Exploring cross-industry connectedness in corporate governance networks in Indonesia
Summary
The presence of common commissioners 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 commissioners.
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 Indonesia.
Highlights
The report finds that a total of 508 individual commissioners serve on the 582 board seats of the major corporations in Indonesia. Analysis shows that 53 of the 508 individual commissioners of the major corporations in the country (or 10%) sit on multiple board seats. Corporate boards in the country are dominated by men, who comprise 90% of commissioners in the country, and the gender composition of connectors reflects this. Around 89% of the connectors in the network are men, while only 11% are women.
Among all network the connectors, 36 individuals (or 68% of connectors) occupy 2 board seats, and 13 individuals (or 25%) occupy 3 board seats. A further 4 individuals (or 8%) hold 4 board seats, thus putting them in the category of network ‘superconnectors’. Among the 4 superconnectors in the network, only 1 is a woman. This indicates that network power and influence in the country is overwhelmingly concentrated among men. The women connectors in the network typically hold 3 board seats, representing governance participation in 2 industries on average. The top woman superconnector (who holds 4 board seats) participates in the governance of 3 different industries.
The report concludes that there is a significant opportunity to further improve gender diversity in the management and control of capital in Indonesia.
Contents
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- Origin and significance of interlocks
- The case of Indonesia
- Network connectors
- Corporate connectedness
- Industry connectedness
- Implications
