Interlocking Directorates and Communities of Interest Among American Railroad Companies, 1905

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Abstract
The debate about the separation of ownership and control has focused primarily on internal control of corporations. This study examines the relationship between ownership and control at the interorganizational level. It investigates the relationship between the structure of interorganizational title, as indicated by proprietary communities of interest, and the structure of interorganizational control, as shown by clusters of firms that recruited their boards from the same sets of directors. Secondarily the paper investigates the structure of centrality in the interlocking directorates, for which managerial theory predicts a close relationship between size and centrality. Examining American railroads in 1905, the results show that (1) while ownership and control may or may not have been separate at the level of the individual firm, at the interorganizational level the structure of title conforms very closely to the structure of control; and (2) the structure of centrality exhibits no singular hierarchy, but distinct clusters. Moreover, major companies were not highly central in the entire network, but were instead dominant within particular clusters, suggesting that centralization does not always engender power. The paper concludes that the debate over ownership and control should focus on both organizational and interorganizational levels.

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