Who Killed the Inner Circle? The Decline of the American Corporate Interlock Network

Abstract

U.S. corporations shared members of their boards of directors since the early 1900s, creating a dense interlock network in which nearly every major corporation and director was connected through short paths and elevating a handful of well-connected directors to an influential “inner circle.” This network remained highly-connected throughout the 20th century, serving as a mechanism for the rapid diffusion of information and practices, as well as a device for promoting elite cohesion. Some of the most well-established findings in the sociology of networks spring from this milieu. In the 2000s, however, board recruiting practices changed: well-connected directors became less preferred, and due to this shift in preference, the inner circle disappeared and companies are less connected to each other. Revisiting three classic studies on the diffusion of corporate policies, on corporate executives’ political unity, and on elite socialization, we find that established understandings of the effects of board interlocks on U.S. corporations, their directors, and social elites no longer hold.