MPIfG Working Paper
03/9, September 2003
Politics of the German Company Network
and Lothar Krempel
Max Planck Institute for the Study of Societies
For over 100 years, the German company network was a
major feature of organized corporate governance in Germany. This paper uses
network visualization techniques and qualitative-historical analysis to discuss
the structure, origins and development of this network and to analyze the
reasons for its recent erosion. Network visualization makes it possible to
identify crucial entanglement patterns that can be traced back historically. In
three phases of network formation – the 1880s, 1920s and the 1950s –, capital
entanglement resulted from the interplay of company behavior and government
policy. In its heyday, the company network was de facto encompassing and
provided its core participants, especially the banks, with a national,
macroeconomic perspective. In the 1970s, a process of increased competition
among financial companies set in. In the 1980s and 1990s, declining returns from
blockholding and increased opportunity costs made network dissolution a
thinkable option for companies. Because of the strategic reorientation of the
largest banks toward investment banking, ties between banks and industry
underwent functional changes. Since the year 2000, the German government’s tax
policy has sped up network erosion. Vanishing capital ties imply a declining
degree of strategic coordination among large German companies.
Ausgehend von einer Kombination von
Netzwerkvisualisierung und historischer Analyse werden in diesem Papier
Struktur, Entstehung und Entwicklung des deutschen Unternehmensnetzwerks
sowie die Gründe für seine Erosion diskutiert. Die Visualisierungstechnik
ermöglicht die Identifikation auffälliger Merkmale des Netzwerks, die
anschließend geschichtlich zurückverfolgt werden können. In den drei Phasen der
Netzwerkentstehung – den 1880er, 1920er und 1950er Jahren – resultierten
Unternehmensverflechtungen aus einem Zusammenspiel von strategischen
Unternehmensentscheidungen und Unterstützung auf politischer Ebene. In seiner
Blütezeit umfasste das Netzwerk die größten deutschen Unternehmen und führte
dazu, dass die Banken im Verflechtungskern eine nationale, makroökonomische
Orientierung entwickelten. In den siebziger Jahren setzte ein Prozess
zunehmender Konkurrenz unter Finanzunternehmen ein. In den achtziger und
neunziger Jahren machten sinkende Erträge aus dem Halten großer Aktienpakete und
gestiegene Opportunitätskosten die Netzwerkauflösung zu einer strategischen
Option. Wegen der Umorientierung der Großbanken zum Investmentbanking unterlagen
Verbindungen zwischen Banken und Industrie einem funktionalen Wandel. Seit dem
Jahr 2000 unterstützte die Bundesregierung die Netzwerkauflösung
steuerpolitisch. Dieser Prozess resultiert in einer rückläufigen strategischen
Koordinierung zwischen großen deutschen Unternehmen.
The Origins of the Company Network
Network during the Nazi Dictatorship
Republic of Germany
Competition and Change: Cutting Back
This paper discusses structure, history and current developments of the
German company network.  What kind of
network structure do the largest German companies establish? In which stages did
it evolve? Is it eroding? And, if so, why?
The purpose of our discussion is threefold. Our first claim is a
methodological one. We show that network analysis can be improved by combining
network visualization techniques, which provides information about structural
entanglement features, with qualitative-historical narratives. Second, we point
to the contingency of network evolution, driven by interplay of company behavior
and political ideology of governments. The network was rooted in the era of
industrialization and expanded in two waves in the 1920s and the 1950s. We show
that the stability of the capital network was no forgone conclusion in German
history and that, at two historical moments, network dissolution by law was a
conceivable option for governments: in the Nazi era and at the end of the Social
Democrat/Liberal coalition period which was abruptly ended by the fall of the
Schmidt government in 1982. Tensions and increased competition inside the
network core, which led to disentanglement in the 1990s, can be traced back to
the 1970s. Third, we argue that qualitative network analysis has to pay
attention to the changing functionality of the network. In the 1970s, the
network was used to protect companies from hostile takeovers; in 1997, by
contrast, Deutsche Bank used its supervisory board seat in Thyssen
to arrange Krupp’s hostile takeover attempt. Links between companies,
like other institutions (Thelen 2003), can be used as tools for aims different
from their initial historical goals.
As the company network was part of a wider range of institutions of German "organized"
capitalism, our combination of network visualization and historical narrative
contributes to the debate over national varieties of capitalism. In Germany,
competition among companies was embedded in inter-firm cooperation,
institutionalized by interlocking shareholdings and interlocking directorates
(Beyer 1998; Windolf and Beyer 1996; Windolf and Nollert 2001). In its heydays,
the network established a "quasi cartel", internally organized and protected
against influence from outside, and provided its core participants – above all,
the large banks – with a common shared macroeconomic orientation. Our
qualitative analysis comes to the conclusion that these heydays are over, which
implies a declining "coordination" and "organization" degree of the German
We begin our analysis by visualizing the company network in its state in
early 1996 (Figure 1). The figure draws on data provided by the Monopoly
Commission (Monopolkommission 1998; 2002) and shows all the companies that were
among the 100 largest Germanbased companies in 1996 and were entangled with
other companies from the same sample. Companies are displayed as points, and
capital interlocks between them as arrows. An arrow that points from Deutsche
Bank to Metallgesellschaft means that Deutsche Bank holds
shares in Metallgesellschaft. Point sizes represent not company sizes,
but degrees of involvement in the network. We calculated the degrees of
involvement by combining both the active network participation (i.e. the company
shareholding in other companies) and the passive network participation (i.e. the
shares of the company held by other companies) in terms of the amount of the
firm’s net value added represented by the respective share blocks. The advantage
of using net value added is that this measure is not biased towards different
capital market valuations (which would be the case if share block prices were
used) or towards the vertical range of manufacture (which would be the case if
yearly sales were used). Net value added, therefore, is a good measure of the
"real" size of company shares, being highly correlated with the number of
employees represented by those shares. We also use colours as distinguishing
features. We chart financial companies as yellow points and nonfinancial
companies as red points. Finally, we distinguish three different kinds of links
between firms: yellow arrows mean that financial companies are entangled; red
arrows represent connections between industrial companies ;
and orange lines indicate industrial shares held by financial companies and,
which is rare, vice versa (for further information on the visualization
technique, see Krempel 2003). We argue that our visualization technique is a
good complement to statistical network analysis (Brandes 2001; Krempel 1999) .
The aim of descriptive statistics is to make complex data structures visible by
condensing data into indexes. Our technique does the same by transforming a
complicated dataset into one readable figure.
[please click on the image to enlarge]
What can be learned from Figure 1? Instead of a group of isolated networks (like
the Japanese keiretsu), 60 of the 100 largest German companies establish
one network component with a complicated structure in which most of the
companies are connected with more than one other company. The network has an
identifiable core that consists predominantly of financial companies. In this
core, we find heterarchical connections. Companies like Deutsche Bank and
Dresdner Bank are both actively and passively involved at the same time.
We also find reciprocal cross-shareholdings: Deutsche Bank, for example,
holds shares in Allianz, and Allianz owns shares in Deutsche
Bank . However, cross-shareholdings
are virtually absent in the industrial sector. Even hierarchical connections
between the largest industrial companies are rare (which the low number of red
lines in Figure 1 indicates). An exception to this rule is the relatively large
company cluster located in the northeast of Figure 1, consisting mostly of
companies from the energy sector and complemented by some heavy-industry
companies . These companies are
characterized by differing amounts of Land and state ownership, and most of them
were regionally oriented state monopolies which, until the liberalization of the
European energy sector, did not compete anyway. A second, much smaller, cluster
of shareholdings among the largest German industrial corporations is connected
to Siemens, which holds shares in BMW and in Bosch-Siemens
(which, in turn, is co-owned by Bosch). All other connections between industrial
companies represent single investments .
Heterarchical links are therefore not a characteristic of the company network
as a whole, but typical of the financial sector. And, as Beyer (2002: 14) has
pointed out, direct reciprocal shareholdings (A holds B, B holds A) tend to be
more characteristic of Allianz than a typical German feature. Industrial
companies are connected by hierarchical lines that belong to one (or more than
one) of the financial core companies. We provide information on the origins of
these company links, on the political support they receive as well as on the
political countermovements in the forthcoming sections.
The Origins of the Company Network
Close relationships between financial and industrial companies as well as
between different financial companies themselves can be traced back to the years
of industrialization. When Deutsche Bank was founded in 1870, its first
spokesman for the board of management was Georg von Siemens from the Siemens
family. From the outset, cooperation between Siemens and Deutsche Bank
was eminently close. Commerzbank, likewise founded in 1870, started out
by cooperating closely with trading companies (Kurzrock 1970: 39). Since its
foundation in 1889, the insurance company Allianz was entangled with
other financial companies: one of its founders, Carl Thieme, was a former
director of Münchner Rück, and Deutsche Bank, Dresdner Bank
and Bayerische Vereinsbank all held shares in Allianz (see arrows
in Figure 1).
The big banks' commitment to founding and financing industrial companies
began after the "start-up crisis" of 1873-79. When banks organized the
distribution of shares from newly founded corporations or from increases in
capital stock, they often – sometimes by accident, when shares sold worse than
expected – incorporated a part of the shares into their own portfolio. In order
to limit risks from large financial transactions, banks syndicated consortiums.
The conversion of frozen credits into shares owned by banks also commenced in
the 1880s. From this time on, it was typical of large German banks to attend
industrial companies "from the cradle to the grave". An example of this is the
founding of AEG in 1883/87: Deutsche Bank, heading a large
consortium, organized the distribution of shares and took around one fourth of
the shares into its own portfolio (Eglau 1989: 20) – and, in fact, Deutsche
Bank intervened in AEG issues until the end of AEG in 1996.
Deutsche Bank, together with Siemens, was also involved in the
founding of Mannesmann in 1890. Max Steinthal’s handling of the Mannesmann
crises as its supervisory board chairman until 1905 is a good example of bankers
crucially intervening in the matters of industrial firms (Gall 1995: 40-44; Pohl
Cooperation among firms was supported politically. The Stock Corporation Act
of 1884, an amendment to the 1843 Prussian act regulating stock corporations,
conferred supervisory power on the supervisory board instead of the shareholders’
meeting (Jackson 2001: 132). Both at company level and in the political sphere,
the view of how companies should organize their relationships with other firms
was not based on pure competition. It was best expressed in the state’s
promotion of cartels. In 1879, this issue was discussed in the Reichstag in the
so-called "cartel debate", which was initiated in the main by Bismarck’s change
of course from free trade to protectionism. At the same time, national peak
associations of economic interests emerged and developed rapidly; the "Central
Association of German Industrialists" was founded in 1876 (Lehmbruch 2001). The
cartelization process got underway in the mid-1880s, and cartels were seen to
operate most effectively in the coal, iron, steel, and chemical sectors. In
1897, the supreme imperial court in a decision of general principle ruled that
cartels were consistent with basic principles. At the same time in the USA,
cartels were prohibited by the Sherman Anti-Trust Act of 1890.
Company cooperation in the Weimar Republic can be understood as an
accumulation of the tendencies that first arose in the 1870-1917 era. Lehmbruch
(2001) locates the decisive historical break towards organized, non-market
economic regulation after the First World War. Characteristic features of this
period were waves of additional entanglement among financial and industrial
companies, especially during the 1923-24 and 1929-1933 crises; mergers and the
formation of cartels; new forms of company cooperation like the "community of
interests"; and the first emergence of "corporatist" interest mediation
(Lehmbruch 2001: 71). The 1920s were also the glory days for banks transforming
frozen credits into long-term industrial shareholdings.
One of the most eye-catching entanglement patterns in Figure 1, the large
cross-shareholding between the insurance companies Allianz and
Münchner Rück, is a good example of the organization of markets among large
companies in the 1920s (Feldman 2001: 10). In 1921, the CEOs of both companies
signed a cooperation contract that set Münchner Rück’s Allianz capital
participation at 25 per cent. At least three managers of each insurance company
were allowed to sit on the supervisory board of the other. Allianz agreed
to restrict itself to direct insurance business and Münchner Rück to
indirect insurance business. Münchner Rück’s already existing direct
insurance subsidiary companies were transferred to Allianz.
In the heavy-industry sector, the formation of the trust Vereinigte
Stahlwerke was the outstanding event in 1925 (Reckendrees 2000). A parallel
development also occurred in the chemical sector in 1925 with the integration of
formerly competing chemical firms, among them the precursors of the three large
firms Bayer, BASF and Hoechst, into the IG
Farbenindustrie (Pohl 1982: 302-303). The degree of bank involvement in
these concentration and organization processes differed. An example of a high
degree of bank interference is the merger of Daimler and Benz in
the year 1926, which was essentially planned by Deutsche Bank board
member Emil von Strauss (Eglau 1989: 30-31; Pfeiffer 1987: 49). Strauss’s aim
was to build a large automobile trust involving BMW, but the realization
of this plan did not go beyond a reciprocal cross-shareholding and interlocking
directorate between Daimler-Benz and BMW. In the process,
Deutsche Bank acquired Daimler-Benz shares that it held on to for
decades (see Figure 1). Examples of share ownerships that resulted from frozen
credits or from the attempts of banks to prevent unwanted takeovers are
Deutsche Bank’s Südzucker investment in the late 1920s and Commerzbank’s
shareholding in the trading company Karstadt, which stemmed from the
crisis years of the early 1930s (for both share ownerships, see Figure 1).
In the Weimar Republic, markets were replaced by company coordination in
order to prevent overproduction, stop prices from decreasing in times of reduced
demand and guarantee a predictable share of profits to a large number of firms
even in times of crises, which was especially important for creditors (Beyer
2002: 7). However, the role of bank credits in German industrial financing
should not be overestimated. The low degree of dividend pressures exerted by
underdeveloped capital markets resulted in a large amount of retained earnings
and, as a consequence, in a great ability to avoid external finance. In the
formative phases of organized capitalism discussed in this paper – the period of
promoterism, the 1920s, the 1950s and the period of dictatorship of 1933-1945 –
internal finance dominated over credits and recapitalization measures (Abelshauser
1983: 72; Holtfrerich 1995: 574; Pohl 1982: 300, 353, 406; Vitols 2001: 181).
The banks’ positions as centres and junctures of industrial policy thus resulted
not from exceptional financing patterns, but from the multidimensional access to
industrial matters that German universal banks enjoyed. They were simultaneously
supervisory board members, creditors, share owners, organizers of consortiums,
and executors of the voting rights of dispersed share owners (which included
large voting blocks in their own shareholders’ meetings).
The significance of company cooperation and the importance of banks were also
expressed in the composition of industrial supervisory boards. Ziegler’s survey
on the supervisory boards of 78 large German firms in 1927 provides an insight
into the extent of entanglement in the latter days of the Weimer Republic. In
stock corporations from the iron and steel industry, Ziegler (1997: 106-111)
found that 28 per cent of supervisory board members belonged to banks, and an
additional 36 per cent represented industrial interests. The supervisory board
was not only used to exercise supervision over companies but also – and
increasingly so – as a tool for business cooperation in the fields of production
and finance (Jackson 2001: 134). Until 1931, when the size of supervisory boards
was limited to 30, no rules governing the size of supervisory boards existed. In
its "natural state", for example, the AEG supervisory board had 36
members (Ziegler 1997: 10-11) and was much more capable of providing cooperation
and information flows between business partners than of effecting supervision.
Until 1923, no state regulation of cartels and competition existed at all,
which contrasted with the situation in the USA, England and France, where
anti-cartel legislation was introduced before World War I. When the grand
coalition government of Gustav Stresemann passed the first cartel law in 1923,
its aim was to protect the interests of cartels rather than stop cartel building
and company cooperation (Jackson 2001: 135). The idea of the organized markets
being superior to pure competition relied on a large societal consensus
(Lehmbruch 2001). It was not only supported by laissez-faire clientelism, but
also by the ideas of the political left, which were best expressed in the
writings and speeches of Naphtali (1928/1969) and the late Hilferding (1924).
For trade unionists and Social Democrats in the late Weimar Republic, entangled
capital represented the more developed model of capitalism and was therefore
nearer to socialism. The relationship between the organized economy and the
public sphere was increasingly seen as a reciprocal one, in which – in contrast
to the Leninist view – firms used the state and politics used organized capital
as tools to achieve their respective aims. Liberal competition policy, in the
view of the left, would therefore have been a backward rather than a forward
move (for details, see Höpner 2003b).
The Company Network during the Nazi
The consensus that a rigid competition policy was not required implied no
consensus on the conflict line between laissez-faire and state interventionism.
The economic crisis of 1929-1933 was also a crisis of the idea of laissez-faire.
After the 1932 elections, at least two thirds of Reichstag members represented
anti-laissez-faire ideas: Communists and Social Democrats on the left and the
Nazi party on the far-right with its 37.3 per cent share of votes. A radical
transformation of the German financial system was a manifest option for
additional reasons: after the banking crisis of 1931, the topic was on the
political agenda anyway – as a first step, this resulted in an increase in
banking supervision in 1932 – and, above all, a large part of bank shares were
held by the state as a result of the support measures necessary in the early
Right from the start, the NSDAP ideology was hostile to the financial sector.
Financial capital, according to Nazi ideology, was more profit-earning than
working capital, was disembedded from its national context and was in the
service of Jewish interests. In his 1925 published pamphlet "Mein Kampf", Hitler
(1925/1999: 213) wrote, "the hardest battle would have to be fought, not against
hostile nations, but against international capital" which was "robbing the
enterprises" (ibid: 314). Thus the strong continuity of the bank's entanglement
with industrial corporations over the Nazi period and beyond was not a forgone
conclusion. The relationship between different groups of industry and the NSDAP
is the subject of numerous controversial debates (see the overview in Turner
1974), but there seems to be a consensus that "Hitler's assistants" were located
more in the heavy-industry sector – the political commitment of Fritz Thyssen is
a well-known example of this – than in the financial sector .
Initially meant as a starting point for a more large-scale reform of the
financial sector, the Nazis inaugurated an enquiry board on bank affairs. Its
chairman Wilhelm Keppler explicitly focused on bank–industry relationships,
saying that "finance capital seeks to rule the economy instead of serving it.
Share block ownerships and voting battles in supervisory boards and shareholders'
meetings do not belong to the scope of functions of banks" (quote from James
1995: 323; own translation). However, it transpired that the Nazi elite failed
to make an extensive reform of the banking sector their top priority. The
cartel-like banking system and the banks' ties with industrial corporations were
not dissolved, and the new credit law passed in December 1933 was limited to a
further increase in banking supervision and some risk-minimizing restrictions on
large credits. In the years 1936 and 1937, the re-privatization of the large
banks and insurance companies was completed (Kurzrock 1970: 73).
The Nazis assumed two different stances in their policy towards the financial
sector. First, starting in 1937, private banks were subject to "Aryanization",
which meant in practice the expropriation of Jewish holdings in banks. Second,
they controlled the investment flows of banks politically in order to use them
for war preparation. For the Nazis, banks and insurance companies were agents
that had to manage their funds with respect to the needs of the state. In 1934,
corporations were prohibited from paying more than six per cent – in exceptional
cases, eight per cent – as dividends, which had the effect of supporting
industrial self-financing and limiting the attractiveness of shares (Pohl 1982:
405). Increases in capital stocks required state agreements. This held the
demand side of the capital market open for the enormous purchases of government
bonds. In 1938, insurance companies were prohibited from investing in the
construction sector; after 1939, at least two thirds of investment flows had to
be spent on government bonds and a catalogue of permitted investment
alternatives was introduced for the last third (Arps 1976: 214).
After the failure of the "Barbarossa" campaign against Russia in 1941, the
German economy ultimately shifted towards an "organized" system in which private
property remained intact, but wages, prices and investment flows were controlled
by the state. In this phase, a second wave of verbal attacks on banks occurred,
and in particular the security service of the "Schutzstaffel" (SS) agitated
against banks as rent seekers of the war and demanded the nationalization of the
large banks. Again, the banks’ influence over industrial companies was a main
point of criticism (James 1995: 390-395). Hitler refused such demands, arguing
that National Socialists should not assume any responsibility towards banks.
By and large, the company network remained stable in the years of the Nazi
dictatorship. Gradual disentanglement measures in some cases were
counterbalanced by reinforced ties in other cases. For example, when the
automobile and armaments manufacturer BMW increased its share capital in
1936, Deutsche Bank added a part of the shares to its own portfolio. In
1942, in order to help crisis-ridden BMW, the steel trust Vereinigte
Stahlwerke acquired a BMW share block (James 1995: 396, 398). In the
early 1940s, the industrialist Günther Quandt (a member of the family that owned
BMW) collected shares in the construction company Holzmann until
he held 25 per cent of the shares. Since this breached a state decree that
prohibited unauthorized changes in ownership structures during wartime, Quandt
transferred the share block to Deutsche Bank, which retained a part of it
and therefore increased its stockholding in Holzmann (see Figure 1).
Further parts of the share block were sold to industrial companies like
Reemtsma and Henkel (Eglau 1989: 68).
Federal Republic of Germany
After World War II, the disintegration of the largest trusts such as IG
Farben and Vereinigte Stahlwerke and the separation of the largest
banks into regional units (revised in 1957) were not combined with an
expropriation of the industrial ownership that the banks had acquired during the
previous decades. Furthermore, as regards the public access to the financial
resources of banks and insurance companies, the year 1945 did not represent a
radical historical break. Steadily rather than abruptly, the unambiguous state
dominance over financial companies eroded and made way for a more reciprocal
interpenetration, in which it was increasingly difficult to decide who embedded
Until the early 1950s, economic planning remained important in Germany. The
import and export of raw materials, all infrastructural issues, housing, food
markets, and the capital market remained highly regulated. As before 1945, the
resources of financial companies were not seen as private matters. They were
subject to political negotiations and were therefore treated like a national
infrastructure. Trade unions, for example, demanded that insurance companies
should have to invest four fifths of their funds in mining and electricity,
while the Association of Social Housing wanted to oblige them to invest 70 per
cent of their assets in house building (Borscheid 1993: 27).
Ironically, in the context of the Korean crisis, the American Allies blamed
the German economic system for being too market-driven, as too many investment
resources were spent on the "useless" consumption sector (Abelshauser 1983: 76).
In addition, the 1950 energy crisis increased the demands for more economic
planning. In 1950/51, in order to prevent state pressure, peak associations
jumped at the chance and constructed a "voluntary" body of investment flow rules
that governed the allocation of capital and raw materials for different economic
sectors. Again, company cooperation and industrial associations – the peak
association BDI (Bundesverband der Deutschen Industrie) in particular gained in
importance in these years of economic planning – evolved in a parallel manner.
The hierarchical corporativism of the Nazi years turned into a "neo-corporatism".
However, it would be misleading to overemphasize the voluntary character of
these investment activities, as resistance against the desires of the state, the
public and, above all, the Allies would obviously have been futile.
In this context, insurance companies invested large amounts of their funds in
house building as well as in coal mining, steel, and electricity. Firstly in
1951, then in collaboration with the economic ministry, the insurance companies'
association developed lists of qualified investment objects. What is crucial
here is that a large part of Allianz's industrial ownership, seen in
Figure 1, smacks in these years of – at best – "corporatist" investment
decisions (Borscheid 1990: 429-431).
In the Adenauer era, criticism of the power of the banks and of their
industrial ownership was practically absent, and political attitudes towards
banks were largely clientelistic. The state’s influence over banks was
increasingly counterbalanced, maybe overbalanced, by the banks’ control over
resources of the state. A good example of this is the relationship between
Deutsche Bank and state-owned Kreditanstalt für Wiederaufbau, which
had distributed the Marshall Plan funds. Industrial ownership by banks was not
simply accepted, but rather encouraged, by the state. An important basic
condition for this was the affiliation privilege, which ruled that dividend
payouts from the ownership of more than 25 per cent of companies were not
subject to taxation. At the same time, profits from sales of share blocks were
heavily taxed. As a consequence, incentives to retain industrial ownership were
much greater than incentives to dispose of it. In this context, for example,
Dresdner Bank acquired a 25 per cent ownership of Metallgesellschaft
which, since then, has been subject to a shared Deutsche Bank and
Dresdner Bank influence (see Fig. 1) (Eglau 1989: 63, 67). Likewise, (still
disintegrated) Deutsche Bank with its de facto chairman Hermann Josef Abs
enlarged its shareholding in Südzucker until it reached the 25 per cent
treshold in 1956.
Another basic condition for the development of the company network was that
practically no regulation governing the transparency of share block ownership
existed until 1965 when the Stock Corporations Act Amendment was passed.
Unimaginable in the context of today's standards of transparency, not even
industrial share blocks greater than 25 per cent had to be published in the
annual reports of financial companies and could therefore evolve unhindered. Abs
was quoted as saying "we don't want to shout this from the rooftops" (Spiegel
16/1966). Accordingly, in 1959, when Deutsche Bank made a second attempt
to build a large automobile conglomerate by merging BMW with
Mercedes-Benz and the shareholders' meeting of BMW was convened to
decide on the merger, the BMW supervisory board chairman was obliged to
admit that his company, Deutsche Bank, owned 25 per cent of
Mercedes-Benz and that Deutsche Bank was therefore prone to an
obvious conflict of interests. After that, the BMW shareholders voted
against the merger.
The Stock Corporations Act Amendment of 1965 also limited both the number of
supervisory mandates allowed per person, as well as limiting the permitted size
of supervisory boards. It transpired that the impact of both measures was close
to zero. As bank managers passed supervisory board mandates to other managers
from the same corporations, the overall structure of interlocking directorates
remained the same (Albach and Kless 1980; Beyer 2002). The aim of limiting
supervisory board sizes was to gradually shift their activity back from company
cooperation to company supervision and thereby put an end to the gradual change
in their function that had been taking place in previous decades. The
supervisory boards of banks in particular were seen as being much too large to
allow effective supervision to occur. As a reaction to the reduction in their
supervisory board sizes, Commerzbank, Deutsche Bank and
Dresdner Bank founded additional committees, with the same sizes and
composition of personnel (and also the same salaries for their members) as their
initial supervisory boards. "I don't mind whether or not we call ourselves
supervisory board members, as long as we can meet routinely in order to discuss
our economic problems", said one industrial member of Dresdner Bank
supervisory board in 1966 (Spiegel 25/1966).
With regard to the conflict line between liberalism and clientelism, Economic
Minister (and, since 1963, Chancellor) Erhard had always been in a minority
position in the CDU, and Adenauer's support for Erhard's liberal ideas in
particular was limited. It was not until the time of the Social Democrat/Liberal
coalition that some significant liberalization measures were passed against the
resistance of economic interests, among them the 1973 anti-cartel law.
Furthermore, Social Democrats pushed the public banking sector into greater
competition with private banks in order to break up de facto cartels. At first
glance, it may seem puzzling that Social Democrats behaved in a more liberal
manner here than the CDU. Besides the liberal attitude that Social Democrats and
trade unions adopted to such competition and corporate governance issues as a
result of German companies collaborating with the Nazis during the Third Reich,
one explanation for this is the prevalence of Keynesian thinking among
politicians like Schiller (economic minister 1966-1972) and Schmidt (economic
minister 1972-1974 and chancellor 1974-1982), who were convinced that Keynesian
monetary and demand policy required markets.
The SPD attitude towards the company network was much more ambivalent than
the position of the governments of the 1950s and 1960s. On the one hand, in some
exceptional cases, state representatives called upon banks to invest in
industrial companies when sheiks from oil-producing countries used the so-called
"petrodollars" to acquire stakes in German companies or in order to prevent
bankruptcies. This led not to a third wave of entanglement, but to some
spectacular incidents, such as Deutsche Bank's acquisition of
Mercedes-Benz shares in 1974, which made Deutsche Bank temporarily
the majority shareholder of Mercedes-Benz with a 57.5 per cent share
block (Büschgen 1995: 657). On the other hand, Social Democrats – supported in
the process by a public debate on the power of banks – used the bankruptcy of
the private bank Herstatt in 1974 to introduce a commission on banking
issues so it could initiate a discussion on a broader reform of the banking
system in Germany. The commission published its report in 1979, in which it
suggested that banks should be forbidden to own more than 25 per cent of
industrial companies (Studienkommission 1979: 267).
At the same time, the Liberal Party, encouraged by its economic expert Graf
Lambsdorff, took some significant steps away from economic clientelism towards
economic liberalism, the first of which were expressed in a programme published
by the FDP economic committee in 1975 (Spiegel 40/1975). In 1979, Lambsdorff
surprised both public and bank managers alike when he used the "Bankentag" (the
meeting of the peak association of German banks) to announce that a federal law
ought to go beyond the suggestion of the banking commission and should actually
forbid banks to hold industrial share blocks greater than 15 per cent, in
preference to the 25 per cent originally proposed (Spiegel 14/1979). After the
1980 elections, finance minister Matthöfer announced the government's intention
to pass an appropriate act in the incoming legislative period (Spiegel 50/1980).
At no point in German history, including the Nazi era, was an act of
prohibition that would have statutorily reduced capital ties between companies
more on the political agenda than during the years 1979 to 1981. It was only the
coalition change initiated by the FDP in 1982 that saved the financial companies
from this measure. The government of the new chancellor Helmut Kohl, instead of
passing a prohibition act, lowered the threshold of the affiliation privilege
from 25 per cent to 10 per cent in 1993 (Eglau 1989: 78). In response,
Deutsche Bank enlarged its shareholding in Allianz until it reached
the new 10 per cent threshold (Figure 1). We believe that the 1980s were already
a decade of change rather than of stable reproduction of the German company
network. When Deutsche Bank increased its shareholding in the tyre
producer Continental (Fig. 1) in order to help the company's management
fight the hostile takeover attempt by the Italian company of Pirelli in
1992/93 (Höpner and Jackson 2001), it was the last time that the mechanisms of
"Germany Inc." dominated the principles of investment banking. Just four years
later, the dominating logic had ultimately changed in favour of principles that
were rooted, as we now show, in the 1970s.
Competition and Change: Cutting Back Capital Ties
Although the actual erosion of the capital network took place in the second
half of the 1990s, we argue that the underlying changes in the core of the
network began in the 1970s. Figure 2, which shows the state of the company
network in 2000, provides first indications of an erosion process .
Between 1996 and 2000, a huge number of restructurings, mergers and acquisitions
took place, which makes only 23 of the network participants in 1996 and 2000
directly comparable . In 2000, 41
companies can be seen to establish a connected component, compared to 60 in
1996. The number of capital ties between the 100 largest companies has dropped
from 168 to 80, while the number of capital ties between the companies in the
connected component has fallen from 143 to 72. The amount of net value added
represented by the capital links has declined to a nominal 86 per cent from the
1996 amount. The complex energy and steel cluster of 1996 has been reduced to
the three companies e.on, RWE and ThyssenKrupp, which are owners
of RAG (Ruhrkohle AG). However, the most significant changes have
occurred in the centre of the network. The core of financial companies still
exists, but has become smaller, less entangled and less connected with
industrial companies. By combining these indications with qualitative
information, we now show that the three waves of network formation were followed
by a process of increased competition and network dissolution.
[please click on the image to enlarge]
In the 1950s and 1960s, the core of the company network was characterized by
a commonly shared, overall national orientation. The large financial companies
had invested in so many industrial companies that every single hot spot in
German industry, in the event of it reaching a significant size, must have
endangered the stocks and credits of every participant at the centre of
entanglement. A precondition for the nation-wide economic orientation of the
network core participants was the readiness of every participant to intervene in
order to prevent company crises. From the 1970s onward, the shared perception
inside the core was increasingly fragile. Tensions, divergent strategies and
competition arose inside the financial sector and led to creeping erosion of the
common economic orientation.
Starting in the year of the first major economic crisis in the Federal
Republic, 1967, Dresdner Bank took significant steps to abandon its
macroeconomic orientation and was blamed for "rough" business methods (Spiegel
32/1976) – which meant a lack of a societal, national perspective. During the
crisis of the steel company Krupp in 1967, Dresdner Bank was
criticized for its reluctance in the anti-crisis cartel although it had
traditionally cooperated closely with Krupp. In the early 1970s,
Dresdner Bank was the first large German bank that centralized its
decision-making by adopting an Anglo-American style CEO management model (Hanley
et al. 1986). Different bank strategies clashed in 1974 when Dresdner Bank
CEO Ponto helped the Quandt group to sell its Mercedes-Benz share
block to an investor group in Kuwait. Both government and opposition, along with
key representatives from the business community were unanimous in blaming
Dresdner Bank for its inconsiderateness (see the interview with Ponto in
Facing the threat of petrodollar reflows, the conflict between Deutsche
Bank and Dresdner Bank split the German company network into two
camps: industrial companies that collaborated with Deutsche Bank like
Mannesmann, Bayer and BASF adopted unequal voting rights to
prevent unsolicited influence from outside "Germany Inc.", while Dresdner
Bank advised "its" industrial companies such as Hoechst not to do so
(Spiegel 7/1975). A further significant indication of increasingly diverging
orientations occurred in the early 1980s: in the run-up to the shareholders'
meeting of the crisis-ridden Commerzbank in 1981, Dresdner Bank
refused to advise its share depot customers to vote for the exoneration of the
Commerzbank board of directors, which was a unique event in German
banking history. The network core companies' trust in each other's
macro-orientation was decreasing, which implied free-rider problems and called
the encompassingness of the network into question.
At the same time, financial companies began to retreat from their strategy of
expanding their links with industrial companies. In 1973, Deutsche Bank
chief Ulrich announced for the first time that the bank was not willing to add
more industrial share blocks greater than 25 per cent to its portfolio and that
Deutsche Bank was willing to sell some of its industrial shareholdings.
This was more than lip service, for Deutsche Bank sold the
Mercedes-Benz share block that it acquired from the Flick group in
1975 by offering it on the stock exchange between 1975 and 1977, and it also
sold parts of its traditional shareholdings, for example its Stollwerck
shares in 1972 and 1973, its Continental shares in 1978, and its
Phoenix shares in 1978 (Eglau 1989: 75). In 1981, Commerzbank sold a
large part of its Hochtief shares. When the banking commission suggested
forbidding banks from owning more than 25 per cent of industrial companies, the
banks – not surprisingly – protested. Hackl, a speaker for Bayerische
Vereinsbank, said for example that a prohibition act would be inconsistent
with the protection of property guaranteed by basic rights, and that banks would
definitely complain at the Federal Constitutional Court if such an act were
passed. Interestingly, speakers from the largest banks were not at the forefront
of the protests, and Deutsche Bank chief Herrhausen explicitly stated
that such a prohibition act would not be excessive (see the interview with
Herrhausen in Spiegel 25/1979). This indicates that Deutsche Bank
perceived its position in the "frozen" company network as no longer adequate.
Bankers hoped that a prohibition act would be combined with exceptional tax
treatment of the profits on share block sales, which would allow activation of "hidden
reserves". There are, in other words, good reasons for believing that tax policy
conserved the company network longer than its core actors actually favoured.
Some bankers might have seen the end of the discussion on the prohibition act,
which resulted from the change in government in 1982, as an ambivalent outcome.
Competition in the financial sector increased in the 1980s when concepts of
financial conglomeration tested the willingness of banks to call the traditional
division of influence spheres between banks and insurance companies into
question. Initial attempts by banks to break into the insurance market date from
1983. In 1986, it was viewed as something of a sensation that the insurance
holding Aachener und Münchner Beteiligungs-AG acquired formerly
trade union-owned Bank für Gemeinwirtschaft. At the same time, Deutsche Bank
founded its own home loan bank, and – reciprocally – market leader Wüstenrot
founded a credit bank. Tensions increased in 1988 when Deutsche Bank
announced its intention to found its own life insurance company. This provoked
fierce reactions in the insurance sector, and insurance companies demanded that
Deutsche Bank should retreat from its plan. When Deutsche Bank
refused, Allianz CEO Schieren left the "Beraterkreis" of Deutsche Bank
(Büschgen 1995: 794). Unlike capital entanglement, interlocking directorates
were not protected by tax law, and the abolishment of personal ties began
earlier than the actual erosion of capital ties. Since 1985, at the latest, the
degree of interlocking directorates between the 100 largest German companies had
been decreasing (Höpner 2003a: 137).
In addition, there are indications that the positive returns from share block
holding had started to dwindle. Various economic studies have observed the
economic effects of different types of ownership structures in Germany. In their
study on the economic impact of bank ownership on company performance, Gorton
and Schmid (2000) show that the slight positive effect of 1974 had vanished by
1985. Cable (1985) finds a profitability increasing effect of bank ownership
among the 100 largest German corporations in the early 1970s. By contrast,
studies that focus on profitability effects of large share blocks in the 1980s
and 1990s tend to find a negative impact (see the excellent overview that Frick
and Lehmann (2003) provide). Lehmann and Weigand (2000) report a negative impact
of ownership concentration on profitability by observing a sample of 361 firms
in the years 1991 to 1996; Clark and Wójcik (2003) find a significant negative
relationship between ownership concentration and share price increases over the
period 1997 to 2001. This finding is puzzling, as some of these blockholders –
at least, banks and insurance companies – had started to manage their assets
more actively, and more efforts to "pick winners" should lead to increasing, not
decreasing benefits from blockholding.
How can this change in the functionality of blockholding be explained? Let us
assume, in accordance with Roe (2003: 129), that positive effects of
blockholding are associated with limited competition. Imperfect competition
provides insiders with an opportunity to extract rents by, for example, using
cash flows for ineffective prestige investments without endangering the survival
probability of the firm. In this situation, supervision by blockholders prevents
insiders from rent seeking and, therefore, leads to positive returns. This
effect vanishes under conditions of increased competition, which limits the room
for manoeuvre for rent seeking. The costs of blockholding may therefore start to
dominate private benefits (for general discussions on private benefits, see Roe
2001). Blockholding may, in other words, lose its mission under conditions of
strong competition. Beyer's case study of the strategic reorientations of
Deutsche Bank and Allianz explores a further effect that decreases
the gains from industrial ownership especially for banks: industrial ownership
originally helped banks to reduce credit risks, but as internationalization
increased the general risks to business from outside the sphere of influence of
domestic banks (see the data in Albach et al. 1999), the competitive edge that
industrial ownership had given banks was gradually lost (Beyer 2002: 9). However,
from both points of view, internationalization led to declining net benefits
from blockholding and therefore set incentives to cut capital ties.
Both increased competition in the financial sector and international
competition together led to a creeping reorientation of the large banks towards
investment banking. The year 1997 marks a watershed in German banking history.
It was in this year that Deutsche Bank first supported a hostile takeover
attempt, with the German steel company Thyssen as takeover target. We
believe that the coexistence of investment bank strategies and the (decreasingly)
close ties with industrial companies marks a transitional stage. However, in
this transitional stage, capital ties are again subject to functional change:
traditionally, the company network was seen as an instrument for shielding
companies from capital market influences. In 1997, Deutsche Bank used its
presence on the Thyssen supervisory board to arrange Krupp's
hostile takeover attempt, which turns the traditional functionality on its head.
As to the changing relationship between bank–industry ties and capital market
demands, Thyssen was an extreme, but not an exceptional, case. In the
late 1990s, "shareholder value" strategies evolved both inside and outside the
company network, and some of the managers with the largest number of supervisory
board seats in the company network represented concepts of capital
market-oriented company management. These included Paul Achleitner (Allianz),
Rolf-E. Breuer (Deutsche Bank), Gerhard Cromme (ThyssenKrupp),
Heinrich von Pierer (Siemens) and Jürgen Schrempp (DaimlerChrysler)
(Beyer and Höpner 2003). While the diffusion of high standards of capital market
orientation inside the network grew, the macroeconomic orientation of core
participants and therefore the internalization of risks declined. This is best
expressed by chancellor Schröder's difficulties when he tried to convince banks
to invest in the crisis-ridden Holzmann company in 1999.
The reorientation towards investment banking produced further tensions that
called the industrial ownership of banks into question. Close ties with
industrial companies are not compatible with the acquisition of orders in
international investment banking (Beyer and Höpner 2003; Dziobek and Garrett
1998): reputation building in investment banking would be impossible if the
suppliers of such services defined the protection of domestic industrial
companies as a business objective. Hence the reorientation process speeded up
network dissolution dramatically, as Figure 2 shows. Furthermore, large banks
started to reduce their supervision of industrial companies by abolishing
interlocking directorates. In 2001, Deutsche Bank announced a general
retreat from non-financial supervisory board chairs. Figure 2 indicates that the
insurance company Allianz continues to be highly entangled with
industrial companies. However, as Beyer (2002) shows, Allianz has
undergone reorientations that are comparable to the strategic moves of the large
banks. Allianz has started to change its investment behaviour from stable
industrial ownership towards active asset management. The major restructuring
that, among other goals, has sought to increase the freedom of action in
investment policy dates from 1985. Even in the decades before active asset
management, Allianz' strategy was not so much aimed at gaining industrial
influence by acquiring large share blocks, but at diversifying its portfolio by
acquiring small share blocks from a large number of companies. Allianz today,
therefore, is more comparable to a mutual fund than to a strategic actor in
old-style "Germany Inc".
The government change in 1998 placed the company network back on the
political agenda. In contrast to previous decades, both network participants and
politics called its existence into question. When the KonTraG (Corporate
Governance and Transparency Act) – a reform act that abolished unequal voting
rights and legalized share buybacks and stock options – was discussed in
1997/98, the SPD opposition introduced its own reform blueprint and demanded the
prohibition of capital ties between banks and industrial companies greater than
5 per cent (Cioffi 2002; Höpner 2003b). In the context of the major tax reform
in 2000/2001, the Schröder government surprised the public as well as capital
market participants by opting for the total abolition of the tax on profits from
the sale of large share blocks without hurting banks with any prohibition act.
Chancellor Schröder and his finance minister Eichel were convinced that the
company network was eroding anyway. They therefore saw no need to engage in
conflicts with large companies. The CDU opposition criticized the reform as a
tax gift for banks. In his election campaign in 2002, the conservative candidate
for chancellor, Stoiber, announced his intention to reintroduce the tax if he
were elected chancellor.
We discussed the development of the German company network by combining two
methods of network analysis: network visualization techniques and
qualitative-historical analysis. Network visualization allows identification of
structural patterns of the network that can be traced back historically. Our
narrative focused on the most eye-catching bank-industry relationships. Figures
1 and 2 reveal further outstanding entanglement patterns such as the complex
energy/heavy industry cluster in the northeast of Figure 1 that can be subject
to future research. Furthermore, historical analysis discovers functional
changes of company links that would be ignored by a purely
We distinguished three crucial phases of network formation – the 1880s, the
1920s and the 1950s – in which capital entanglement resulted from interplay of
both company behavior and politics. The role of politics turned out to be highly
contingent and dependent on the ideology of governments. During the Nazi era and
in the latter years of the Social Democrat/Liberal coalition (1969-1982),
network dissolution by law was on the political agenda. The political support
for the company network was therefore no forgone conclusion in German history.
Network visualization provided us with first indications of declining network
density. Qualitative analysis added evidence for a process of network
dissolution. We paid special attention to the reasons of this process. We argue
that they are threefold. First, until the 1970s, a process of increased
competition among financial companies set in. This resulted in a decline of the
common shared macroeconomic orientation of the network core participants.
Second, in the 1980s and 1990s, a mixture of push and pull factors made network
dissolution a thinkable option for financial companies. Under conditions of
increased international competition, returns from blockholding declined. At the
same time, opportunity costs increased, as close cooperation with industrial
companies was not compatible with competing internationally in the field of
investment banking. Third, until the end of 1999, the government speeded up
network dissolution by means of tax policy.
Our narrative stopped in the year 2000. This year marks no endpoint of
network dissolution. The abolishment of capital ties between banks and
industrial companies continued in the year 2000-2003. As a result of the tax
reform, and bucking the worldwide trend, German mergers and acquisitions
activity rose after the year 2000. We believe that the existence of a
nation-wide encompassing company network that provides its core participants
with a macroeconomic perspective is a closed episode of German economic history.
It will not re-emerge on a national basis, and it is an open question whether a
network of similar deepness will ever emerge at the European level.
Abelshauser, Werner (1983): Wirtschaftsgeschichte der Bundesrepublik
Deutschland (1945-1980). Frankfurt: Suhrkamp.
Albach, Horst; Brandt, Thomas; Fleischer, Manfred; Yang, Jianping (1999):
Soziale Marktwirtschaft: Eine Erfolgsgeschichte. In: Max Kaase and Günter Schmid
(eds.), Eine lernende Demokratie. 50 Jahre Bundesrepublik Deutschland. Berlin:
Edition Sigma, 499-528.
Albach, Horst; Kless, Heinz-Peter (1982): Personelle Verflechtungen bei
Industrieaktiengesellschaften. In: Zeitschrift für Betriebswirtschaft 52, 10,
Arps, Ludwig (1976): Durch unruhige Zeiten. Deutsche Versicherungswirtschaft
seit 1914. II. Teil: Von den zwanziger Jahren zum zweiten Weltkrieg. Karlsruhe:
Beyer, Jürgen (1998): Managerherrschaft in Deutschland?
unter Verflechtungsbedingungen. Opladen: Westdeutscher Verlag.
Beyer, Jürgen (2002): Deutschland AG a.D.: Deutsche Bank, Allianz und das
Verflechtungszentrum großer deutscher Unternehmen. MPIfG Working Paper 2002/4.
Cologne: Max Planck Institute for the Study of Societies.
Beyer, Jürgen; Höpner, Martin (2003): The Disintegration of Organised Capitalism.
German Corporate Governance in the 1990s. In: Herbert Kitschelt and Wolfgang
Streeck (eds.), Germany beyond the Stable State? Special Issue of West European
Borscheid, Peter (1990): 100 Jahre Allianz. Hamburg: Glöss.
Borscheid, Peter (1993): Mit Sicherheit leben. Die Geschichte der deutschen
Lebensversicherungswirtschaft und der Provinzial-Lebensversicherungsanstalt von
Westfalen. Band 2: Von der Währungsreform 1948 bis zur Vollendung des
europäischen Binnenmarktes. Münster: Westfälische Provinzial.
Brandes, Ulrik (2001): Drawing on Physical Analogies. In: Michael Kaufmann and
Dorothea Wagner (eds.), Drawing Graphs: Methods and Models. Springer LNCS
Tutorial 2025: 71-86.
Büschgen, Hans E. (1995): Die Deutsche Bank von 1957 bis zur Gegenwart. Aufstieg
zum internationalen Finanzdienstleistungskonzern. In: Gall et al. (eds.),
Cable, John (1985): Capital Market Information and Industrial Performance: The
Role of West German Banks. In: Economic Journal 95, 1, 118-132.
Clark, Gordon L.; Wójcik, Dariusz (2003): Financial Valuation of the German
(Regional) Model: The Negative Relationship between Ownership Concentration and
Stock Market Returns, 1997-2001. Unpublished Manuscript.
Dziobek, Claudia; Garrett, John R. (1998): Convergence of Financial Systems and
Regulatory Policy Challenges in Europe and in the United States. In: Stanley W.
Black, Mathias Moersch (eds.), Competition and Convergence in Financial Markets.
Amsterdam: Elsevier, 195-215.
Eglau, Hans Otto (1989): Wie Gott in Frankfurt. Die Deutsche Bank und die
deutsche Industrie. Düsseldorf: Econ.
Feldman, Gerald D. (2001): Allianz and the German Insurance Business, 1933-1945.
Cambridge, MA: Cambridge University Press.
Frick, Bernd; Lehmann, Erik (2003): Corporate Governance in Germany: Ownership,
Codetermination and Firm Performance in a Stakeholder Economy. In: Howard
Gospel, Andrew Pendelton and Gregory Jackson (eds.), Corporate Governance and
Human Resource Management. Cambridge: Cambridge University Press (forthcoming).
Gall, Lothar (1995): Die Deutsche Bank von ihrer Gründung bis zum Ersten
Weltkrieg 1870-1914. In: Gall et al. (eds.), 1-135.
Gall, Lothar; Feldman, Gerald D.; James, Harold; Holtfrerich, Carl-Ludwig;
Büschgen, Hans E. (eds.) (1995): Die Deutsche Bank 1870-1995. München: Beck.
Gorton, Gary; Schmid, Frank A. (2000): Universal Banking and the Performance of
German Firms. In: Journal of Financial Economics 58, 1/2, 29-80.
Hanley, Thomas; Rosenberg, James M.; D'Arista, Carla A.; Mitchell, Neil A.
(1986): The Universal Banks of West Germany: Competitive Strategies Begin to
Emerge. Salomon Brothers Inc. Stock Research.
Heinze, Thomas (2002): Die Struktur der Personalverflechtung großer deutscher
Aktiengesellschaften zwischen 1989 und 2001. In: Zeitschrift für Soziologie 31,
Hilferding, Rudolf (1924): Probleme der Zeit. In: Die Gesellschaft 1, 1, 1-17.
Hitler, Adolf (1925/1999): Mein Kampf. Translated by Ralph Manheim. Boston/New
York: Houghton Mifflin Company.
Höpner, Martin; Jackson, Gregory (2001): An Emerging Market for Corporate
Control? The Mannesmann Takeover and German Corporate Governance. MPIfG
Discussion Paper 2001/4. Cologne: Max Planck Institute for the Study of
Höpner, Martin (2003a): Wer beherrscht die Unternehmen? Shareholder Value,
Managerherrschaft und Mitbestimmung in Deutschland. Frankfurt: Campus.
Höpner, Martin (2003b): European Corporate Governance Reform and the German
Party Paradox. MPIfG Discussion Paper 2003/4. Cologne: Max Planck Institute for
the Study of Societies.
Holtfrerich, Carl-Ludwig (1995): Die Deutsche Bank von Zweiten Weltkrieg über
die Besatzungsherrschaft zur Rekonstruktion 1945-1957. In: Gall et al. (eds.),
Jackson, Gregory (2001): The Origins of Nonliberal Corporate Governance in
Germany and Japan. In: Streeck and Yamamura (eds.), 121-170.
James, Harold (1995): Die Deutsche Bank und die Diktatur 1933-1945. In: Gall et
al. (eds.), 315-408.
Kogut, Bruce; Walker, Gordon (2001): The Small World of Germany and the
Durability of National Networks. In: American Sociological Review 66, 3,
Krempel, Lothar (1999): Visualizing Networks with Spring Embedders: Two-mode and
Valued Data. American Statistical Association 1999, Proceedings of the Section
of Statistical Graphs, Alexandria, VA, 36-45.
Krempel, Lothar (2003): Netzwerkvisualisierung: Prinzipien und Elemente einer
graphischen Technologie zur multidimensionalen Exploration sozialer Strukturen (Manuscript).
Kurzrock, Hans (1970): Aus der Geschichte der Commerzbank. In: Commerzbank AG
(ed.), 100 Jahre Commerzbank. 1870-1970. Frankfurt: Fritz Knapp Verlag, 39-125.
Lehmann, Erik; Weigand, Jürgen (2000): Does the Governed Corporation Perform
Better? Governance Structures and Corporate Performance in Germany. In: European
Finance Review 4, 2, 157-195.
Lehmbruch, Gerhard (2001): The Institutional Embedding of Market Economies: The
German "Model" and its Impact on Japan. In: Streeck and Yamamura (eds.), 39-93.
Monopolkommission (1998): Marktöffnung umfassend verwirklichen. Zwölftes
Hauptgutachten der Monopolkommission. Baden-Baden: Nomos.
Monopolkommission (2002): Netzwettbewerb durch Regulierung. Vierzehntes
Hauptgutachten der Monopolkommission. Baden-Baden: Nomos.
Naphtali, Fritz (1969/1928): Wirtschaftsdemokratie. Ihr Wesen, Weg und Ziel.
Dritte, unveränderte Auflage. Mit einem Vorwort von Ludwig Rosenberg und einer
Einführung von Otto Brenner. Frankfurt: Europäische Verlagsanstalt.
Pfeiffer, Hermannus (1987): Das Imperium der Deutschen Bank. Frankfurt/New York:
Pohl, Manfred (1982): Konzentration im deutschen Bankwesen (1848-1980).
Frankfurt: Fritz Knapp Verlag.
Reckendrees, Alfred (2000): Das Stahltrust-Projekt. Die Gründung der Vereinigten
Stahlwerke AG und ihre Unternehmensentwicklung 1926-1933/34. München: C.H. Beck.
Roe, Mark (2001): Rents and their Corporate Consequences. Columbia Law School
Center for Law and Economic Studies Working Paper 184. New York: Columbia
Roe, Mark (2003): Political Determinants of Corporate Governance. Oxford: Oxford
Streeck, Wolfgang (2001): Introduction: Explorations into the Origins of
Nonliberal Capitalism in Germany and Japan. In: Wolfgang Streeck, Kozo Yamamura
Streeck, Wolfgang; Yamamura, Kozo (eds.) (2001): The Origins of Nonliberal
Capitalism. Germany and Japan in Comparison. Ithaca/London: Cornell University
Studienkommission Grundsatzfragen der Kreditwirtschaft (1979): Bericht der
Studienkommission Grundsatzfragen der Kreditwirtschaft. Bonn: Wilhelm Stollfuss
Thelen, Kathleen (2003): How Institutions Evolve: Insights from
Comparative-Historical Analysis. In: James Mahoney and Dietrich Rueschemeyer (eds.),
Comparative-Historical Analysis in the Social Sciences. Cambridge: Cambridge
University Press, 208-240.
Turner, Henry A. (1974): Das Verhältnis des Großunternehmertums zur NSDAP. In:
Hans Mommsen, Dietmar Petzina, Bernd Weisbrod (eds.), Industrielles System und
politische Entwicklung in der Weimarer Republik. Verhandlungen des
Internationalen Symposiums in Bochum vom 12.-17. Juni 1973. Düsseldorf: Droste
Vitols, Sigurt (2001): The Origins of Bank-Based and Market-Based Financial
Systems: Germany, Japan, and the United States. In: Streeck and Yamamura (eds.),
Windolf, Paul; Beyer, Jürgen (1996): Co-operative Capitalism: Corporate Networks
in Germany and Britain. In: British Journal of Sociology 47, 2, 205-231.
Windolf, Paul; Nollert, Michael (2001): Institutionen, Interessen, Netzwerke.
Unternehmensverflechtung im internationalen Vergleich. In: Politische
Vierteljahresschrift 42, 1, 51-78.
Ziegler, Dieter (1997): Zur Struktur der Aufsichtsräte in der deutschen
Industrie während der Zwischenkriegszeit. Eine Querschnittsanalyse für das Jahr
1927. Arbeitspapier Nr. 3/1997 des Arbeitskreises für Unternehmensgeschichte.
Frankfurt: Gesellschaft für Unternehmensgeschichte.
Ziegler, Rolf (1984): Das Netz der Personen- und Kapitalverflechtungen Deutscher
und Österreichischer Wirtschaftsunternehmen. In: Kölner Zeitschrift für
Soziologie und Sozialpsychologie 36, 3, 585-614.
We would like to thank Pablo Beramendi, Helen Callaghan, Renate Mayntz, Abraham
Newman, Wolfgang Streeck and Sigurt Vitols for helpful hints and comments.
To simplify our terms, we will refer to non-financial companies as industrial
companies, which by definition include both manufacturing and trade.
For statistical analysis of the structure of the German company network, see
Beyer (1998); Heinze (2002); Kogut and Walker (2001); Windolf and Beyer (1997);
Windolf and Nollert (2001); Ziegler (1984).
Münchner Rück, Bayerische Vereinsbank, Bayerische
Hypobank and Commerzbank also belong to the network core and
are both actively and passively involved.
This cluster is centered on the RAG (Ruhrkohle AG) and its
shareholders VEBA, VEW, Krupp and Thyssen.
RAG, in turn, holds shares in Ruhrgas. Additional
Ruhrgas shares are held by Mannesmann, Krupp, RWE
and VEBA. Further energy and utilities companies are to be found
in the periphery of this cluster: Viag, Veag, Bewag,
EVS and Hamburger Gesellschaft für Beteiligungsverwaltung.
Daimler-Benz/Metallgesellschaft, Henkel/Degussa, Deutsche Bahn/Lufthansa,
However, the example of Deutsche Bank board (since 1933, supervisory board)
member Emil Georg von Strauss, who was the vice-president of the Reichstag after
1933, shows that NSDAP involvement could also be found among bankers.
We also call attention to disconnected components here.
Some mergers and takeovers have reduced the number of companies.
Mannesmann has been acquired by Vodafone, Thyssen and
Krupp have merged, VEBA and Viag have merged (now
e.on), and RWE and VEW have merged. A Swedish
energy company has acquired VEAG and Bewag. The structure
of the energy cluster will be further simplified by the acquisition of
Ruhrgas by e.on. In the financial sector, Bayerische
Hypobank and Bayerische Vereinsbank have merged to form
Bayerische Hypo-Vereinsbank, and Allianz has acquired
Vereinte Versicherungen. In the retail sector, Schiekedanz
and Karstadt have formed the new company Karstadt-Quelle.
The chemical firm Hoechst has merged with the French company of
Rhone-Poulenc; the new company, Aventis, has its home base
in France. In the insurance sector, Italy’s Generali has acquired
AMB. Furthermore, some dropouts and new entrants have changed the
structure of the network. Bilfiger+Berger, Deutz,
Degussa, VEAG and Victoria (acquired by Allianz)
have dropped out. New entrants are privatized companies like Deutsche
Telekom and Deutsche Post; the software producer SAP;
the media companies Kirch and Springer; EADS, which
was formerly the aerospace section of Daimler-Benz, has become a
separate company, as well as the de-merged parts of former Mannesmann.
Copyright © 2003 Martin Höpner and Lothar Krempel
No part of this publication may be
reproduced or transmitted without permission in writing from the author.
Jegliche Vervielfältigung und Verbreitung, auch auszugsweise, bedarf der
Zustimmung des Autors.
MPI für Gesellschaftsforschung,
Paulstr. 3, 50676 Köln, Germany