Abstract: Company Networks in Switzerland: The Formation of the "Fortress of the Alps"

Thomas David, Martin Lüpold, André Mach, and Gerhard Schnyder, with the collaboration of Stéphane Bacciochi


Swiss corporate governance traditionally has been characterized by two main traits: concentration of ownership and high density of interlocking directorates and strong interrelationships between banks and industry. In this contribution, we analyze the emergence of the Swiss model of capitalism during the first half of the twentieth century. The study of this "formative phase" of Swiss corporate governance is made through a network analysis of interlocking directorates of the 120 largest firms in Switzerland in 1910, 1929, and 1938. Our paper highlights two points. First, banks, or more precisely the financial sector (banks, finance companies, investment trusts, and insurance companies), have "central" positions in the Swiss corporate network during this period. The industrial sector is less central in the Swiss business network. Except the machine industry and in particular the electric machine industry, the other leading industrial branches (textile; food and beverage; chemical; watch) do not figure in the ranking of the top ten companies according to degree centrality in 1910, 1929, and 1938. Moreover, a first analysis seems to show that close relations exist between the financial sector and industry. Second, the network has not only a national, but also a regional dimension. Through the analysis of one of these regional clusters (the "Basle network"), it appears that interlocking directorates between firms are reinforced by very close familial ties. This factor is partly responsible for the high concentration of ownership. However, this network is not a peaceful and homogenous one. There are sharp business rivalries within. Finally, this network is not restricted to the Basle region. It seems that these firms are embedded in other clusters: interregional (across the cantonal and national borders—with Alsace) and national and international ones.