Resilience of the Swiss Firm Network

Analyzing how interlocking directorates cope with crises

In times of turmoil and rising uncertainty, resilience and firms’ rapid strategic adaptation are essential. Therefore, we study the resilience of strategic governance networks, focusing on corporations, which constitute the backbone of the Swiss economy.

Aim

How resilient is the Swiss economy? We address this paramount question by examining the fundamental elements of an economy, its firms, and the networks connecting them. A strategic governance network is defined through corporate director interlocks, i.e., the connections of corporations via their members of the board of directors. The integration of network science and physics modeling with economics and management science can teach us valuable lessons for coping with future crises. This hthe as significant implications for how to structure and regulate firm governance.

Methodologies

We use a novel and unique dataset that covers the universe of all Swiss corporations for almost a century. We measure resilience with the tools developed in network science and physics. Simulating the destruction and recovery of the firm network provides a measurement of the system’s resilience over time. We further ask how firms strategically adapt their governance networks to external shocks, using insights from management science and economics. Applying the modern empirical toolbox, we assess the impact of historical economic shocks, such as currency, commodity, trade and finance shocks, or other significant economic and public policy shifts, on strategic firm networks.