Richard Benton, University of Illinois

Eyes on the Horizon? Fragmented Elites and the Short-Term Focus of the American Corporation
Richard Benton


Fall 2018
Lecture Time: 
Friday, October 26, 2018 - 1:30pm to 3:00pm
Lecture Location: 
R0220 Ross School of Business
Introduced By: 
Hyuck David Chung


In recent years, scholars and popular commentators have expressed concerns that U.S. corporations are too focused on short-term performance, thereby undermining their long-term health and competitiveness. This paper examines how this focus on short-term strategies and performance, or short-termism, results from the dissolution of the American corporate elite network. In particular, we argue that the corporate-board interlock network traditionally served as an important collective resource that helped corporate elites to preserve their autonomy and control, mitigating short-termism. In recent years, changing board-appointment practices have fractured the board network, undermining its usefulness as a platform for collective action and exposing corporate leaders to short-term pressures. We develop and apply a cohesion metric for network managerialism, derived from theory and evidence in social-network scholarship. Using three indicators that capture short-termism earnings management and shareholder returns, we identify a structural basis for managerial short-termism that links external, network-based resources to managers’ decisions. The results highlight the benefits of the corporate elite network and illustrate unforeseen consequences of the network’s dissolution.

Recording & Additional Notes

Richard A. Benton is Assistant Professor of Labor and Employment Relations at the University of Illinois. Richard’s research interests include economic sociology, organization theory, social stratification, and social networks. Richard’s primary research stream examines board interlock networks, corporate governance, and elite power. Using advanced computational techniques for modeling social network dynamics, this research stream focuses on recent changes in the structure of corporate elite networks and their effects on elite collective action. He is currently examining how the fracturing of the corporate elite network increases managerial myopia, leading to stagnant corporate R&D expenditures, increased earnings management, and excessive stock-buyback and dividend payouts. Other research examines the dynamics of contention in shareholder activism, how organizational and social processes affect social stratification, and the role of inheritances in reproducing wealth inequality. Richard’s research has been supported by the National Science Foundation and the Russell Sage Foundation and has appeared in The American Journal of Sociology, Organization Science, Social Forces, and Social Networks.