Exploring cross-industry connectedness in corporate governance networks in Vietnam

The presence of common directors who occupy board seats in several companies within the same industry can be viewed as an indicator of the degree of concentration of control or influence within that industry. At a country-wide level, connectedness in corporate governance networks can indicate that the control and management of capital may be concentrated in the hands of a few highly connected and influential directors.

The report explains how these ‘connectors’ are responsible for bridging companies and industries, and act as the glue that binds the network together. Because they act as bridges between companies and industries, connectors effectively define the critical pathways through which information travels across the corporate sector. Therefore, as gateways and gatekeepers to information, they occupy very important and influential positions in the network.

These connectors and superconnectors also play a significant role in defining the overall structure of the network. The gender make-up of these network connectors and superconnectors therefore impacts the degree to which women control capital and influence the business sector in Vietnam.

Highlights

The report finds that a total of 628 individual directors serve on the 689 board seats of the major corporations in Vietnam. This provides evidence of individuals holding multiple board seats, who serve as ‘connectors’ in the corporate governance network of the country.  Analysis shows that 54 of the 628 individual directors of the major corporations in the country (or around 9%) sit on multiple board seats. Corporate boards in the country are dominated by men, who comprise around 81% of directors in the country, therefore the gender composition of these connectors is skewed in favour of men. Around 83% of the connectors (or 45 directors) in the network are men, while only 17% (or 9 directors) are women.

Among all network the connectors, 49 individuals (or 91% of connectors) occupy 2 board seats, and 3 individuals (or 6%) occupy 3 board seats. A further 2 individuals (or 4%) hold 4 board seats, thus putting them in the category of network ‘superconnectors’. Of the 2 superconnectors in the network, 1 is a woman. This indicates that network power and influence in the country is overwhelmingly concentrated among men, although the most influential female superconnector is just as influential as the male superconnector.

The report concludes that there is clearly a significant opportunity to further improve gender diversity in the management and control of capital in Vietnam. While some women directors exercise the same degree of power and influence as male directors, women remain a minority in corporate governance in the country.

Contents

• Origin and significance of interlocks
• The case of Vietnam
• Network connectors
• Corporate connectedness
• Industry connectedness
• Implications