The internal organisation of the Australian corporate elite: A 'small world' analysis

This paper examines the network of personal contacts, created by interlocking directorates, among all board members of the Top 500 publicly listed Australian companies. In the past it has been difficulty to analyse such sparse networks, however recent advances in our understanding of the 'small world' phenomenon and the application of random graph theory to large networks provide new tools to measure the connectivity of large networks of this type. The paper analyses the 'small world' of Australian company directors in 1976 and 1996. We find that the size of the network increases significantly from 1976 to 1996 and that its connectivity increases also. We examine the most central persons in the network. We find that network centrality differs markedly when measured by average distance rather than degree (i.e. direct contacts) and we examine the network profiles of persons who rank highly on the different scores. Introduction: Corporate elite studies, inter-corporate networks and the network of personal contacts among company directors It is commonly accepted that ‘business’ has an influential ‘voice’ in national economic and political affairs. Indeed it is possible to argue that business attitudes and perspectives also exert a subtle but pervasive hegemonic influence on much of our social and cultural life. There is less theoretical agreement if we attempt to theorise about the internal organisation of business or to locate centers of consensus building and decision-making within the business community. On the one side structuralist theories tend to discount any overt forms of agency in the business community referring instead to its embedded, structural power. Other approaches, however, acknowledge some element of overt agency and internal organisation for business. The locus of this internal organisation may be postulated to lie within the major institutions of business, the major companies, banks and investment agencies. Classic power elite theory locates it within the professional training and career structures of the corporate elite personnel themselves. More recently attention has focused on the activities of employer ‘peak organisations’ such as the Business Council of Australia. 1 The ideas for this paper were developed in collaboration with colleagues in the Social Networks Research Group at the Netherlands Institute for Advanced Study (NIAS), 2000-2000. The other members of the research group were William Carroll, Meindert Fennema, Eelke Heemskerk and Robert Mokken. Further significant input came from Prof. Geoff Kiel and Gavin Nicholson, colleagues in the Corporate Governance research group at the University of Queensland. Much of the data for the study was collected under ARC Large Grant, File No: A79905918.