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Exceptional big linkers: Dutch evidence from the 20th century

Journal: Business History

Date: 2021

Author: Abe de Jong, Philip T. Fliers, Gerarda Westerhuis

Abstract:
This article investigates the effects of individual directors for corporate strategies and firm performance over the course of the 20th century for Dutch exchange-listed firms. We apply a multi-method approach on directors with many executive and supervisory roles in multiple firms--so-called big linkers. We first identify exceptional big linkers, board members whose presence is systematically related with firm characteristics. Our approach allows us to identify a number of exceptional individuals who were previously overlooked by business historians. Then we investigate the backgrounds of these exceptional big linkers. We find that their biographies and other archival materials provide explanations for their systematic relation with corporate outcome variables such as performance, debt and investments. Using additional information about these directors, including network centrality, bank relations and family histories, we are able to shed light on the multitude of explanations for the roles of exceptional big linkers.

Link: Google Scholar

Background and Context

Study Focus

This study investigates how individual directors influenced Dutch corporate strategies and firm performance throughout the 20th century by examining "big linkers" - directors with multiple board positions.

Data Coverage

The analysis covers 6,637 firm-year observations with 48,524 board seats between 1908-2003, identifying 102 big linkers who held at least 3 concurrent board positions and 10+ positions over their career.

Methodology

The research uses a mixed-method approach combining statistical analysis of director fixed effects with detailed historical investigation of exceptional big linkers' backgrounds and characteristics.

Decline in Number of Big Linkers Over Time

  • Shows how the number of big linkers changed across the 20th century
  • Reveals peak in 1928 followed by temporary decline in 1930s
  • Demonstrates consolidation in 1950s-1960s before declining from 1970s onwards

Characteristics of Top 10 Big Linkers

  • Shows key attributes of the most influential board members
  • Highlights variation in education levels and elite family background
  • Demonstrates importance of bank connections and management experience

Average Board Positions Held by Period

  • Illustrates how many board positions big linkers typically held across different time periods
  • Shows concentration of power in early periods
  • Demonstrates gradual decline in multiple directorships over time

Impact on Firm Performance Metrics

  • Shows how presence of big linkers correlates with different performance measures
  • Demonstrates varying effects on ROE, leverage, and market value
  • Highlights importance of individual director characteristics rather than just being a big linker

Contribution and Implications

  • The study demonstrates that being a big linker alone does not guarantee influence - individual characteristics matter more than number of positions
  • Exceptional big linkers typically combined high social capital with substantial management experience or industry expertise
  • The research provides a new mixed-method approach for identifying and studying influential corporate directors

Data Sources

  • Big linkers trend chart based on Figure 1 showing number of big linkers 1908-2003
  • Characteristics visualization derived from Table 2 descriptive statistics
  • Board positions data from Table 3 firm descriptive statistics per period
  • Performance metrics from Table 5 Panel A showing big linker effects