Eyes on the Horizon? Fragmented Elites and the Short-Term Focus of the American Corporation

Abstract

Recent scholarship expresses concerns that U.S. corporations are too focused on short-term performance, undermining their long-term competitiveness. We examine how short-term strategies and performance, or short-termism, results from the dissolution of the American corporate elite network. We argue that the corporate board interlock network traditionally served as a collective resource that helped corporate elites to preserve their autonomy and control, mitigating short-termism. In recent years, changing board-appointment practices have fractured the board network, undermining its usefulness as a platform for collective action and exposing corporate leaders to short-term pressures. We develop and apply a cohesion metric for network managerialism, derived from theory and evidence in social-network scholarship. Using three indicators that capture short-termism earnings management and shareholder returns, we identify a structural basis for short-termism that links network-based resources to managers' decisions. The results highlight the benefits of the corporate elite network and illustrate unforeseen consequences of the network's dissolution.

The Right to Work, Power Resources, and Economic Inequality

“…Ferguson (2008), for example, demonstrates that successful union organizing can be thwarted through antiunion firm actions. More generally, firm-level research on changing structural conditions and labor market institutions shows how managers and corporate elites strategically address challenges to their own power and capacity to increase claims over status and rewards (Jung 2016, Benton and Cobb 2019. These points reinforce the basic fact that inequality is a result of interested groups with different power levels vying for valued resources in local spaces.…”

“What do interlocks do” revisited – a bibliometric analysis

“…In more recent years, there has been some debate into whether there has been a fracturing of the corporate elite (Benton and Cobb, 2019; Chu and Davis, 2016; Domhoff, 2015). Mizruchi (2013) outlines this thesis for the USA based on historical evidence, noting that cohesive subgroups of the past and unified elite have been in decline.…”

A Causal Model on Resistance to Change in Relation to Organizational Communication, Work Ethic and Self-Efficacy on Tertiary Teachers

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