In this chapter we investigate the ownership and control of UK firms using contemporary methods from computational graph theory. Specifically, we analyze a ‘small-world’ model of ownership and control. A small-world is a network whose actors are linked by a short chain of acquaintances (short path lengths), but at the same time have a strongly overlapping circle of friends (high clustering). We simulate a set of corporate worlds using an ensemble of random graphs introduced by Chung and Lu (2002a, 2002b). We find that the corporate governance network structures analyzed here are more clustered (‘clubby’) than would be predicted by the random-graph model. Path lengths, though, are generally not shorter than expected. In addition, we investigate the role of financial institutions: potentially important conduits creating connectivity in corporate networks. We find such institutions give rise to systematically different network topologies.
Conyon, M.J. and Muldoon, M.R. (2008), "Ownership and Control: A Small-World Analysis", Baum, J.A.C. and Rowley, T.J. (Ed.) Network Strategy (Advances in Strategic Management, Vol. 25), Emerald Group Publishing Limited, Bingley, pp. 31-65. https://doi.org/10.1016/S0742-3322(08)25002-3
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