The Rolodexes of the business elite help account for the surprising resilience of managerial control of publicly held corporations, leading to an entrenched management structure that comes at the expense of shareholder value, says research from U. of I. labor Richard Benton. Photo by L. Brian Stauffer
CHAMPAIGN, Ill. — It turns out the old saying that "It's not what you know, but who you know" still holds a measure of truth in corporate America. New research from a University of Illinois expert in social network analysis indicates that, through 2006, the Rolodexes of the business elite help account for the surprising resilience of managerial control of publicly held corporations. According to a forthcoming paper from Richard Benton , a professor of labor and employment relations at Illinois, the "interlock" of corporate board members and managers are ties that bind, leading to an entrenched management structure that comes at the expense of shareholder value. "The 'old boys club' still exists, but it's less about gender and more about two different interest groups - entrenched management and activist shareholders - vying for control over publicly held corporations," Benton said. On the one hand, shareholders and institutional investors are interested in seeing corporations managed and directed to reflect their interests. On the other, managers, executives and board members want to preserve their power and autonomy.
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