European firm networks and competition - theoretical background and empirical evidence

This paper analyses firm linkage via multiple directorships among 5,370 non-financial listed firms in the EU-15 member states plus Norway and Switzerland in the period 2005 to 2011. In addition, the network of minority shareholdings and simultaneous interlocking directorates is analysed for the year 2011. The results illustrate that both financial and director networks are dominated by national ties whereas also a range of international linkages is identified. In line with the literature, international director linkages increased in the period under investigation. Further, network analysis shows that regional distance seems to be an important factor for the establishment of personal network ties. Descriptive analyses also suggest a positive relationship between director and financial connections of firms and their financial performance compared to the non-connected firms in the sample. It seems that firm linkages via multiple directorships and minority shareholdings are beneficial for the connected firms to ensure competitive advantages. The paper concludes with policy recommendations and implications for business practice and provides an outlook on further research in this field.

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