam
75 General Motors Acceptance Trade
Corp Ned NV

APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

18

30

732.317

0.265

17

24

245.234

0.286

9

4

14.747

0.333

23

40

1179.741

0.182

12

7

68.810

0.381

6
11
11

1
15

0.000
156.455

0.286

16
23
11

15
7

491.361
720.603

0.359
0.100

12

13

30.712

0.439

9

1

0.000

16

3

50.021

12

1

0.000

10

1

0.000

5
7

6
0.333

3
2

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1976
nr Name

Sector

76 Cooperatieve Ncb B.A.
77 Holland Aluminium BV
78 De Grenswisselkantoren NV
79 Friesch-Groningse
Hypotheekbank
80 Centrale Cooperatievegrooth Ver Enkabe U.A.
81 Gulf Oil Nederland BV
82 Ennia NV
83 Esso Nederland BV
84 Estel NV
85 Friesche Coop.
Zuivelexp. Ver.
86 Europartners Bank
Nederland NV
87 Forbo Krommenie BV
88 NV Electriciteitsbedrijf
Zuid-Holland
89 Cooperatieve Ap Vereniging
Onderl Pharm Grooth Ua
90 Furness NV
91 Amsterdam-Rotterdam
Bank NV
92 Brug Centrale
93 Brown Boveri Nederland BV
94 Verenigde Bedrijven
Bredero NV
95 NV Bouwfonds
Nederlandse Gemeenten
96 NV Borsumij Wehry
97 NV Kon Erven Lucas Bols
98 Mij Van Berkel S Patent NV
99 Cooperatieve Ver Centraal
Beheer U.A.
100 Bank Der Bondsspaarbanken NV
101 Bayer Nederland

182

Resources
Manufacturing
Financials

Board
Size

Inter- Between- Closure
locks
ness

14
7
6

2
3

3.602
1.872

0.000
0.333

9

28

266.621

0.324

Trade

12

1

0.000

Trade
Financials
Resources
Manufacturing
Manufacturing

4
19
7
32
9

37
2
24
6

640.737
0.000
458.870
354.000

0.220

4

531.000

0.000

Financials

Financials

0.219
0.500

8

Manufacturing
Utilities

5
13

Trade

11

Utilities
Financials

9
28

13
74

157.373
1 681.683

0.348
0.164

Trade
Manufacturing
Manufacturing

4
6
10

6
12

0.000
65.750

1.000
0.400

Real Estate

15

6

56.468

0.300

Trade
Manufacturing
Manufacturing
Financials

7
9
8
15

6
7
5
6

144.040
4.732
3.931
41.371

0.333
0.762
0.333
0.300

Financials

16

6

4.619

0.000

Manufacturing

8

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Pagina 183

1976
nr Name

Sector

102 Cooperatieve Ver Coveco G.A.Manufacturing
103 Cooperatieve Vereniging Resources
Avebe G.A.
104 Koninklijke Bunge BV
Trade
105 Amstelland
Real Estate
Concernbeheer BV
106 Amfas Groep NV
Real Estate
107 NV Amev
Financials
108 Alusuisse Beheer BV
Resources
109 Alcan Europe NV
Manufacturing
110 Akzo NV
Manufacturing
111 Ago
Other
112 BV Centrale A En O Ned
Other
113 NV Elec Mij Aeg
Utilities
114 Algemeen Burgerlijk
Financials
Pensioenfonds
115 H. Albert De Bary
Financials
En Co. NV
116 Cooperatieve Melkcentrale Manufacturing
G.A.
117 Zuid-Nederlandse MelkManufacturing
industrie Dmv BV
118 Dikema En Chabot S
Trade
Handelsmij BV
119 Koninklijke Douwe
Manufacturing
Egberts BV
120 NV Deli-Maatschappij
Trade
121 Daiwa Europe NV
Financials
122 Cooperatieve Ver
Other
Noordholland G.A.
123 Hendrix Fabrieken NV
Manufacturing
124 Cooperatieve Inkoopver
Trade
Utrecht En Omstr. U.A.
125 Cook International
Financials
126 Concordia
Financials
Levensverzekering NV
127 Bruynzeel BV
Manufacturing

APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

14
25

2
1

42.049
0.000

0.000

3
7

10

9.887

0.762

19
12
5
5
25
22
10
9
25

21
13

338.892
155.219

0.275
0.167

2
40
41

1.546
560.069
1.003.537

0.000
0.242
0.215

3
6

102.039
7.731

0.000
0.500

11

10

60.764

0.689

6

178.000

0.333

9

7

6.273

0.600

8
8
10

12
2
1

28.145
0.000
0.000

0.424
1.000

9
10

10
1

17.253
0.000

0.667

16

23.339

0.436

9
20
6

3
12
7

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Pagina 184

1976
nr Name

Sector

128 Ver Cooperatieve
Manufacturing
Melkindustrie Coberco G.A.
129 Buhrmann-Tetterode NV Manufacturing
130 Citroen Nederland BV
Trade
131 Cinema International
Other
Corporation BV
132 Cindu-Key En Kramer NV Trade
133 Chrysler Nederland NV
Trade
134 Chevron Petroleum Mij
Trade
Nederland BV
135 De Centrale Levensverz.
Financials
Bank NV
136 Cemsto BV
Other
137 C.C.V. Landbouwbelang G.A. Resources
138 Cooperatieve CondensManufacturing
fabriek Friesland
139 Cooperatieve Zuivelver.
Manufacturing
Campina B.A.
140 Cooperatieve Melkproduc- Manufacturing
tenbedr. Domo-Bedum G.
141 Comprimo BV
Utilities
142 Rijn-Schelde-Verolme NV Manufacturing
143 Assurantieconc.
Financials
Stad R Dam 1720 NV
144 Cooperatieve Ver Ned
Manufacturing
Melkhandel Srv U.A.
145 BV Sperwer Nationaal
Manufacturing
146 Centraal Buro Spar
Trade
Nederland
147 Nederlandse
Financials
Spaarbankbond
148 NV Slavenburg S Bank
Financials
149 Skol Brouwerijen NV
Manufacturing
150 NV Gebr.D.Schuitema
Trade
151 N.G.J. Schouten BV
Utilities
152 Scheepshypotheekbank
Financials
Ned NV
153 NV Prov Gelderse
Utilities
Elektriciteits-Mij

184

Board
Size

Inter- Between- Closure
locks
ness

51

1

0.000

13
4
3

25

114.045

0.322

11
3
7

4

18.374

0.167

1

0.000

8

5

180.147

0.300

7
5
12

3
2
6

0.000
0.000
132.641

1.000
0.500

7

5

0.000

1.000

24

1

0.000

6
20
6

8
28
2

14.197
282.152
1.124

19

1

0.000

10
4

1

0.000

12

7

48.660

0.000

17
9
10
11
10

11
2
1

159.785
2.203
0.000

0.167
0.000

10

124.393

0.311

16

1

0.000

0.393
0.246
0.000

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Pagina 185

1976
nr Name

Sector

154 Rank Xerox
155 Cooperatieve Ver Suiker
Unie U.A.
156 Rijkspostspaarbank
157 Rotterdamsch Beleggingsconsortium NV
158 Riva NV
159 Renault Nederland NV
160 Nederlandse Reassurantie
Groep NV
161 NV Prov Zeeuwse
Energie-Mij
162 Proost En Brandt NV
163 Koninklijke Houthandel
William Pont NV
164 Polyzathe
165 NV Prov Noordbrabantsche
El.Mij
166 Inkoopcombinatie
Nederland NV
167 BV Inkoopcombinatie
Samen Sterk
168 D. Ven BV
169 Holl Aannemersbedr
Zanen Verstoep NV
170 Cacaofabriek De Zaan BV
171 Wyers Beheer NV
172 Westland-Utrecht
Hypotheekbank NV
173 Koninklijke Wessanen NV
174 Wehkamp BV
175 Wastora BV
176 NV Gem Bezit Vrg
177 Volvo Car BV
178 De Vleeschmeesters BV
179 Vihamij-Buttinger NV
180 Stevin Groep NV
181 Zentralgesellschaft
Vfw-Fokker Mbh
APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

Manufacturing
Manufacturing

5
13

2

0.000

1.000

Financials
Investment
companies
Other
Trade
Financials

9
15

10
24

10.106
353.988

0.600
0.277

6
3
13

1

0.000

12

63.340

0.378

Utilities

19

Manufacturing
Manufacturing

7
8

7
5

8.151
7.817

0.571
0.400

Manufacturing
Utilities

8
13

4
3

9.487
48.239

0.333
0.000

Trade

16

Trade

9

Trade
Manufacturing

4
7

1
3

0.000
17.403

0.667

Manufacturing
Manufacturing
Financials

8
9
13

14
17

96.602
61.586

0.374
0.408

Manufacturing
Trade
Trade
Manufacturing
Trade
Manufacturing
Trade
Manufacturing
Manufacturing

10
9
4
10
11
5
8
16
18

18
2

218.404
0.000

0.301
1.000

1
7

0.000
0.000

1.000

17
15
12

74.244
76.380
18.250

0.429
0.341
0.467

185

decline1.qxp

01-02-2007

09:47

Pagina 186

1976
nr Name

Sector

182 Stedelijke Fabr. Gas
En Electriciteit
183 Ve-Ge
184 Vroom En Dreesman BV
185 Transol Exploitatiemij BV
186 Handelsvereniging
Tradax BV
187 Total Nederland NV
188 Topkring-Ceniko NV
189 Thyssen-Bornemisza NV
190 Thomassen En
Drijver-Verblifa NV
191 Cooperatieve Zuivelindustrie De Takomst
192 Cooperatieve Inkoopver
Superunie B.A.
193 Prov Elec Bedrijf Van
Noord-Holland
194 NV Vereenigde
Glasfabrieken
195 NV Elec-Mij
Ijsselcentrale-Zwolle
196 Koninklijke Van Leer BV
197 Leonard Lang BV
198 Koninklijke
Scholten-Honig NV
199 Knsm Group NV
200Kluwer NV
201Keurslagercentrale BV
202Koninklijke
Adriaan Volker Groep
203Hermans Groep BV
204NV Levensverz.Mij.
Nederlanden 1870
205NV Interpolis
206NV Prov Limburgse Elec-Mij
207Incotrans BV
208BV Ned Importmij
Automob. S Gravenhag

186

Utilities

Board
Size

Inter- Between- Closure
locks
ness

13

1

0.000

Manufacturing
Trade
Trade
Trade

7
4
2
4

1

0.000

Trade
Trade
Manufacturing
Manufacturing

7
10
15
9

7
11

37.346
11.780

Manufacturing

64

1

0.000

Manufacturing

8

9

7

19.967

Utilities

18

1

0.000

Manufacturing
Other
Manufacturing

5
5
11

3

4.081

0.333

7

14.595

0.600

Utilities
Other
Trade
Manufacturing

10
11
7
8

11
16

110.872
74.849

0.236
0.341

4

0.000

1.000

Trade
Financials

8
11

8

50.166

0.286

Financials
Utilities
Utilities
Trade

15
14
11
4

9
5
7

725.333
7.609
6.853

0.067
0.000
0.571

Utilities
Manufacturing

0.400
0.545

25
0.400

APPENDIX

III

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01-02-2007

09:47

Pagina 187

1976
nr Name

Sector

209NV Industriele
Handelscombinatie Holl
210 Industr. Disconto Mij NV
211 Ici Holland BV
212 Verenigde Hva Mijen NV
213 T Hooge Huys
Levensverz. 1891 NV
214 Homburg BV
215 Holec NV
216 Hoechst Holland NV
217 Hobo-Faam BV
218 Hudig-Langeveldt Groep BV
219 Van Heugten BV
220Algemene Bank
Nederland NV
221 De Erven De Wed.
J.Van Nelle NV
222Peja Holding NV
223NV Prov En Gem Utrechts
Stroomlev.Bed
224Pechiney Nederland NV
225Prov Elec Bedrijf In
Friesland
226Oving-DiepeveenStruycken NV
227Ogem Holding NV
228NV Nederlandsche
Scheepvaart Unie
229Nederlandse Participatie
Maatschappij NV
230Nomura Europe NV
231 Nederlandsche
Middenstandsbank NV
232Koninklijke Textielfabr.
Nijverdal-Ten Cate NV
233Limagas NV
234Nidera Handelscompagnie BV
235Lips United BV
APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

Trade

11

16

49.327

0.385

Financials
Manufacturing
Utilities
Financials

6
5
11
7

7

13.208

0.600

3
9

2.399
15.322

0.333
0.714

Manufacturing
Manufacturing
Manufacturing
Trade
Financials
Other
Financials

6
10
10
17
9
7
47

6
21

0.000
186.627

1.000
0.320

6
2
85

12.510
0.000
1 627.498

0.467
1.000
0.168

Manufacturing

13

22

189.280

0.348

Trade
Utilities

6
12

9
8

11.495
31.049

0.556
0.381

Manufacturing
Utilities

5
4

1

0.000

Manufacturing

8

11

77.964

0.455

Utilities
Utilities

10
14

25
33

219.784
396.761

0.303
0.258

Financials

22

44

1 072.568

0.188

Financials
Financials

10
25

18

213.281

0.294

Manufacturing

11

26

226.003

0.324

Utilities
Trade

7
2

3

28.549

0.000

Manufacturing

9

6

44.503

0.133

187

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01-02-2007

09:47

Pagina 188

1976
nr Name

Sector

236Gebr. Nefkens NV
237Nederl Installatiebedr
Nedib-Weck Cv
238Nederlandse
Dagbladunie NV
239Nat Cooperatievezuivelverkoopcentrale G.A.
240Nederlandse
Credietbank NV
241 NV Ver Nbm-Bedrijven
242Nationale-Nederlanden NV
243Naarden International NV
244Bank Morgan Labouchere
NV
245Bank Mendes Gans NV
246Hercules BV
247Niemeijer
248Ned. Fin.-Mij. Voor
Ontwikkelingslanden NV
249Polygram NV
250Ceteco NV

Board
Size

Inter- Between- Closure
locks
ness

Other
Other

8
4

2

0.000

1.000

Other

10

9

30.064

0.321

Manufacturing

10

1

0.000

Financials

20

28

727.359

0.202

Financials
Financials
Manufacturing
Financials

11
19
9
10

10
39
15
12

46.252
728.534
145.667
242.227

0.289
0.240
0.348
0.327

Financials
Manufacturing
Manufacturing
Financials

7
6
8
8

2

0.000

1.000

1
15

0.000
14.931

0.476

Manufacturing
Trade

8
9

6
9

3.204
199.034

0.733
0.333

1996
nr Name

1 NV Koninklijke Nederlandse Petroleum
Maatschappij
2 Unilever NV
3 Koninklijke Philips
Electronics NV
4 Koninklijke Ahold NV
5 Shv Holdings NV
6 Akzo Nobel NV
7 Koninklijke Kpn NV
8 NV Koninklijke Knp Bt

188

Sector

Board
Size

Inter- Between- Closure
locks
ness

Resources

12

24

375.552

0.281

Manufacturing
Manufacturing

20
15

9
18

34.103
294.170

0.556
0.181

Trade
Trade
Manufacturing
Utilities
Manufacturing

12
14
15
13
12

21
25
15
20
19

619.560
567.280
241.201
757.775
729.820

0.242
0.267
0.341
0.240
0.211

APPENDIX

III

decline1.qxp

01-02-2007

09:47

Pagina 189

1996
nr Name

9
10
11
12
13
14
15
16
17
18
19
20

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

Sector

Heineken NV
Vendex NV
Iveco NV
Koninklijke Luchtvaart
Maatschappij NV
Dsm NV
Gec Alsthom NV
Sara Lee/De NV
Hagemeyer NV
Koninklijke Hoogovens NV
Cargill Holdings NV
Koninklijke Nedlloyd NV
NV Samenwerkende
Elektriciteits-Produktiebedrijven
Zuivelcooperatie Campina
Melkunie U.A.
Randstad Holding NV
Hollandsche Beton
Groep NV
Pirelli Tyre Holding NV
Dow Benelux NV.
Cebeco-Handelsraad B.A.
Stork NV
NV Nederlandse
Spoorwegen
Koninklijke
Bolswessanen NV
Nutreco Holding NV
NV Koninklijke Bijenkorf
Beheer Kbb
Friesland Diary Foods
Holding NV
Wolters Kluwer NV
Unigro
Koninklijke Emballage
Industrie Van Leer NV
Océ Van Der Grinten NV

APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

Manufacturing
Trade
Other
Utilities

11
8
12
16

26
13

511.064
236.093

0.344
0.308

18

184.094

0.319

Manufacturing
Utilities
Manufacturing
Trade
Manufacturing
Trade
Utilities
Utilities

13
16
14
13
14
14
9
16

15

356.037

0.179

22
12
33
6
23
22

398.126
188.705
617.057
18.391
453.671
890.014

0.235
0.345
0.245
0.600
0.274
0.210

Manufacturing

18

5

215.005

0.100

Other
Manufacturing

12
10

15
11

558.308
107.256

0.190
0.378

Manufacturing
Manufacturing
Trade
Manufacturing
Utilities

12
5
22
11
12

1
1
6
23
15

0.000
0.000
129.709
1 247.586
395.228

0.133
0.221
0.220

Trade

11

25

825.166

0.190

Manufacturing
Trade

7
9

19

147.963

0.458

Manufacturing

15

8

34.996

0.619

Other
Trade
Manufacturing

11
5
13

19
9
10

425.173
92.774
338.223

0.268
0.500
0.244

Manufacturing

10

19

220.999

0.267

189

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01-02-2007

09:47

Pagina 190

1996
nr Name

37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68

Sector

Otra NV
Trade
Ballast Nedam NV
Manufacturing
Nbm-Amstelland NV
Manufacturing
Pon Holdings BV
Other
Texaco Nederland BV
Utilities
Dumeco NV
Manufacturing
Zuivelcooperatie
Manufacturing
Coberco U.A.
Koninklijke Pakhoed NV
Utilities
Netherlands Car BV
Other
Vnu NV
Other
Internatio-Muller NV
Manufacturing
Csm NV
Manufacturing
Koninklijke Volker
Manufacturing
Stevin NV
NV Verenigde Bedrijven
Manufacturing
Nutricia
Daf Trucks NV
Manufacturing
Bp Nederland Holdings NV. Manufacturing
Apothekers Cooperatie
Trade
Opg U.A.
Unisource NV
Utilities
Merck Sharp & Dohme BV Other
Ibm Nederland NV
Utilities
Siemens Nederland NV
Trade
Tbi Holdings BV
Manufacturing
Hunter Douglas NV
Manufacturing
Getronics NV
Other
De Boer Winkelbedrijven Trade
Evc International NV
Manufacturing
Cooperatie Cosun U.A.
Manufacturing
Koninklijke Gist-Brocades Manufacturing
NV
Cooperatieve Cehave U.A. Manufacturing
Hoogwegt Groep BV
Manufacturing
Intergamma BV
Other
Kuwait Petroleum
Trade
(Nederland) BV

190

Board
Size

Inter- Between- Closure
locks
ness

8
11
9
9
9
4
22

7
9
12
10

42.917
297.354
214.647
12.623

0.714
0.250
0.309
0.643

3

7.831

0.333

9
13
9
8
11
9

24
4
17
11
16
6

671.201
11.693
501.295
183.348
415.769
23.018

0.242
0.500
0.242
0.400
0.225
0.267

9

10

209.070

0.250

8
4
13

8

140.187

0.393

3

4.961

0.333

7
7
10
9
8
8
6
8
9
26
9

2
1
4
7
13
4
15
7
2
2
10

0.000
0.000
37.078
13.472
124.284
36.588
455.175
21.736
0.000
192.000
93.027

1.000
0.167
0.714
0.273
0.333
0.248
0.476
1.000
0.000
0.444

18
5
10
4

10

59.601

0.333

4

42.600

0.500

APPENDIX

III

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01-02-2007

09:47

Pagina 191

1996
nr Name

Sector

69 Du Pont De Nemours
Manufacturing
(Nederland) BV
70 Provimi Holding BV
Manufacturing
71 Koninklijke Bam Groep NV Manufacturing
72 Elsag Bailey Process
Trade
Automation NV
73 Memorex Telex
Manufacturing
Nederland BV
74 Wavin BV
Manufacturing
75 Heijmans NV
Manufacturing
76 Samas-Groep NV
Other
77 Gti NV
Manufacturing
78 Daimler-Benz Holding
Other
Nederland BV
79 Gucci Group NV
Trade
80 Ihc Caland NV
Manufacturing
81 Petroplus International NV Trade
82 Wegener Arcade NV
Other
83 NV EnergieproduktieUtilities
bedrijf Una
84 Basf Nederland BV
Manufacturing
85 Fina Nederland BV
Manufacturing
86 Maas International
Manufacturing
Europe BV
87 Meneba NV
Manufacturing
88 Rothmans Nederland
Manufacturing
Holdings BV
89 Koninklijke Ten Cate NV
Manufacturing
90 Wilma BV
Manufacturing
91 Nestle Nederland BV
Manufacturing
92 Gamma Holding NV
Manufacturing
93 Cooperatieve VerkoopManufacturing
En Productievereniging
Van Aardappelmeel En
Derivaten ‘Avebe‘‘ B.A.
94 Nkf Kabel BV
Manufacturing
95 Asm Litography
Manufacturing
Holding NV

APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

9
5
9
1

12

273.814

0.182

13
6
7
11
5

1
7
13
9

0.000
71.351
355.843
119.818

0.286
0.295
0.278

7
7
5
12
10

1
17
7
5
2

0.000
294.857
173.937
420.607
4.604

0.325
0.524
0.100
0.000

7
4
5

1

0.000

6

42.462

0.500

7
2

8

420.550

0.214

8
10
2
8
14

15
7

693.496
132.862

0.190
0.190

18
1

315.802
0.000

0.346

7
8

6
3

27.840
3.892

0.400
0.333

5

191

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01-02-2007

09:47

Pagina 192

1996
nr Name

Sector

96 Ford Nederland BV
Other
97 NV Holdingsmaatschapij Other
De Telegraaf
98 Draka Holding NV
Manufacturing
99 Pcm Uitgevers NV
Other
100 Van Leeuwen Buizen
Manufacturing
Groep BV
101 Mars BV
Manufacturing
102 Koninklijke Frans Maas
Utilities
Groep NV
103 Mandam BV
Trade
104 Solvay Duphar BV
Manufacturing
105 Polaroid (Europa) BV
Manufacturing
106 Acf Holding
Manufacturing
107 Prisma Food Holding BV
Resources
108 Koop Holding Europe BV Manufacturing
109 Tengelmann Holding BV Trade
110 Koninklijke Boskalis
Manufacturing
Westminister NV
111 Roto Smeets De Boer NV
Manufacturing
112 Heijdemij NV
Manufacturing
113 Macintosh Retail Group NV Trade
114 Geveke NV
Trade
115 Beers NV
Trade
116 Atag Holding NV
Manufacturing
117 Cap Gemini NV
Other
118 Kondor Wessels Groep NV Manufacturing
119 Madge Networks NV
Utilities
120 Schuttersveld NV
Manufacturing
121 Sligro Beheer NV
Trade
122 Fugro NV
Other
123 Van Melle NV
Manufacturing
124 NV Sphinx Gustavsberg
Manufacturing
125 Athlon Groep NV
Other
126 NV Twentsche Kabel
Utilities
Holding
127 Koninklijke
Utilities
Van Ommeren NV

192

Board
Size

Inter- Between- Closure
locks
ness

5
10

1
4

0.000
0.000

1.000

6
13
8

8
9
4

128.213
182.772
19.890

0.571
0.194
0.167

10
7

5

30.186

0.167

9

233.451

0.444

3

7.776

0.333

14

744.654

0.231

9
10
8
6
6
9
9
7
3
8
6
13
7
9
6
8

7
9
12
3
8
4
8
13

214.167
212.051
337.137
0.000
35.336
32.032
45.164
568.892

0.333
0.250
0.255
1.000
0.750
0.500
0.393
0.303

4
3
7
2
7
7
8

51.306
104.237
75.825
0.000
101.021
99.249
0.000

0.333
0.333
0.381
1.000
0.333
0.333
1.000

8

7

211.563

0.190

3
7
5
5
3
4
2
9

APPENDIX

III

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09:47

Pagina 193

1996
nr Name

128 Koninklijke Ahrend NV
129 Nederlandse Organisatie
Voor Toegepast-Natuurwetenschappelijk
Onderzoek
130 Ansaldo Signal NV
131 Baan Company NV
132 Koninklijke Grolsch NV
133 Asm International NV
134 Endemol Entertainment
Holding NV
135 Him Furness NV
136 Polynorm NV
137 Toolex Alpha NV
138 NV W.A. Hoek‘S MachineEn Zuurstoffabriek
139 Grontmij NV
140 Tulip Computers NV
141 Koninklijke Econosto NV
142 Vredestein NV
143 Cindu International NV
144 Be Semiconductor
Industries NV
145 Delft Instruments NV
146 Smit Internationale NV
147 Aalberts Industries NV
148 Eriks Holding NV
149 Rubber Cultuur Maatschappij Amsterdam NV
150 Content Beheer NV
151 Roba Holding BV
152 Koninklijke Vanderhave
Group BV
153 Norit NV
154 Triple P NV
155 Van Oord Groep NV
156 Nagron Nationaal
Grondbezit NV

APPENDIX

III

Sector

Trade
Other

Board
Size

Inter- Between- Closure
locks
ness

8
13

7
10

126.302
254.540

0.143
0.178

Trade
Other
Manufacturing
Manufacturing
Other

9
8
7
6
9

11
7
6

59.869
115.505
67.520

0.400
0.238
0.267

Utilities
Manufacturing
Manufacturing
Manufacturing

5
8
11
7

6
10
4
4

101.438
272.894
0.000
11.919

0.467
0.178
1.000
0.500

Manufacturing
Manufacturing
Trade
Manufacturing
Manufacturing
Manufacturing

8
6
6
5
8
6

6
10
3

28.777
88.415
383.000

0.300
0.467
0.000

1

0.000

Manufacturing
Utilities
Manufacturing
Trade
Manufacturing

9
8
7
5
4

8
10
3
1
1

147.609
52.192
26.192
0.000
0.000

0.214
0.528
0.333

Other
Trade
Resources

7
7
3

11

71.934

0.422

Manufacturing
Trade
Manufacturing
Real Estate

5
8
6
5

3
1
3
5

202.852
0.000
34.804
33.633

0.000
0.333
0.400

193

decline1.qxp

01-02-2007

09:47

Pagina 194

1996
nr Name

Sector

157 Koninklijke Nedschroef
Manufacturing
Holding NV
158 Peek & Cloppenburg BV
Trade
159 Free Record Shop
Trade
Holding NV
160 Simac Techniek NV
Manufacturing
161 Indigo NV
Manufacturing
162 Alanheri NV
Trade
163 NV Gemeenschappelijk
Manufacturing
Bezit Crown Van Gelder
164 Brunel International NV Other
165 Reesink NV
Trade
166 Van Dorp Groep NV
Trade
167 Neways Electronics
Manufacturing
International NV
168 Lci Computer Group NV
Other
169 Core Laboratories NV
Manufacturing
170 Batenburg Beheer NV
Trade
171 Ordina Beheer NV
Other
172 Van Der GiessenManufacturing
De Noord NV
173 Flexofit International NV Manufacturing
174 NV Nederlandsche
Manufacturing
Apparatenfabriek ‘Nedap’
175 A.I.R. Holdings NV
Trade
176 Koninklijke Ubbink NV
Manufacturing
177 H.E.S. Beheer NV
Trade
178 Koninklijke Landre &
Trade
Glinderman NV Sinds 1863
179 Beter Bed Holding NV
Trade
180 Vilenzo International NV Trade
181 Unique International BV. Other
182 Gouda Vuurvast Holding NV Manufacturing
183 Docdata BV
Manufacturing
184 Nedcon Groep NV
Manufacturing
185 Blydenstein-Willink NV
Manufacturing
186 Rood Testhouse
Trade
International NV.

194

Board
Size

Inter- Between- Closure
locks
ness

8
8
7

6

33.318

0.533

7
11
7
6

2
4

192.000
58.336

0.000
0.333

4
5
3
6

5
2
1
2

21.640
2.263
0.000
0.000

0.400
0.000

3
8
5
8
4

1
3
2

0.000
10.272
13.968

0.333
0.000

8
6

6
2

28.120
50.907

0.400
0.000

3
6
5
4

2
6
4
5

0.000
55.539
18.746
0.000

1.000
0.267
0.333
1.000

9
4
8
5
5
6
5
6

2

0.000

1.000

2
4
3
3
1
2

0.000
201.702
12.913
0.000
0.000
0.000

1.000
0.167
0.000
1.000

1.000

1.000

APPENDIX

III

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Pagina 195

1996
nr Name

Sector

187 Smit Transformatoren NV Manufacturing
188 Welna NV
Manufacturing
189 NV Dico International
Manufacturing
190 Elsevier NV
Other
191 Hal Holding NV
Trade
192 Abn Amro Holding NV
Financials
193 NV Bank Nederlandse
Financials
Gemeenten
194 De Nederlandsche Bank NV Financials
195 Delta Lloyd
Financials
Verzekeringsgroep NV
196 Nederlandse
Financials
Waterschapsbank NV
197 NV. Bouwfonds
Real Estate
Nederlandse Gemeenten
198 Generale Bank
Financials
Nederland NV
199 De Nationale
Financials
INVersteringsbank NV
200F. Van Lanschot
Financials
Bankiers NV
201De Zwitserse MaatFinancials
schappij Van Levensverzekering En Lijfrente
202Deutsche Bank De Bary NV Financials
203Banque Paribas
Financials
Nederland NV
204Friesland Bank NV
Financials
205Kas-Associatie NV
Financials
206NV De Indonesische
Financials
Overzeese Bank
207Dai-Ichi Kangyo Bank
Financials
Nederland NV
208Axa Leven NV
Financials
209Eureko BV
Financials
210 Zurich Leven
Financials
211 Nuts Ohra Beheer BV
Financials
212 Kredietbank
Financials
(Nederland) NV
APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

6
5
5
15
8
22
14

2

0.000

1.000

4
13
10
52
8

0.000
395.767
116.364
3 003.271
83.585

1.000
0.273
0.378
0.135
0.393

17
11

19
14

279.599
279.481

0.233
0.330

13

6

506.503

0.133

15

6

284.420

0.333

13

11

132.353

0.467

12

29

953.283

0.254

12

20

941.617

0.163

12
10

7

87.289

0.143

14
10
6

2
5

0.000
213.288

1.000
0.200

3
4

0.000
0.000

1.000
1.000

4

303.704

0.167

3

5
11
14
1
11
5

195

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09:47

Pagina 196

1996
nr Name

213 Bank Of Tokyo-Mitsubishi
(Holland) NV
214 Commerzbank
(Nederland) NV
215 De Amersfoortse
Verzekeringen NV
216 Generali Verzekeringsgroep N. V.
217 Royal Nederland
Verzekeringsgroep NV
218 Levob Verzekeringen BV
219 Zwolsche Algemeene NV
220Wereldhave NV
221 Robeco Bank Holding BV
222NV Nederlandse Gasunie
223Achmea Group
224Aegon NV
225Asr Verzekeringsgroep NV
226Fortis Amev
227Ing Group
228Rabobank Group
229Sns Reaal Group
230Uap Nieuw Rotterdam
Holding
231 Nederlandse Participatie
Maatschappij NV
232Nomura Bank
Nederland NV
233Vib NV
234Algemene Levensherverzekering Mij. NV
235Coöperatie Univé
Verzekeringen B.A.
236Ned. Fin.-Mij. Voor
Ontwikkelingslanden NV
237Tokai Bank Nederland NV
238Goudse Verzekeringen BV
239Onderlinge Waarborgmaatschappij Rzg U.A.

196

Sector

Board
Size

Inter- Between- Closure
locks
ness

Financials

7

Financials

6

Financials

7

5

5.228

0.500

Financials

11

3

12.593

0.333

Financials

9

2

10.013

0.000

Financials
Financials
Real Estate
Financials
Resources
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials

6
10
7
6
14
24
15
8
15
17
30
16
16

1
1
3
4
5
8
30
6
11
22
12
3
7

0.000
0.000
14.475
34.477
40.553
122.759
847.579
38.435
544.758
540.105
165.228
195.659
53.135

0.333
0.333
0.333
0.238
0.209
0.100
0.109
0.148
0.127
0.000
0.762

Investment
companies
Financials

20

21

1486.386

0.153

Financials
Financials

8
5

13
2

184.551
0.000

0.242
1.000

Financials

22

Financials

16

5

74.948

0.100

Financials
Financials
Financials

5
15
5

2

6.245

0.000

6

APPENDIX

III

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09:47

Pagina 197

1996
nr Name

240Vvaa Groep BV
241 Yamaichi Bank
Nederland NV
242Uni-INVest NV
243Aot
244Axxicon
245Burgman-Heybroek
246Holland Colours
247Ict Automatisering
248Krasnapolsky Hotels
& Restaurants NV
249Weweeler
250Koninklijke Textielgroep
Twente NV

Sector

Board
Size

Financials
Financials

9
5

Financials
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Real Estate

5
6
5
7
8
6
4

Manufacturing
Manufacturing

4
5

Inter- Between- Closure
locks
ness
2

0.000

1.000

2
1

0.000
0.000

1.000

1
1
4

0.000
0.000
192.000

0.500

2001
nr Name

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Koninklijke/Shell Groep
Koninklijke Ahold NV
Unilever NV
Hewlett-Packard
Europe BV
Koninklijke Philips
Electronics NV
Akzo Nobel NV
Ibm Global Holdings BV
Shv Holdings NV
Koninklijke Kpn NV
Tpg NV
Trafigura Beheer BV
Buhrmann NV
NV Nederlandse Gasunie
Hagemeyer NV
Dsm NV

APPENDIX

III

Sector

Board
Size

Inter- Between- Closure
locks
ness

Resources
Trade
Manufacturing
Manufacturing

11
14
19
3

20
18
6

449.796
1 085.843
8.967

0.364
0.210
0.700

Manufacturing

11

13

228.901

0.301

Manufacturing
Real Estate
Trade
Utilities
Utilities
Trade
Trade
Trade
Trade
Manufacturing

14
5
17
11
13
5
12
15
8
13

16
2
13
14
9

449.394
0.000
216.204
274.148
87.476

0.273
1.000
0.255
0.263
0.190

18
5
8
11

1487.356
133.000
61.720
935.443

0.176
0.333
0.518
0.208

197

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09:47

Pagina 198

2001
nr Name

16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45

Sector

Agip International BV
Canon Europa NV
Ingka Holding BV
Esso Nederland BV
Nissan Europe NV
Heineken NV
Cisco Systems
International BV
Koninklijke Luchtvaart
Maatschappij NV
Vedior NV
Laurus NV
Ericsson Holding
International BV
Reed Elsevier Plc
Randstad Holding NV
Fujitsu Siemens Computers
(Holding) BV
Corus Nederland BV
Cepsa International BV
Xerox INVestments
Europe BV
Ispat International NV
Hollandsche Beton
Groep NV
Sara Lee/De NV
Cargill Holdings BV
Essent NV
Koninklijke Vendex Kbb NV
Microsoft International BV
Dell Products (Europe) BV
Cadbury Schweppes
INVestments BV
Koninklijke Numico NV
Koninklijke Vopak NV
Mitsubishi Motors
Europe BV
Getronics NV

198

Board
Size

Resources
Trade
Trade
Manufacturing
Trade
Manufacturing
Real Estate

5
4
10
7
9
14
3

Other

Inter- Between- Closure
locks
ness

2

0.000

21

722.949

0.250

12

13

310.432

0.256

Real Estate
Trade
Manufacturing

11
11
3

1
13

0.000
501.226

0.321

Manufacturing
Real Estate
Trade

11
11
13

6
11

18.748
364.928

0.400
0.245

Manufacturing
Trade
Manufacturing

8
3
6

1

0.000

Manufacturing
Manufacturing

8
10

9

157.056

0.417

Manufacturing
Manufacturing
Utilities
Trade
Real Estate
Trade
Manufacturing

14
3
17
10
3
5
13

10

261.386

0.300

10
9

395.708
312.069

0.143
0.250

Manufacturing
Manufacturing
Trade

10
11
7

10
20

400.497
639.421

0.244
0.330

8

12

28.838

0.656

Real Estate

APPENDIX

III

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09:47

Pagina 199

2001
nr Name

Sector

46 Friesland Coberco
Manufacturing
Dairy Foods Holding NV
47 Philip Morris Holland BV Manufacturing
48 Sony Europa BV
Trade
49 Koninklijke Wessanen NV Manufacturing
50 Eurospecialities Foods BV Manufacturing
51 Zuivelcoöperatie Campina Manufacturing
U.A.
52 NV Nuon
Utilities
53 Wolters Kluwer NV
Manufacturing
54 Dow Benelux NV
Manufacturing
55 Dhl Worldwide Express
Utilities
BV
56 Petroplus International NV Trade
57 Sun Microsystems
Manufacturing
International BV
58 Coöperatie Koninklijke
Manufacturing
Cebeco Groep U.A.
59 Vnu NV
Manufacturing
60 Pon Holdings BV
Trade
61 Emc (Benelux) BV
Manufacturing
62 Océ NV
Manufacturing
63 Nutreco Holding NV
Manufacturing
64 Warner-Lambert
Manufacturing
Holland BV
65 Lucent Technologies
Manufacturing
Emea BV
66 Alfred C. Toepfer
Trade
International BV
67 Billiton Marketing BV
Trade
68 Merck Sharp & Dohme
Manufacturing
Int. Services BV
69 Csm NV
Manufacturing
70 Koninklijke Volker
Manufacturing
Wessels Stevin NV
71 Imtech NV
Manufacturing
72 Stork NV
Manufacturing
73 Louis Dreyfus Holding
Trade
Netherlands BV
APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

15

5

340.435

0.200

6
5
8
2
17

4

387.910

0.333

9

137.176

0.196

8

700.387

0.214

16
9
6
15

14
13

477.982
331.892

0.288
0.397

5
1

3

244.424

0.333

16

9

486.657

0.111

12
11
6
11
9
2

17
7

706.774
24.604

0.290
0.400

22
4

851.239
0.000

0.263
1.000

2

0.000

0.500

10
9

20
13

628.889
392.030

0.308
0.288

8
10
1

16
10

1170.583
191.481

0.271
0.333

3
14
4
1

199

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09:47

Pagina 200

2001
nr Name

74 Alcoa Europe Holding BV
75 NV Nederlandse
Spoorwegen
76 Gucci Group NV
77 Amstelland NV
78 Ahp Holdings BV
79 Nec Computers
International BV
80 Epson Europe BV
81 Daf Trucks NV
82 Asml Holding NV
83 Schuitema NV
84 Ballast Nedam NV
85 Otra NV
86 New Holland Trade NV
87 Mccain Europa BV
88 Yamaha Motor Europe NV
89 Addax BV
90 Bacardi-Martini BV
91 Blokker Holding BV
92 Atos Origin BV
93 Draka Holding NV
94 Lekkerland Benelux NV
95 Hunter Douglas NV
96 Tui Nederland NV
97 Opg Groep NV
98 Kappa Holding BV
99 Dumeco BV
100 Equant NV
101 National Semiconductor
International BV
102 Jt International BV
103 Kuwait Petroleum
(Nederland) BV
104 Heijmans NV
105 The Greenery
International BV
106 Tetra Laval BV

200

Sector

Board
Size

Manufacturing
Utilities

3
9

Manufacturing
Manufacturing
Manufacturing
Manufacturing

15
8
11
7

Trade
Manufacturing
Manufacturing
Trade
Manufacturing
Trade
Trade
Manufacturing
Trade
Trade
Manufacturing
Trade
Real Estate
Manufacturing
Trade
Manufacturing
Other
Manufacturing
Manufacturing
Manufacturing
Real Estate
Trade

4
10
11
10
9
4
2
5
6
2
9
5
4
11
5
15
9
9
8
16
12
4

Manufacturing
Trade

6
4

Manufacturing
Trade

10
14

Trade

Inter- Between- Closure
locks
ness

21

772.240

0.359

2
9

0.000
631.556

0.500
0.194

3
4
8
8

0.000
461.343
815.411
123.721

1.000
0.167
0.095
0.357

8
5
5
4
3
3
4
4
3

124.147
45.382
0.000
92.830
0.000
21.418
72.344
18.046
1.000

0.482
0.350
1.000
0.500
1.000
0.333
0.500
0.500
0.167

14
2

655.620
262.000

0.179
0.000

2

APPENDIX

III

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Pagina 201

2001
nr Name

Sector

107 Koninklijke Bam Nbm NV Manufacturing
108 Mitsubishi Electric
Trade
Europe BV
109 Holland Chemical
Trade
International NV
110 Kendrion NV
Manufacturing
111 Transmissions And
Manufacturing
Engineering Serv.Neth. BV
112 Denso International
Manufacturing
Europe BV
113 Vodafone International BV Utilities
114 Hoogwegt Groep BV
Trade
115 NV ElektriciteitsUtilities
Produktiemij. Zuid-Ned. Epz
116 Ibm Nederland NV
Trade
117 Daimlerchrysler Nederland Trade
Holding BV
118 Siemens Nederland NV
Manufacturing
119 NV Eneco
Utilities
120 Apple Computer
Trade
Holding BV
121 Alenia Marconi Systems NV Manufacturing
122 Evc International NV
Manufacturing
123 Metro Distributie
Trade
Nederland BV
124 Athlon Groep NV
Real Estate
125 Compaq Computer BV
Trade
126 Totalfinaelf Nederland NV Trade
127 Libertel NV
Utilities
128 Abbott Holdings BV
Trade
129 Ricoh Europe BV
Trade
130 Koninklijke Coöperatie
Manufacturing
Cosun U.A.
131 Swets & Zeitlinger
Manufacturing
Holding NV
132 Granaria Holdings BV
Trade
133 Coöperatie Cehave
Manufacturing
Landbouwbelang U.A.

APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

10
8

9

407.341

0.089

4

4

0.000

1.000

6
6

4

0.000

1.000

3
4
3

2

0.000

5
9

1
4

0.000
15.360

0.667

9
9
2

3
3

9.793
262.000

0.333
0.333

4

63.376

0.250

0.167

3

8
7
7
9
6
4
10
1
6
25

3

8.280

1

0.000

7

2

0.000

1
3

1

0.000

0.500

201

decline1.qxp

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09:47

Pagina 202

2001
nr Name

134 Start Holding BV
135 Prada Holding BV
136 Electrabel Nederland NV
137 Samas-Groep NV
138 United Pan-Europe
Communications NV
139 Euretco NV
140 Wegener NV
141 Geveke NV
142 Gti NV
143 Koninklijke Frans Maas
Groep NV
144 Gamma Holding NV
145 Asm International NV
146 Koninklijke Nedlloyd NV
147 Hal Holding NV
148 British American Tobacco
Hold. (Neth.) BV
149 Merck Sharp & Dohme BV
150 Du Pont De Nemours
(Nederland) BV
151 Archer Daniels Midland
Nederland BV
152 Beheer Koop Tjuchem BV
153 Universal Studios
International BV
154 Koninklijke Boskalis
Westminster NV
155 Bocchi Holding BV
156 Cap Gemini NV
157 Wavin BV
158 Teva Pharmaceuticals
Europe BV
159 Van Drie Holding BV
160 Crh Nederland BV
161 Ihc Caland NV
162 Nestlé Nederland BV
163 NV Holdingmaatschappij
De Telegraaf

202

Sector

Board
Size

Real Estate
Trade
Utilities
Manufacturing
Utilities

7
5
10
9
14

Real Estate
Manufacturing
Trade
Manufacturing
Other

7
11
7
8
7

Manufacturing
Manufacturing
Other
Real Estate
Manufacturing

9
8
6
6
3

Manufacturing
Manufacturing

8
8

Manufacturing

3

Manufacturing
Other

1
3

Manufacturing

Inter- Between- Closure
locks
ness
2

520.000

0.000

4
11

285.632
268.633

0.167
0.300

2
1
6
9

5.582
0.000
313.400
528.769

0.000
0.133
0.264

14
5
11
13

936.113
54.592
346.758
615.069

0.181
0.300
0.236
0.205

2

0.000

1.000

8

7

213.481

0.300

Trade
Real Estate
Manufacturing
Manufacturing

4
7
9
7

1
8
1

0.000
231.529
0.000

0.250

Manufacturing
Trade
Resources
Manufacturing
Manufacturing

1
6
11
7
11

13
1
1

679.076
0.000
0.000

0.333

APPENDIX

III

decline1.qxp

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09:47

Pagina 203

2001
nr Name

Sector

164 Macintosh Retail Group NV Trade
165 Arcadis NV
Real Estate
166 Dura Vermeer Groep NV
Manufacturing
167 Bosal Holding BV
Trade
168 Sligro Beheer NV
Trade
169 Tbi Bouwgroep BV
Manufacturing
170 Abb Oil & Gas Europe BV Manufacturing
171 Accenture Participations Real Estate
BV
172 Gak Nederland BV
Other
173 Pcm Uitgevers NV
Manufacturing
174 Sew-Eurodrive
Manufacturing
International BV
175 Coöperatie Intres U.A.
Trade
176 Connexxion NV
Utilities
177 Holding Pricewaterhouse- Real Estate
coopers Nederland BV
178 Aramco Overseas
Trade
Company BV
179 Econocom
Trade
International NV
180 Tengelmann Holding BV Trade
181 Samsung Electronics
Trade
Benelux BV
182 Fugro NV
Real Estate
183 Roto Smeets De Boer NV
Manufacturing
184 Van Der Sluijs Holding
Trade
Statendam BV
185 Remu NV
Utilities
186 L.V.I. Holding NV
Manufacturing
187 Mars BV
Manufacturing
188 Landis Group NV
Real Estate
189 Viacom International
Other
(Netherlands) BV
190 International Masters
Manufacturing
Publishers BV
191 Eagleville Group BV
Trade
192 NV Deli Universal
Trade

APPENDIX

III

Board
Size
8
10
12
3
6
2
4
3
1
10
3
11
1
4

Inter- Between- Closure
locks
ness
10
2
6

884.424
0.000
247.004

0.144
1.000
0.100

2

42.741

0.000

6

74.684

0.250

3

0.000

0.000

6
3

172.898
0.000

0.267
1.000

5
8
2
6
9
8
1
13
12
12
6
4
3
3
3

203

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09:47

Pagina 204

2001
nr Name

Sector

193 Teka BV
Manufacturing
194 Coöp. Verk.- & Prod.Ver.
Manufacturing
Aardappelm. &
Deriv.‘Avebe‘ B.A.
195 Beers NV
Trade
196 Pinkroccade NV
Real Estate
197 Nylstar NV
Manufacturing
198 Van Leeuwen Buizen
Trade
Groep BV
199 NV Luchthaven Schiphol Other
200NV Delta Nutsbedrijven
Utilities
201Ing Groep NV
Financials
202Abn Amro Holding NV
Financials
203Fortis
Financials
204Coöp. Centrale Raiffeisen- Financials
Boerenleenbank B.A.
205Aegon NV
Financials
206NV Bank Nederlandse
Financials
Gemeenten
207Eureko BV
Financials
208De Nederlandsche Bank NV Financials
209Sns Reaal Groep NV
Financials
210 Delta Lloyd NV
Financials
211 Nederlandse WaterFinancials
schapsbank NV
212 Nib Capital NV
Financials
213 Van Lanschot NV
Financials
214 Axa Verzekeringen BV
Financials
215 Zwitserse Mij. Van Levens- Financials
verz. En Lijfrente
216 Labouchere NV
Financials
217 Friesland Bank Holding NV Financials
218 Kas Bank NV
Financials
219 Fgh Bank NV
Financials
220Banque Artesia
Financials
Nederland NV
221 Commerzbank
Financials
(Nederland) NV

204

Board
Size
8
13

6
13
8
8

Inter- Between- Closure
locks
ness

2

0.000

1.000

8
3

76.131
9.627

0.607
0.333

4

292.722

0.083

11
8
19
22
23
25

15

814.385

0.271

25
23
15
11

1027.361
930.798
1173.262
411.060

0.216
0.167
0.214
0.042

14
16

19
10

623.598
215.231

0.213
0.125

15
15
10
12
13

2
20
2
6
6

0.000
1 315.673
3.275
290.952
110.066

1.000
0.205
0.000
0.150
0.333

12
13
9
4

6
12
4

175.089
818.500
262.000

0.267
0.189
0.500

11
10
10
7
12

4
3
3
3

33.780
2.136
64.086
35.761

0.500
0.333
0.167
0.333

5

APPENDIX

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2001
nr Name

Sector

222Kbc Bank Nederland NV
223Royal Nederland
Verzekeringsgroep NV
224Generali
Verzekeringsgroep NV
225Canada Trust Bank NV
226Zurich Leven
227Levob Verzekeringen BV
228Zwolsche Algemeene NV
229Bank Of Tokyo-Mitsubishi
(Holland) NV
230Mizuho Bank
Nederland NV
231 NV De Indonesische
Overzeese Bank
232Swiss Re Nederland
Holding BV
233Aot NV
234United Garanti Bank
International NV
235Finansbank (Holland) NV
236Dela Coöperatie U.A.
237Demir-Halk Bank
(Nederland) NV
238Zorgverzekeraar Vgz Groep
239De Goudse NV
240Kempen & Co NV
241 Winterthur Levensverzekering Maatschappij
242Onderl. Levensverz.-Mij.
“‘S-Gravenhage” U.A.
243Ncm Holding NV
244Erasmus Groep BV
245Amicon Groep
246Owm Cz Groep
Ziektekosten U.A.
247Interpay Nederland BV
248Eurocommercial
Properties NV
APPENDIX

III

Board
Size

Inter- Between- Closure
locks
ness

Financials
Financials

5
9

2

262.000

0.000

Financials

8

3

166.307

0.167

Financials
Financials
Financials
Financials
Financials

6
1
6
4
6

1

0.000

1

0.000

Financials

5

Financials

5

Financials

6

Financials
Financials

6
9

4

0.000

1.000

Financials
Financials
Financials

6
6
10

5

357.269

0.300

Financials
Financials
Financials
Financials

10
10
9
1

3
7

150.343
189.202

0.000
0.400

Financials

8

Financials
Financials
Financials
Financials

12
9
10
10

7

178.911

0.286

3

0.000

1.000

Financials
Financials

11
6

8

138.911

0.089

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2001
nr Name

249Robein Leven NV
250Citco Bank Nederland NV

206

Sector

Financials
Financials

Board
Size

Inter- Between- Closure
locks
ness

5
10

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Appendix IV

Big Linkers

Table IV.1: Big Linkers
1976

1996

2001

Number of big linkers
Percentage of interlocks
Created by big linkers

68

47

32

67.5

58.9

53.5

Total number of positions
Total number of executive positions

344
35

230
22

146
2

Directors with More Than Three Positions in Both 1996 and 2001:
P. Bouw
4
7
M.W. Dekker
5
4
F.H. Fentener van Vlissingen
7
5
R. Hazelhoff
9
4
P.C. van den Hoek
4
4
P.J. Kalff
4
6
N. Kroes
4
4
A.H. Land
4
4
H. Langman
7
5
H.B.van Liemt
5
4
A.A. Loudon
5
4
J.V.H. Pennings
5
4
A.H.J. Risseeuw
4
5
H. de Ruiter
8
7
G. van Schaik
7
4
K.J. Storm
4
4

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Big Linkers in 1976:
The numbers following the names denote the total number of positions at
the top 250 firms, the number of executive positions, and the number of
supervisory positions.
J.R.M. van den Brink 9 1 8
A. Jiskoot 8 1 7
W.A.J. Bogers 8 1 7
L.P. Ruys 7 0 7
J. de Wilde 7 1 6
P.A. Blaisse 7 0 7
A.W.J. Caron 7 0 7
J. Loopuijt 7 0 7
J.A.H. Delsing 7 1 6
H.J.W. Brouwer 7 0 7
B. Pruijt 7 0 7
W.T. Kroese 7 0 7
O. Vogelenzang 6 1 5
C.F. Karsten 6 1 5
E.H. van der Beugel 6 0 6
P.M. van Doormaal 6 0 6
C.R.C. Wijckerheld Bisdom 6 0 6
J. van der Velden 6 1 5
H.J. Kruisinga 5 1 4
P.M.H. van Boven 5 0 5
P.L. Justman Jacob 5 0 5
S. Orlandini 5 1 4
PH.C.M. van Campen 5 0 5
D. Haentjens Dekker 5 1 4
K. Fibbe 5 1 4
H. Langman 5 1 4
F.J.F.M. van Thiel 5 0 5
G. van der Wal 5 0 5
H.N. Wakkie 5 1 4
J. de Vries 5 1 4
J. Visser 5 1 4
E. van Veelen 5 1 4
A. Meijer 5 1 4
J.M. van Susante 5 0 5
H. Stout 5 0 5
Y. Scholten 5 0 5
B. Roolvink 5 0 5
H.M. van Mourik Broekman 5 0 5

208

J.A. Bakker 4 1 3
H.J.E. van Beuningen 4 0 4
J. Bartels 4 1 3
S.C. Bakkenist 4 1 3
L.E.J. Brouwer 4 0 4
M.G. de Bruin 4 1 3
L.M. Kretzers 4 1 3
B.W. Biesheuvel 4 0 4
F. Hoogendijk 4 1 3
Jhr. mr. F.O.J. Sickinghe 4 1 3
E.K. den Bakker 4 1 3
C.D. Matthijssen 4 0 4
Jhr. S.G. van Weede 4 1 3
H.W.A. van den Wall Bake 4 0 4
N. van der Vorm 4 1 3
E.H. Toxopeus 4 0 4
M. Ruppert 4 0 4
J.W. de Pous 4 0 4
H.D. Pierson 4 1 3
P.E.E. Kleyn van Willigen 4 0 4
L.H. Meerburg 4 0 4
W.H. Fockema Andreae 4 0 4
D.F.W. Langelaan 4 1 3
J. Kraaijeveld van Hemert 4 1 3
F. Jockin 4 1 3
B.F.C.M. Ingen-Housz 4 0 4
G. van ’t Hull 4 0 4
G.F. Hepkema 4 2 2
B.A.J.M. van Hellenberg Hubar 4 1 3
H.H. Nauta 4 0 4
Big Linkers in 1996:
R. Hazelhoff 9 0 9
H. de Ruiter 8 0 8
H. Langman 7 1 6
A. Maas 7 0 7
A.P.J.M.M. van der Stee 7 0 7

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J.M.H. van Engelshoven 7 0 7
F.H. Fentener van Vlissingen 7 1 6
G. van Schaik 7 0 7
A.J. Reeders 6 1 5
J.F.M. Peters 6 0 6
J.C.M. Hovers 5 1 4
J.V.H. Pennings 5 1 4
P.A.W. Roef 5 0 5
H.P.H. Crijns 5 0 5
A.A. Loudon 5 0 5
J. Groenendijk 5 0 5
M. Ververs 5 0 5
R.J. Nelissen 5 0 5
H.B. van Liemt 5 0 5
W. Overmars 5 0 5
M.W. Dekker 5 1 4
N.G. Ketting 4 1 3
J.J. van Rijn 4 0 4
J.B.Th. Manschot 4 1 3
A.H.J. Risseeuw 4 1 3
J.D.R.A. Bax 4 1 3
F.H.M. Grapperhaus 4 0 4
P.J. van Dun 4 1 3
J.D. Timmer 4 0 4
M. Kuilman 4 0 4
L.J.M. Berndsen 4 1 3
O.H.A. van Royen 4 0 4
P. Bouw 4 1 3
A.H. Land 4 1 3
N.J. Westdijk 4 1 3
N. Kroes 4 0 4
G.J. Swalef 4 1 3
W.H. Brouwer 4 0 4
Th.M. Scholten 4 0 4
W. Vlasblom 4 1 3
P.J. Kalff 4 1 3
G.M.L. van Loon 4 1 3
A.W. Veenman 4 1 3
K.J. Storm 4 1 3
P.C. van den Hoek 4 0 4
F.A. Maljers 4 0 4
F.J. de Wit 4 1 3

APPENDIX

IV

Big Linkers in 2001:
P. Bouw 7 0 7
A.G. Jacobs 7 0 7
H. de Ruiter 7 0 7
J.M. Hessels 6 0 6
P.J. Kalff 6 0 6
H. Langman 5 0 5
F.H. Fentener van Vlissingen 5 0 5
A.H.J. Risseeuw 5 0 5
R. Zwartendijk 5 0 5
M. Ververs 5 0 5
R. Hazelhoff 4 0 4
L.A.A. van den Berghe 4 0 4
H.B. van Liemt 4 0 4
Jhr. A.A. Loudon 4 0 4
C. Boonstra 4 0 4
J.L. Brentjens 4 0 4
C.J. Brakel 4 0 4
M.W. Dekker 4 0 4
P.A.F.W. Elverding 4 1 3
J. Kremers 4 0 4
N. Kroes 4 0 4
J.F. van Duyne 4 0 4
A.H. Land 4 0 4
M.C. van Veen 4 0 4
D.G. Eustace 4 0 4
P.C. van den Hoek 4 0 4
J.V.H. Pennings 4 0 4
K.J. Storm 4 1 3
A.N.A.M. Smits 4 0 4
G. van Schaik 4 0 4
J.M. Schröder 4 0 4
Jhr. H.A. van Karnebeek 4 0 4

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Appendix V:

Meetings of the Interviewees

Figure V.1 shows how the interviewees are connected through board meetings with each other. The circles represent the interviewees,1 the anonymous squares represent the firms where the interviewees hold board positions.
Figure V.2 presents a more condensed version of the meeting network,
and leaves out the corporations that are involved in binding together the
interpersonal meeting network of the interviewees. Next to the direct connections, 21 of the interviewees were connected at distance two. They both
meet a third person who could bring the two together. Figure V.3 shows the
network of indirect contacts between the interviewees. The thicker the tie,
the more indirect connections exist between board members. These network
drawings clearly show that even a random selection of directors find themselves heavily intertwined in the corporate elite network.
Figure V.1 Corporate Network of the Interviewees

Walravens Prof. Dr. A.H.C.M.

Andreae Ir. J.G.

Westdijk Mr. N.J.
Vink Dr. J.A.J.
Davignon Burggraaf E.F.J.M.J.
Loudon Jhr. Mr. A.A.
Roobeek Prof. Dr. A.J.M.
Dijk Drs. J.A.N. van

Geers Prof. Mr. A.J.C.M.

Aalberts J.

Koffrie Drs. F.H.J.

Herkströter Prof. Drs. C.A.J.

Kottman Drs. R.H.Ph.W.

Hoek Prof. Mr. P.C. van den
Land A.H.

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Figure V.2 Corporate Meeting Network Interviewees
Walravens Prof. Dr. A.H.C.M.

Vink Dr. J.A.J.
Loudon Jhr. Mr. A.A.

Davignon Burggraaf E.F.J.M.J.
Andreae Ir. J.G.

Aalberts J.

Westdijk Mr. N.J.
Roobeek Prof. Dr. A.J.M.

Land A.H.

Geers Prof. Mr. A.J.C.M.
Hoek Prof. Mr. P.C. van den
Kottman Drs. R.H.Ph.W.
Koffrie Drs. F.H.J.

Herkströter Prof. Drs. C.A.J.

Dijk Drs. J.A.N. van

Figure V.3 Indirect Connections between Interviewees
Vermeulen
Roobeek
Wateler

Westdijk

Davignon

Aalberts
Vink

Westerlaken

Wijffels

Loudon
Walravens

Hoek

Andreae
Dijk

Hondt
Staal

Land
Herkströter
Kottman
Koffrie

Geers

212

APPENDIX

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NOTES

1 Corporate Communities, Governance and Control
1 Albert used the term Neo-American instead of Anglo-American.
Furthermore, the market models discussed here are all forms of capitalism, being systems that promote private investment and business and
include competition as an organising principle. The models do differ in
the extent to which they promote competition as opposed to coordination.
2 The term ‘market’ can be used to denote a number of phenomena.
Deriving from marcatus (trade), it is defined variously, including: a space
where buyers and sellers meet, a group of (potential) buyers, a segment in
the economy and the available supply of or potential demand for specified goods or services. However, one of the most dominant usages of the
term market is to denote an ideal type of mechanism for economic
exchange. In such a free or liberal market, production and distribution of
goods and services take place through self-organising mechanisms based
on full competition, and needs no external coordination. In this book, the
liberal market is used to denote this. When referring to a segment in the
economy, market is used in combination with that segment (such as the
labour market, the capital market, the stock market).
3 The varieties of capitalism literature suggests that business systems
should be understood in terms of the institutional setting of an economic region, encompassing legal, labour capital aspects and the like (Hall
and Gingerich 2004; Hall and Soskice 2001b). These scholars include multiple institutional fields in the analysis of corporate regimes, such as education and welfare arrangements, and stress resilience to change. As they
argue, institutions in an economic arena (most often the nation state)
interact and complement each other. These institutional complementarities create comparative institutional advantages (Hall and Soskice 2001a,
p. 39), alleviating the need for institutional change under pressures of
international competition. These different institutional settings go
together with different modes of governance (Heinze 2004).
4 Höpner and Jackson (2001) show how different institutional set-ups do

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indeed create very different corporate regimes. They found that stock-listed corporations in Germany and the UK pursue different states of equilibrium, reflecting the comparative institutional advantage of the corporate
regime. The corporate strategy of German companies follows a low-level
equilibrium, where low share prices go together with low corporate earnings. British corporations, on the other hand, create a high-level equilibrium, where high corporate earnings sustain high share prices. The shareholders of German corporations receive competitive rates of return, as
long as market capitalisation remains low. By contrast, UK firms have
higher share prices, but require higher payments to investors to maintain
comparable returns to capital. The consequence of these differences is
that British corporations are much more appreciated on the stock market, whereas German corporations have a higher turnover and, above all,
are able to sustain nearly double the number of employees. The British
corporate regime favours capital over labour, whereas in Germany it is
the other way around.
5 For the Dutch case, it is worth noting that considerable debate has taken
place regarding the word ‘comply’ during the drafting of the 2003
Tabaksblat code for good governance. It was argued that ‘comply’ presupposes rules. After successful lobbying, the word ‘comply’ was changed for
the word ‘apply’, making it less strong. The corporate elite thus successfully lobbied for a corporate governance code that remains more principle-based than rule-based.
6 Corporate networks in Asia are also well studied, but show very different
patterns and functions, mainly because of the corporate group structures
common in this region of the world (Scott 1987; Scott 1999). In Japan they
take the form of the Keiretsu, which evolved from the pre-war
family/region based zaibatsu (Aoki 1990; Berglof and Perotti 1994; Yafeh
2003), in South Korea as vertically organised chaebols (Chang and Chang
2003; Feenstra, Yang and Hamilton 1997), in China as qiye jituans (Kleister
1998), and other forms in Taiwan (Numazaki 1986) and Singapore
(Sabhlok 2001; Zang 2000). In contrast to New Zealand, the network of
board interlocks in Australia shows signs of increasing strength and cohesion, particularly at the interpersonal level (Alexander 1998; Alexander
2003; see also Heemskerk 2004b for a comparison with the US and the
Netherlands). With Australia as an exception, all authors seem to agree
with Barnes and Ritter (2001) that, while the inter-firm networks are
becoming less concentrated, this does not mean that they have become
insignificant. This is corroborated by studies of networks of interlocking
directorates that are not comparative in time. A major contribution was
a comparative study of ten nations in 1976 (Stokman, Ziegler and Scott
1985). Others include case studies of Switzerland (Nollert 1998; Nollert
2005), the Netherlands (Nollert 2005), Spain (Aquilera 1998), Germany

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(Pappi, Kappelhof and Melbeck 1987), Hungary (Vedres 1998), Sweden
(Smangs 1999), South Africa (Cox and Rogerson 1985) and Israel (Maman
2000).
7 In Dutch: ‘De gehele economie in ons land is in handen van rond de tweehonderd personen. Van een groep mensen, die elkaar goed kennen en
elkaar frequent ontmoeten in verschillende colleges. Het is een evenzo
deskundige, financieel sterke als beangstigende groep.’ (cited in Helmers
et al. 1975, p. 11).
8 In reaction to the initial research report, Mertens remarks that he came
to his observation mainly because of ‘intuition and experience’ (De Nieuwe
Linie, 5 January 1972). He did have some inside knowledge on the matter.
As his records shows, he himself was member of a number of boards such
as the Centrale Volksbank, investment fund WeBeFo, chairman of de
Volkskrant and printer Lumax, member of the supervisory board of the
Katholieke Economische Hogeschool in Tilburg, and outside director at
the insurance company Concordia. Mertens was inspired by a current
affairs program on Dutch television in which he participated (Vara’s achter
het nieuws), which dealt with the topic of economic power (see De Hen
1972). Interestingly, one of the main advisors for this program was V.
Halberstadt, who grew to be one of the most influential persons of the
Dutch elite. He is known in elite circles as the man with the largest
address book. Halberstadt is the director of multiple firms, a professor at
Leiden University, and a close friend of the Dutch royal family. For many
years he was also the secretary-general of the yearly Bilderberg conferences.
9 A full list of all national and regional corporate governance codes is provided by the European Corporate Governance Institute (http://www.ecgi.org
/codes/all_codes.php).
10 As Samuels notes, ‘the interpretation of Smith has been influenced by a
selective filtration process. […] a process deeply channelled by ideology,
power, and whatever governs professional or disciplinary concerns’
(Samuels 1977, p. 190). In general, a less selective reading of Adam Smith
reveals a much more nuanced and complex view of economic, and indeed
social, relations than commonly attributed to him.
11 Elite-threatening actions include the repeal of structures that protect
management from hostile takeovers (such as poison pills), CEO dismissal,
the creation of independent nominating committees, and separation of
the CEO and board-chair positions (in the one-tier system)
12 This practice was in fact also commonplace at the European level of competition policy. Of all the notifications under Article 81 of the EC treaty,
which prohibits cartels and other forms of collusion, only 0.5 per cent
generated negative decisions in the past. This observation provides evidence for the lenient stance of the Commission towards cartels in the
past. Angela Wigger made me aware of this point.
N OT E S

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13 See for instance the work of Beuving on second-hand car trade between
Europe and West-Africa (2004; 2006). He shows that traders and middlemen do not act as rational actors, with gambling behaviour reminiscent
of the gold fever of Klondike. Gambling, rather than calculating, seems
dominant as a logic for economic action.
14 This adjustment commonly entails adjusting the rationality of actors.
Research emerged that reconstructed the utility function used in economic models, by introducing alternative components for this function
that are commonly not included. For instance, Fehr and Smidt (2004)
argue that economic actors can be driven by personal motives. Likewise,
Engelmann and Strobel (2004) see inequity aversion (the preference for
‘fair’ rewards) as an important determinant of human behaviour.
15 Ownership also creates network ties at the inter-organisational level. It is
possible to conceive ownership ties as a bipartite network as well. It suffices to replace directors with owners in the conceptual scheme of figure
1.1. From these ownership ties, one can derive a network of firms that
share one or multiple owners, and a network of owners were the ties are
common investments (see for instance Kogut and Walker 2001). However,
this analytical perspective disregards the most obvious and more direct
relationship that exists when corporations themselves hold ownership of
other corporations. In terms of a governance network, emphasise lies
with direct ownership ties when applicable.
16 These findings are based on an analysis of the amount of ‘executive interlocks’, i.e. board interlocks that are created by an executive director.
Chapter 2 discusses these ties in detail. Companies in the USA were less
heavily interlocked during the 1970s than their Rhenish counterparts
such as the Netherlands, Germany and Switzerland. However, the interlocks that did exist were predominantly executive ties, pointing at an
institution-oriented network (Fennema 1982; Stokman and Wasseur
1985). But while 30 per cent of all interlocks amongst the top 250 in the
USA were executive ties in 1976, twenty years later this percentage has
already dropped to 19 per cent (Heemskerk 2004b). Apparently, a key
property of the network in the USA showed clear signs of change.
17 Rajan and Zingales (2001) argue against this dominance of legal origin as
a time-invariant explanation for cross-country differences. Not only do
they show that by most measures, countries were more financially developed in 1913 than in 1980, they also point out that the legal origin provides no explanation for the decline and subsequent growth of the financial sector. The financial sector does not develop monotonically, and
according to Rajan and Zingales, trade openness is perhaps more important than legal institutions in understanding economic and financial
development.
18 The formal legal mechanism is sufficient to generate institutional change

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only in cases in which payoffs are not highly interdependent (Culpepper
2005). In those cases, individual firms can shift their strategy immediately without any restraints. For instance, this is the case with the shift from
coordinated to uncoordinated wage bargaining, in the field of industrial
relations (ibid.). However, when the coordinative element of the pay-off is
high, legal changes are not sufficient. The price cartel in the construction
industry is a case in point. Pay-off of involvement in board interlocks and
corporate elite networks is difficult to assess precisely. The relation
between corporate profitability and a firm’s network position is complex,
and mixed at best (Mizruchi 1996). Burt (1983) found no effect on profitability of having suppliers, bankers or customers on the board, while
others even found a negative relationship between performance and
interlocks with banks (Dooley 1969; Fligstein and Brantley 1992; Mizruchi
and Stearns 1988; Pfeffer 1972). However, other studies do find a positive
relationship between directors interlocks and profitability (Burt 1983;
Pennings 1980). The benefits of being part of the network are likely to be
much more subtle, and must be sought in such attributes as information,
trust, influence, prestige and esteem. Contrary to the multifaceted
aspects of positive pay-off, negative pay-offs of board interlocks are likely
to be much more straightforward. Thus, a shift in balance in a cost-benefit analysis of involvement in the corporate governance network occurs is
most likely to be the result of increasing negative pay-offs.

2 Decline of the Corporate Network
1 In Dutch: ‘de nijverheid te ondersteunen door haar geld te lenen of vennoot te worden, is een denkbeeld, dat alleen in tijden van ziekelijke overspanning ingang kan vinden.’
2 Frentrop (2002) gives an excellent and elaborate overview of corporate
governance issues in the Netherlands from the 1600s onward.
3 In Dutch: ‘Het is met het oog hierop noodzakelijk, dat er een zoo eng
mogelijke samenwerking bestaat tusschen de industrie en het
bankwezen.’
4 This structuurregeling was put into practice in 1971, and had three manifestations: the full structure regime, the mitigated structure regime, and
the exempted structure regime. Roughly all large firms had to apply the
control structures from this regime. It should noted that multinational
corporations, given that most of their employees work outside the
Netherlands, are granted leeway in applying the structure regime.
5 The number of firms that fall under the structure regime dropped significantly over the years. By 1993, only 53.15 per cent of a selection of 143
large non-financial firms applied the structure regime (compulsory: 41.96
per cent; voluntary: 9.79 per cent; mitigated: 1.4 per cent) (De Jong and
Röell 2005).
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6 When the Rabobank was created through a similar merger in 1972, this
policy also applied to them.
7 A number of attempts to create industry banks, just like the German (and
Belgian) ones, were not successful. Following the example of the Belgian
and German banks, the Crediet- en Depositiebank of Dr. Samuel Sarphati
attempted to acquire majority stakes in promising new industrial firms.
However, nine years after its start in 1863 it merged with a French bank,
becoming the Banque de Paris et de Pays-Bas (Paribas). Likewise, the
Algemene Maatschappij voor Handel en Nijverheid, a direct participation
of the Paris-based Crédit Mobilier, did not last long (De Hen 1972, p. 99). De
Hen concludes that, ‘the Dutch banking sector, as it developed after 1870,
considers the ownership of large parts of corporate shares and the related
risk-bearing voting power in non-financial firms, as undesirable (in
Dutch:‘het Nederlandse bankwezen zoals het zich na circa 1870 heeft
ontwikkeld, beschouwt het bezit van grote aandelenpakketten en daarmee
van direct risicodragende zeggenschap in niet-financiële instellingen in
principe als ongewenst.’) (ibid., p. 100). As a result, Hilderding’s theory of
finance-capital (‘Kapital in der Verfüging der Banken und in der
Verwendung der Industriellen’ (see Hilferding 1910/1968)), was never fully
applicable. This specific form of industrial finance, with its characteristically strong (personal) ties between banks and industry remained mostly a
German practice. An exception was the Nationale Investeringsbank (now
NIB Capital), established after the Second World War with the explicit goal
of financing industry through participations. The NIB monitored its
‘clients’ through a system of outside directorships (participatie commissarissen).
8 At the turn of the century, banks officially still needed consent from the
minister of finance for a ten per cent participation in a non-financial
firm, a merger, or for a five per cent participation (in capital or in votes)
in another bank. However, with a European rather than a national market, the objections to equity ties amongst Dutch financials have largely
vanished.
9 In some cases, a special foundation holds certain priority shares, and the
foundation itself is under the control of the corporate management or
allied partners. Priority shares are also used by the government to gain
control over privatised former state companies, while gradually decreasing their capital stakes. For instance, the Dutch state still controls major
decisions at the TNT Post group, while their capital share is already below
the 20 per cent. In December 2005, the Dutch government returned its
‘golden share’ of formerly state-owned KPN, and in April 2006 the
European Commission ruled that the Dutch state must sell its ‘golden
share’ of TNT as well.
10 A third statutory defence is the blocking device, where the transfer of the

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share is bound to certain rules. For example, permissions from the board
might be necessary to sell one’s shares, or there is a limit as to who can
own the shares. Subsequently, the X per cent rule can limit ownership of
one single shareholder. 10.5 per cent of the 143 non-financials had a X per
cent arrangement (De Jong and Röell 2005).
11 Still, a number of large Dutch corporations do in fact make use of a holding or non-listed company as owner. A good example of such a – rather
straightforward – defensive ownership structure is that of Heineken.
Heineken Holding controls Heineken NV through a 50.005 per cent share.
Both corporations are stock listed. The Heineken family controls the
Heineken Holding through their Swiss company L’Arche Holdings SA,
which in turn holds 50.0005 per cent of the holding company. Likewise,
in the financial sector, a number of key players are owned by holding
companies. This is especially a practice of firms that are cooperatives, or
have a cooperative history. According to some definitions (notably La
Porta, Lopez-de-Silanes and Shleifer 1999), these chains of ownership
might be denoted as pyramids. For instance, Coöperatie Achmea controls
the insurance conglomerate Achmea Holding through a 33.04 per cent
stake. Following La Porta et al., all companies in which Achmea Holding
maintains stakes of more than 20 per cent are part of a pyramid. Other
examples of cooperative financials are Aegon (controlled by Vereniging
Aegon) and SNS Reaal Groep (controlled by Stichting Beheer SANES).
12 Because the Dutch government acted under pressure from the European
Union to come up with these legal adoptions, the law did not function
very well in the first few years. Just as with the legislative changes in the
banking sector, this Wet Melding Zeggenschap was a direct result of
European directives, in this case the 1988 Large Holdings Directive. Under
this law, shareholders have to report their participation when it reaches
certain thresholds. Notification is required once the participation in a
company reaches 5, 10, 25, 50 or 75 per cent. However, in the early days
when the law first became effective, the information on ownership was
not only incomplete, it was also often incorrect.
13 Here we do not want to limit ourselves to listed companies only, since we
are interested in the Dutch economy as a whole. A predisposition in
favour of listed firms would strongly bias the results. It is striking to see
how influential publications on ownership composition across countries
only focus on the 20 or so largest stock listed corporations in a country
(e.g. La Porta, Lopez-de-Silanes and Shleifer 1999). While such an approach
does enable the authors to engage in a comparative study, the basis of
their conclusions remains small.
14 The data on ownership largely derives from the reports of the Autoriteit
Financiële Markten (AFM), and the REACH databases (Bureau van Dijk 19962001).

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15 The distribution of firms with majority shareholders across categories
was as follows. foreign owned 1997: 24 per cent, 2001: 38 per cent; state
owned 1997: 8 per cent, 2001: 4 per cent; state big block holder 1997: 0 per
cent, 2001: 4 per cent; Dutch subsidiary 1997: 10 per cent, 2001 4 per cent;
holding/ultimate owner: 1997 3 per cent, 2001: 6 per cent.
16 State-owned shareholdings in the Netherlands by capital share

1997
2001

100

90-50

49.9-10

>10

Total percentage

21
21

25
14

13
18

8
5

67
58

17 A more inclusive approach examines all significant shareholdings. Note
that here we do not consider concentration of ownership per firm, but
the size of ownership stakes. Because data on ownership for this large
sample is relatively unreliable, it is not prudent to infer the concentration of ownership per firm on this basis. However, we can report on the
size of the shares for which we do have information. There are about
4,000 disclosed shareholdings in 1997, and about 500 more in 2001. As is
the case amongst the shareholdings of the top 50 corporations, the lion’s
share of these shareholdings represents full ownership. This highly
skewed distribution blurs the picture. Therefore, the third column in the
table contains the percentage of the number of shareholdings in five
tiers, excluding all shareholdings of more than 99 per cent.
Ownership Concentration
Proportion of
owned stock

1997
N

99+
75-98.9
50-74.9
25-49.9
10-24.9
5-9.9
-4.9
Total
shareholdings
Total firms

1489
80
237
342
341
603
305
3397

220

2177

%
43.8
2.4
7.0
10.1
10.0
17.8
9.0

<99

2001
N

4.2
12.4
17.9
17.9
31.6
16.0
1908

2599
108
317
312
345
516
269
4466

703

3325

%
58.2
2.4
7.1
7.0
7.7
11.6
6.0

<99

5.8
17.0
16.7
18.5
27.6
14.4
1867
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18 A basic classification into seven sectors, showing the number of firms in
that sector in 1976, 1996 and 2001 shows the following: resources 8, 4, 3;
manufacturing: 92, 108, 93; utilities 30, 17, 15; financial institutions 50,
50, 50; trade 47, 42, 62; real estate 4, 2, 19; other 19, 27, 8.
19 Hopefully, the accuracy of available databases will increase over the coming years, because they do present great opportunities for research on
board interlock structures. So far, collection of yearly data remains a
daunting task. However, there are positive prospects for the near future.
First, there are a growing number of laws in place that enforce the publication or disclosure of relevant information. Furthermore, this information is increasingly considered to be of strategic importance for stakeholders in the corporate governance arena. Hence, a number of institutions already collect a huge amount of information. For the future, this
information could present an enormous impetus to the research of interfirm relations at a national, an international (comparative) and at the
global level.
20 In an earlier, exploratory study on the network of Dutch board interlocks
in 1996, the effects of intra-group interlocking was explicitly investigated
(see Heemskerk 2001). Other recent studies on Dutch board interlocks
such as Nollert (2005) and Windolf (2002) do not take this extra step. As a
result, their studies report higher numbers of interlocks and ‘big linkers’
(people with more than three positions).
21 Again, in contrast to Nollert (2005), and – as became evident when rechecking the 1976 data – to some extent also in contrast to the 1985
Corporate Power study (Stokman and Wasseur 1985). For the current
research, the decision was made to exclude advisory boards, and to
include voting members of the board only. The problem of including the
advisory board in the analysis was already mentioned by AMRO chairman
Van den Brink when he reflected on the initial research findings of Traces
of Power (De Bruijn 1972; Mokken 1971). As a consequence, the 1976 network differs slightly from the one analysed by Stokman et al. Companies
could reach astonishingly high levels of network centrality due to their
advisory boards, which would not in fact reflect institutional bonds with
other firms, nor a strong involvement of advisors with the firm. In this
study, advisory boards are not considered to be a part of the institutional
board overlap network of the largest firms in the Netherlands.
22 Höpner and Krempel (2003) give a good example of how the visual inspection of corporate networks, combined with a qualitative-historical analysis, helps to understand the politics of the German corporate network.
23 An interlock between two boards is created when one or multiple directors sit on both boards. The interlock is an edge between the two boards.
If two people sit on both boards, two interlocks exist, and the edge has a
value (multiplicity) of two.

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24 Distance is a simple yet crude measure for cohesiveness. Chapter 4 elaborates on this issue while discussing social closure. For now, average distance provides us with insight into the cohesion of the network.
25 Stokman et al. (1985) made use of a different sample, varying between the
67 and 89 companies during the period 1960-1980. A comparison of their
exact findings is not very useful, although the tendencies they uncover
(such as a smaller board size after 1969) do bear significance. For
instance, for 1976 they find an average board size of 14 members.
26 Note that there are more positions than there are directors, because some
directors sit on more than one board.
27 Contrary to the overall decrease in directors during the years under observation, there are a few women taking positions on corporate boards during that period. Yet, given the persistent and astonishingly small number
of female corporate directors, this small increase does not give much
hope. In 1996, 38 women directors were at the top 250 corporations. Five
years later, 62 women can be counted. Much should be done to ensure a
better balance of gender in the corporate boards of the Netherlands.
28 Directors are referred to in masculine for practical purposes. Still, by the
turn of the century, this describes the empirical reality well, since only a
very few number of women occupy the top decision-making organs of the
corporate economy (see previous note).
29 A third, yet quite unlikely option, is that a person holds positions on two
executive boards. This does occur, but usually between parent companies
and their subsidiaries. However, given the selection criteria we applied,
this kind of tie is highly unlike

3 The End of the Old Boys Network
1 Hoogenboom worked with the lists of the inner circle from Schijf (1993),
and compiled information on nobility himself. One should note that due
to selection criteria, the list of interlockers is longer in 1886.
2 In contemporary Dutch: ‘Nu ze tegenwoordig menschen van dat soort
burgemeester maken, moeten die maar in hun buurt blijven.’
3 The Central Bureau of Genealogy in the Netherlands registers membership of the aristocracy. Membership of the nobility is published in
Nederland’s Adelsboek (Centraal Bureau voor Genealogie 2001), and membership of the patriciate is registered in Nederlands Patriciaat (Centraal
Bureau voor Genealogie 2000). In a few cases, the most recent family
genealogy in Nederlands Patriciaat dated from before the birth of the corporate elite member with the same family name. In 1996, there are 15 persons for whom we cannot ascertain their status, and in 2001 there are 16
people, mostly the same. Even if these people did descend from the patriciate, they clearly did not feel compelled to confirm their status and

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renew their family’s genealogy in the register. There are no clear indications that the propensity for people to (renew) their listing has diminished over time. They seem to serve first and foremost as a tool for the
elite itself, in order to (institutionally) distinguish between new and old
families.
4 The differences in prestige within the corporate elite are not exclusively
determined by the formal position of board members in the meeting network. Differences in status attainment also stem from personal characteristics and bonds of affinity among the directors, as well as from the positional power they have. Clearly, the CEO of Philips will have more standing than an outside director of a small trading firm. However, not every
consecutive Philips CEO is necessarily endowed with the same prestige in
the corporate elite. Here, not only positional but also personal characteristics play a role. For example, certain well-respected interlockers are well
known to the public because they frequently appear in the media. Others,
however, choose a position of relative anonymity and shield themselves
from media attention. As one less known, yet highly connected corporate
interlocker explains: ‘I prefer to be a bit invisible, because it allows me to
be myself. (...) If I want to be effective, I must operate in the background’.
(In Dutch: ‘Ik ben graag een beetje onherkenbaar, dan kan ik tenminste
mezelf zijn. Ik ga liever een blokje om, dan dat ik word herkend. Als ik
effectief wil blijven, moet ik op de achtergrond functioneren’.) de Volkskrant 7 January 2006.
5 The top 100 non-financials and the top 25 financials compose the top 125,
and the top 50 non-financials and 15 financials compose the top 65. There
are a few outliers. In particular, Stokman et al. (1988) report that the
group of interlockers comprises 24 per cent of the corporate elite in 1976,
and even 26 per cent by 1980 (omitted in the table). These findings are in
contrast with my observations. This difference is not the result of the
much larger sample size we used. Table 3.1 also reports the share of interlockers in the sub-selections of the top 125 and top 65 corporations for
1976 and 1996. The absence of differences between the samples indicates
that the interlockers amongst the corporate elite are just as prone to sit
on the board of smaller firms as they are for larger firms. Closer inspection of the selection criteria of Stokman et al. (ibid., p. 191-192) suggests
an explanation for this inconsistency. They chose to exclude a number of
‘deviating’ firms from the sample. In a later publication, one of the coauthors of the study reports on an extended version of the set of firms in
1984 (144 firms) (Van der Knoop 1991). For this larger set, he finds that 17
per cent of the corporate elite is an interlocker: a drop of nine per cent in
four years time. This underlines a strong effect of the outlier results.
6 Small as compared to what one would expect given a random network of
the same properties.

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7 While the increase in average distance of 0.3 might seem quite insignificant, one should keep in mind that these are averages, and that the size
of the corporate elite has decreased considerably.
8 The general tendency of decreasing social embeddedness of the corporate
elite as a whole is in line with the findings on the corporate board overlap network, but the network configuration in 1996 stands out due to its
preservation of connectedness. However, this preservation is only possible
at the expense of directors losing local centrality (as measured by the
number of people an average corporate director meets). In 1996, the most
common number of meetings amongst the corporate elite (the modal
number) was only seven, while in 1976, and in 2001, this was about nine
meetings. Because of the skewed distribution of meetings over the corporate elite, the average number of meetings per director shows much larger differences. During the mid-1970s, the average number of meetings
was still 18.9. Twenty years later, due to decreasing board size, a director
only meets 12.8 other directors on average, and by 2001 11.4. The reduced
importance of the highly connected directors took place before the mid1990s. During the mid-1970s, directors with up to 11 meetings accounted
for 47 per cent of all meetings, while in 1996 and 2001, this group
accounted for 65 per cent of all the meetings.
9 Interview in the NRC Handelsblad 28 December 2003
10 As a result, the small world coefficient (Davis, Yoo and Baker 2003) has
extraordinarily high levels as well, with 51.35 in 1976, 66.49 in 1996 and
49.60 by 2001.
11 Conyon and Muldoon make use of a more sophisticated, yet less straightforward measure of clustering when they compare actual findings with
expected results. In particular, they control for degree distribution. The
clustering coefficients as reported in the text are the ‘Watts-Strogatz’ calculations.
12 The Dutch network is close to the UK (0.889) in terms of clustering.
13 In networks with large average distances, betweenness is not very meaningful. Note that this table reports on only those interlockers that form
part of the dominant component.
14 Respectively, the clustering was 1.96, 2.24 and 1.62 times the expected
value given a random distribution in 1976, 1996 and 2001.

4 The Corporate Elite’s Informal Networks
1 The interviews were conducted in collaboration with Mijke van
Ballegooijen.
2 One exception is Khurana’s (2002) study on the irrational quest for corporate saviours, but this study is limited to the USA, and only looks at the
recruitment of directors. Garten (2001) provides a more elaborate insight

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3

4

5

6

7

8

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into ‘the mind of the CEOs’, but his book lacks a sociological interpretation.
The interviewees were initially approached with a formal letter that
introduced the research and asked for their cooperation (for more on corporate elite access, see Galaskiewicz 1987; Richards 1996; Thomas 1993;
Useem 1995). The letter sketched the aim of the research only in broad
terms, leaving the topic rather vague as ‘the changes in corporate governance in the past twenty years’. Furthermore, the letter mentioned that
the interview would not discuss company policy on corporate governance, but rather the ideas and experience of the interviewees themselves. This letter was followed by a phone call, usually to the secretary of
the board. In some cases the letter had to be resent. In a few cases, directors were contacted at their private address, and in a few other cases the
secretary of the directors contacted us in response to the initial letter.
A strategy for a survey that is likely to increase the return rate would be
to gather personal information about the directors, and subsequently ask
them to correct and complete the data, as Beekenkamp did. Furthermore,
the response rate to surveys might very well be related with the ‘acceptability’ of elites in society. Recently, de Volkskrant newspaper published a
series of articles on the Dutch elite (these include Dekker and Van Raaij
2006a; Dekker and Van Raaij 2006b). As part of this project, a survey
amongst 400 people from this elite was held. With 278 respondents
(almost 70 per cent), the response rate was high.
As a result of the sampling, the relative size of the four groups in the sample closely resembles the relative size in the entire inner circle.
Respectively: Group 1: 39.1 per cent/ 38.1 per cent, Group 2 13.0 per cent
/ 23.8 per cent, Group 3 39.1 per cent/ 31.2 per cent and Group 4 8.7 per
cent/6.9 per cent. Some comments on Group 2 are in the text.
One pilot interview was used to test the structure of the interview. Since
significant changes were made to the structure of the interviews, the
pilot interview has been omitted from the analysis.
One of the many examples is Max Hirschfeld, see Baruch (1962, part II,
p143) for some remarks and Fennema and Rhijnsburger (Forthcoming) for
a comprehensive view on the life of interlocker Hirschfeld.
In terms of social capital, the like-me principle can lead to sub-optimal
outcomes when all contacts have the same set of resources at their disposal. This is a particular problem in low status social groups. A dense network with similar others will not help someone much when he and his
contacts all live in the same ghetto, deprived of means and opportunities
to escape the social and economic backwaters (see for instance FernándezKelly 1995, on social capital in the urban ghetto). A mix of weak ties and
strong ties can help to counter this lock-in effect. Whereas strong ties
within subgroups build bonding social capital, weak ties constitute bridg-

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ing social capital. For high status groups such as the corporate elite, the
like-me principle actually works to their advantage, as the levels of social,
cultural and economic capital of the people in the social networks (both
strongly and weakly connected) are deemed to be high.
9 These figures are based on a comparison of the list of directors in 1996
with the Staatsalmanak, a directory which lists positions in the government. An earlier article discusses these links in more depth (Heemskerk,
Mokken and Fennema 2002; see also Mokken and Stokman 1979a).
10 The Johanniter Order is one of three knightly orders in the Netherlands.
The other two are the German Order of Balije of Utrecht and the Catholic
Sovereign Military Order of Malta. The Johanitter Order is open to all
Dutch men and women, while the other two are restricted to nobility.
According to Dronkers: ‘The German Order admits only Dutch Protestant
males and requires in addition to four noble quarters that both parents
come from lineages that were aristocratic before 1795. The Order of Malta
admits Dutch men and women over 25 who are practising Roman
Catholics, are married according to canonical law and are listed in the
records of the Dutch aristocracy with the Supreme Council of the
Nobility. In addition, the marriages of their forebears concluded in the
previous hundred years, as well as the current lifestyles of the prospective
members, need to be worthy of admission to the Order’ (Dronkers 2003,
p. 83-84).
11 Of course, fraternities play an important role in many societies. For
instance, both candidates for the presidency in the 2004 elections in the
USA, George W. Bush and John Kerry, are ‘Bonesmen’: members of the
exclusive Skull and Bones society at Yale University. This elite and highly
exclusive society is known to deliver leading figures to USA business and
politics.
12 ‘What is permitted to Jupiter, isn’t permitted to oxes.’
13 Low levels of membership remains a problem throughout the twentieth
century (ISO and LKvV 2003). However, as fraternities serve a certain role
in the reproduction of elites, it is safe to assume that student fraternities
are here to stay. In fact, in more recent times, student organisations and
fraternities are beginning to regain popularity. At the same time a new
elite educational trajectory is emerging. Don Weenink (2005) shows that
elite trajectories are being constructed in Dutch higher education. In
upwardly mobile families, the parents tend to prefer that their children
follow new, dual-language school trajectories, where the youngsters
receive an education that prepares them for a cosmopolitan career.
Furthermore, Weenink finds that this group of students is more competitive than pupils who follow the classic variant of the highest tier in
Dutch higher education, the gymnasium.
14 A survey of a newspaper among the Dutch elite (n=278, response rate 78

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per cent) showed that 75 per cent of the corporate elite was member of a
student organisation, 80 per cent of whom were a member of a traditional corps (Dekker and Van Raaij 2006a). A incomplete list of corps alumni
among the CEOs includes Anthony Ruys (Heineken), Hans Wijers (Akzo),
Rijkman Groenink (ABN AMRO), Jeroen van der Veer (Shell), Anton van
Rossum (Fortis), Rob ter Haar (Hagemeyer), Frans Koffrie (Buhrmann), Rob
van den Bergh (VNU), and Gerard van Loon (CSM). Likewise, many wellsought supervisory directors spend their student years as a member of
the corps, such as Karel Vuursteen (former Heineken), Jan-Michiel Hessels
(former Vendex), Morris Tabaksblat (former Unilever), Jan Kalff (former
ABN AMRO), Ton Risseeuw (former Getronics), Paul Fenetener van
Vlissingen (former SHV), Ewald Kist (former ING), Cees van Lede (former
Akzo), and Aarnout Loudon (former Akzo).
15 Exemplary is the comment of law firm executive Van Marwijk Kooy, who
was also on the board of the Rotterdam Hockey Club Victoria. When a
young hockey player hinted that he would like to work at the law firm,
Van Marwijk Kooy informed the human resource manager of his firm he
could expect this person (Weeda 2001). It is hard to conceive of a better
introduction.
16 In the following quote, one of the directors explains the importance of
social relations in recruitment: ‘One of the most difficult tasks of being a
corporate manager is the recruitment of new employees. That’s where we
make most of our mistakes. In spite of the increased knowledge in that
area, I noticed that if we fail, it is because we misjudged somebody. It is
not so much a matter of a lack of professional skills; that can be reasonably measured. Errors are made when somebody, for one reason or another, doesn’t fit the culture. We cannot assess how this person thinks and
lives and whether he will fit in the corporation. Because culture is: this is
how we do it. And these are very persistent patterns, where I see people
fail, and saw people fail. So in the end, you need to know somebody
incredibly well in order to know whether he fits into the environment.’
17 Generalised reciprocity is perhaps best described by a quote from the
famous baseball player Lawrence Peter ‘Yogi’ Berra: ‘If you don’t go to
their funeral, they won’t come to yours’.
18 The Heeren 17 is a club for corporate elite members with a Frisian background. Other clubs are De Haagsche Schouw, De Haagsche Club, De Klos, and
De Kruiwagen. The corporate elite also meet at clubs such as the Royal
Sailing and Rowing Club De Maas, Sociëteit De Witte, Nieuwspoort, Arti &
Amicitiae, and the Rotary. Furthermore, Dutch-based yet highly international, the Rare Birds Club is a private society of wealthy individuals,
established by the late Prince Bernhard. Its aim is to collect money
through auctions in order to help rare and almost extinct birds. In this,
the Rare Birds Club is not very different from another (international) elite

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society that was established by Prince Bernhard: The 1001 Club. In 1970,
as president of the World Wildlife Fund, Bernhard invited 1000 (he himself was the 1001th member) wealthy and influential people to join by
donating 10,000 dollars in a trust fund that would benefit the WWF. Ever
since, the 1001 Club has been an impressive transnational private social
network, organising several events a year (the membership fee has
increased to 25,000 dollars in 2005).
19 Another factor adding to the reluctance of meeting and communicating
is the risk of insider trading on the stock market. Most of the corporate
elite members invest in stock, and given the relatively small business circles in the Netherlands, it is very likely that one would invest in the corporation of an acquaintance. In these configurations, the risk of insider
trading is high. And although until now it has proven very difficult, if not
impossible, for prosecutors to actually prove that insider trading took
place, the mere accusation of these actions are sufficient to ruin a corporate career.

5 Formalisation of Governance
1 These 25 firms are the ones that make up the Amsterdam Exchange Index
(AEX). This index includes listed firms on the basis of the highest turnover
of shares and market capitalisation.
2 There are some indications that the bursting of the dot-com bubble and
the concomitant stock market crash in 2001 put a (temporary) stop to the
decreasing tenure of the corporate elite. In 2003, for the first time in five
years, CEO turnover in Europe was less than ten per cent (Lucier, Schuyt
and Handa 2004). Developments in the Netherlands follow a similar pattern. Whereas at the end of 2003 38.6 per cent of CEOs were appointed
less than two years ago, we see that one year later this figure dropped to
24.3 per cent (34 persons). Likewise, in 2004, a CEO of a Dutch stock-listed
company spent, on average, 5.3 years at a company, compared to 4.5 years
in 2002. These figures suggest that Dutch boards are stabilising after a
period of turmoil.
3 Which some firms actually endorse. For instance, the newly built head
office of ING is fully transparent with walls of glass.
4 This section is based on research done in collaboration with Mijke van
Ballegooijen (Van Ballegooijen 2005).
5 John Elkington coined the term Triple P approach (People, Planet and
Profit), stating that ‘companies should be held accountable to a “triple
bottom-line” of pursuing social justice inside and outside the company,
environmental quality, and economic prosperity through creation of
employment and sources of income’ (Elkington 1997, p. 14).
6 For instance, in the Netherlands, ABN AMRO has been criticised by polit-

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ical action groups (organised by the Socialist Party) for its involvement in
the production of cluster bombs (through its client INSYS). When the second Gulf War broke out, pressure grew for ABN AMRO to disengage their
ties with this firm. Finally, the bank sold its shares in INSYS. Not much
later, a director of the bank explained in one of our interviews that that
they are very active in CSR. ‘If somebody produces mean weapons, well,
than we don’t finance them.’ So, when the decision was made to change
the policy, the directors immediately endorsed it.
7 The labels ‘promotor’ and ‘sceptic’ were only attributed after due consideration of the entire interview. So, while a number of questions had the
particular purpose of uncovering the orientation of the interlockers (such
as, ‘which topics do you relate with stakeholder management?’, and ‘how
do you explain CSR policies to your shareholders?’), the parts of the interview that did not explicitly deal with the issue of stakeholder and shareholder orientation were not dismissed. By doing so, the final attribution
of the labels is consistent with the attitude of the interviewees throughout the interview. The same approach has been applied for the attribution of management orientations.
8 Historic exchange rates were based on information provided by the
International Institute for Social History. The rates and conversion sheets
were available at the website of the IISG in 2006 at http://www.
iisg.nl/hpw/.
9 Interview in de Volkskrant 6 november 2004.

6 Conclusions
1 Historic exchange rates were based on information proved by the
International Institute for Social History. The rates were available at the
IISG website in 2006 at http://www.iisg.nl/hpw/.

Appendix V
1 The names of the interviewees are mentioned with their approval.

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Index

A
ABN AMRO, 55, 58, 65, 69, 70, 75, 95, 109,
117, 123
accountability, 42, 74, 124, 125, 129, 133,
135, 140, 143, 154, 157, 166
administratiekantoor, 56
affiliation network, 34
Afrikaansche Handelsvereeniging, 160
Ahold, 15, 123, 140, 160
Air France, 162
ABN-AMRO bank, 55, 58, 65, 69, 70, 75, 95,
109, 117, 123
Algemene Bank Nederland, 54, 65, 69
Amsterdam, 52, 55, 69, 81, 109, 168
Amsterdam Rotterdam (AMRO) bank, 21
Amsterdamsche Bank, 54
Anglo-American capitalism, see capitalism
aristocracy, 42, 80, 81, 82, 89, 106, 110, 112,
151, 175
B
bandwagon behaviour, 31
betweenness centrality, 92, 175
big linkers, 82, 84, 95 - 98, 105, 118, 126,
147, 154, 156-158, 165, 175
Bilderberg Conference, 109, 117, 118, 119
Brent Spar, 145
brokers, 88, 91, 92, 93, 95, 98, 99, 105, 117,
156
brokerage, 80, 83, 91, 92, 99, 131
business associations, 42, 108, 122
business community, 55, 82, 84, 99, 159,
see also community and the corporate
elite, 105, 126
key players, 52, 96
business systems, 16, 18, 23-25, 28, 38, 159,
179

Dutch, 24, 50, 54, 102
transformation of, 38, 161
C
Canada, 19
capitalism
Anglo-American, 16, 31, 38, 45, 131, 166
coordinated market economy, 17, 18,
48, 49
Dutch form of, 49, 50, 54, 55, 57, 68,
158
forms of, 16
change in, 45, 53, 74
convergence, 18, 25, 41, 158, 159
liberal market economy, 17, 18, 41, 48,
58, 80, 129, 158, 159
liberal market mechanism, 16, 29, 31,
32, 45, 129, 150, 163
organised, 30
Rhenish, 16-19, 30, 41, 45, 48, 49, 57, 74,
131, 144, 158, 159, 166
cartels, 30, 31, 39, 102
centrality, 65, 175
certificates, 56
civil servants, 109, 124
class, 82, 163, 175
Clayton Antitrust Act, 31
clustering coefficient, 91, 176
cocktail parties, 102, 116, 120, 128, 157
cohesion, 176, see also corporate elite
collective action, 23, 37, 99, 119, 163
collusion, 29, 31, 33, 36, 125
common norm system, 43, 136, 143, 157
community
business, 23, 45
decline, 155
Dutch, 52

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definition, 106
and shared identity, 107
and social closure, 90
component, 176
concentration of power, 19, 20, 30, 31, 76,
99, 160
concertgebouw, 109
connectedness, 89, 176
construction industry, 38, 40
coordinated market economy, see capitalism
coordination and competition, 28, 30, 32,
78, 164
direct and indirect coordination, 29
mechanisms of, 45, 78
corporate boards, 66, 67, 84
atmosphere, 133, 137, 153, 157
leaner and meaner, 68
tenure, 138
corporate elite, 20, 24, 99, 161
brokers, 95
business associations, 108
cohesion, 37, 56, 79, 80, 108, 126, 137,
157, 163, 165
shared background, 90, 110, 135, 136
community, 105, 126
connectedness, 89
as consensus-making machines, 123,
128
a definition, 79
education, 110, 112
elite families, 82
formative years, 110
good corporate governance, 160
individualisation, 157, 163, 164, 165
interviews with, 103
meeting networks, 88
membership, 80
moral framework, 29, 102
multiple meetings, 93
new boys network, 82, 177
organising principle, 106
peer pressure, 147
remuneration, 149
self-cleaning capacity, 154, 157
social distancing, 30
upper-class distinctiveness, 101, 106
corporate governance, 26, 39, 53
codes, 24
British code, 28

250

Dutch code, 24, 89, 96, 118, 120, 132,
162, 179
definitions, 26, 28
failure, 15, 16, 18, 26, 102, 160
formalisation, 131, 133, 135, 151, 157
of informal norms, 143
‘good corporate governance’, 15, 24, 78,
89, 90, 143, 158, 161
corporate elite, 160
takeover defences, 49, 55-57, 159
corporate power, 20-23, 26, 79
concentration of power, 19, 22
corporate regime, 28, 33, 34, 38, 40, 41, 45,
46, 48, 49, 50, 52, 55, 57, 58, 68, 77, 78,
79, 116, 123, 128, 129, 131, 144, 158, 162,
163, 166, 176, 179
financial sector, 53
corporate social responsibility, 43, 133,
136, 143-149, 154, 157
and network embeddedness, 148
financial performance, 144
corporatism, 52, 53, 108, 167
D
De Pijp, 123
De Pous, 21
De Schoorsteen, 123
De Vogeltjesclub, 123
Domhoff, 22, 79, 101, 118
dominant component, 176
Duisenberg, W., 22
Dutch Central Bank, 50, 54, 55, 58
Dutch East Indies Company, 66, 123
E
education, 80, 110, 112, 167
Elverding, P., 96
embeddedness, 31, 32, 37, 106, 131, 147
and corporate social responsibility, 148
disembedding corporate governance
networks, 66
Enron, 15, 18, 140, 160
European Central Bank, 22
executive directors, 177
executive and supervisory interlocks, 70,
73, see also interlocking directorates
F
family ties, 51, 80, 81, 178

INDEX

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Fentener van Vlissingen, 51
financialisation, 46, 74
and holding companies, 46
Finanzkapital, 33, 47, 78
Fokker, 162
foreign directors, 105, 123, 135, 136-138,
143, 152, 162, 164
formal institutions, 28, 30, 38, 39, 165, see
also institutions
Fortis, 55
France, 20, 110, 136
fraternities, 101, 1101-112, 128
G
Gemeinschaft, 107, 127, 157
generalised reciprocity, 119
generalised trust, 90
Germany, 19, 30, 31, 48, 49, 51, 52, 91, 136,
145, 163, 179
Gesellschaft, 107, 127
government, 16, 22, 49, 52, 57, 58, 107, 108110, 118, 119, 123, 163, 167, 168
graph, 177
Greenpeace, 145
Groenink. R., 123
H
Halberstadt, V., 109, 117
hedge, 142
Heeren Seventien (meeting), 123
Heineken, 109
House of Orange, 81
I
individualisation, see corporate elite
informal institutions, 28, 30, 38, 39, 79,
162, 165, see also institutions
informal meeting networks, 102, 128, 156,
158, 165
cocktail parties, 116
dinner and debating clubs, 103, 107,
121, 122, 123, 128
funerals, 117, 119
skybox, 102, 124, 125
tournaments, 102, 117, 128
ING, 55, 58, 60, 65, 70, 109
inner circle, 83, 84, 156, 177
connectedness, 91

INDEX

definition, 80
foreigners, 137
interviews with, 103
and social closure, 91
institutional change, 24, 25, 38, 39, 40, 46,
131, 157, 159, 162, 164, 166, 168, 179
as conversion, 165
as displacement, 43, 164, 165
as exhaustion, 43, 164, 165
and exogenous pressures, 163, 164
and formal institutions, 39
as incremental, 38, 143, 158, 162- 164
and informal institutions, 38, 40
myopic, 40
institutions
formal and informal, 28, 39, 102, 107,
162, 165
insitutional setting, 28, 29, 58, 162, 179
interlocking directorates, 19, 59
and bankers, 50, 51, 74
as institution, 29-31, 32, 47, 48
as opperunity structure, 40, 45, 47, 78
banks, 33, 50, 69, 75, 78
banks and industry, 33, 75-77, 155
definition, 59
executive interlocks, 48, 66, 73-78, 96,
155
interpersonal network, 34
legitmacy, 165
network of, see network of interlocking
directorates
role and function, 33, 36, 37, 47, 78, 79
in the Netherlands
history, 21, 49, 51, 52, 79, 85
sectors, 59
internationalisation, 19, 23, 38, 40, 42,
108, 132, 135, 136-138, 159, 163, 164, see
also foreign directors
isomorphic behaviour, 153
Italy, 52, 136
J
Japan, 136, 179
Johanniter Order, 109
K
Kalff, P.J., 109
KLM, 162

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Koninklijke Hoogovens, 51, 65, 70, 162
L
Langman, H., 118
legal framework, 18, 38, 39, 52, 102, 132,
168
history of the Dutch, 50, 55
principle-based governance, 18, 132,
136, 143, 179
rule-based corporate governance, 18, 31
level of analysis, 35
interpersonal perspective, 37
organisational Perspective, 36
inter-organisational perspective, 36, 38
individual perspective, 36
liberal market economy, see capitalism
liberalisation, 38, 55, 58, 108, 162, 164
Loudon, A.A., 109, 118
M
Maljers, M.A., 109
market and hierarchy, 17, 32
market for corporate directors, 114, 137
marketisation, 25, 46
mergers, 67
periods of concentration, 21, 46, 54, 67
meritocratic, 82, 156
Mertens 200, 20
mimetic desire, 151,152,154,157
migrating social networks, 165
moral framework, 29, 102
museums, 109
myopic, 40
N
Nederlandsche Handels-Maatschappij, 54
network analysis, 34
network of interlocking directorates, 34,
66
and aristocracy, 82
centrality, 65
characteristics of Dutch, 63
cohesiveness, 64
dominant component, 63
executive and supervisory interlocks,
70, 73
multiple interlocks, 69, 70, 177
networking, 114
new boys network, 82, 177

252

nobility, 80, 81, 112, 175
non-profit organisations, 109
Norway, 19, 145
O
old boys network, 22, 79, 80, 82, 106, 110,
156, 178
definition, 80
sociological profile, 82
Onder Ons, 81
ownership and control, 26, 27, 48, 55, 57
and financial institutions, 58
fragmented ownership, 27, 58
seperation of, 26, 27, 140
P
Parmalat, 15, 140, 160
patriciate, 80, 81, 112, 175
perverse incentives, 16, 161
Peters, J.F.M., 96, 132
Philips, 51, 70, 123, 136, 151
Pincoffs, Lodewijk, 160
politicians, 50, 108, 109
preference share, 55, 56
preferential attachment, 84
Prince Bernhard, 117, 227
principle-based, see legal framework
priority share, 55, 66
R
recruitment, 112
long-term employment, 112, 113, 139
tenure, 138
market for corporate directors, 114, 137
Rembrandt Foundation, 109
remuneration, 149, 153, 162
as social hedging, 152
legitmacy, 152
mimetic desire, 151
Rhenish capitalism, see capitalism
Rijkens, P., 117
Rijksmuseum, 109
Rinnooy Kan, A., 109
Rotterdam, 52, 55, 69, 81, 168
Rotterdamsche Bank, 54
Royal Dutch/Shell, 49, 123, 137, 145, 151,
163
rule-based, see legal framework

INDEX

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S
Sarbanes-Oxley Act, 18
Scheepbouwer, A., 123
Second European Banking Directive, 55
Second World War, 52, 54, 56, 81
sectors, 59
Seperation of ownership and control, see
ownership and control
shared belief system, 39, 40, 132, 159, 161,
164, 165
shareholder interest, 18, 24, 26, 27, 48, 144,
148, 163
shareholder value, 15, 24, 161
Sherman Antitrust Act, 31
small world, 86, 178
and corporate elite, 87
connected caveman graph, 87
interlocked cavemen graph, 87
Smith, Adam, 26, 29, 152, 160
social capital, 36, 37, 90, 96, 99, 102, 103,
110, 114, 115, 117, 119, 128, 139, 156
social closure, 42, 89, 90-92, 95, 98, 99, 131,
156, 163
and inner circle, 91
measurement of, 91
social hedging, 43, 152, 153, 157
social network analysis, 59
social networks, 127
and bankers, 116
as communication device, 115
migrating, 165
Social-Economic Council, 53
Spain, 19, 52, 179
status groups, 79, 80, 82, 89, 98, 99, 156,
178
Storm, K., 96
strong ties, 87, 106, 123, 167

INDEX

structural hole, 92
structure regime, 38, 53, 217
Sweden, 136, 179
Switzerland, 19, 136, 179
T
The Hague, 52, 163
Traces of Power (Graven naar Macht), 20,
23, 32
transaction cost economics, 31, 32
transnational elite, 23, 118
transparency, 124, 125, 129, 132, 151, 152,
157, 161
Twente, 52, 168
Twentsche Bank, 54
U
Unilever, 24, 49, 109, 117, 136, 137
United Kingdom, 19, 48, 49, 57, 91, 159
USA, 18, 19, 27, 31, 37, 38, 48, 49, 53, 57, 82,
90, 91, 106, 110, 118, 136, 150, 159
V
Van den Brink, J.R., 21
Van der Beugel, E., 117
Van der Hoeven, Cees, 15, 123
Van der Veer, J., 123
varieties of capitalism, see capitalism
VNO-NCW, 108
W
weak ties, 87, 106, 112, 123, 124, 128
women, 82, 105
World Economic Forum, 118
World Wildlife Fund, 109, 228
Worldcom, 15, 140

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