The small world of Germany and the durability of national networks

The globalization of financial markets and the concomitant restructuring de cisions of firms challenge the historical legacy of national systems of gov ernance. German corporate ownership patterns and restructuring events in th e 1990's are examined here in this light. The results show that ownership l inks among German firms constitute a "small world" that has consequences fo r understanding mergers and acquisitions. Ownership links form closely-knit clusters of firms that are nonetheless highly connected across the network as a whole. Restructuring events fall squarely in the center of this struc ture. Despite increasing global competition, the German small world tends t o replicate itself To illustrate this robustness, potential disruptions to the observed German network are simulated. This simulation shows that the p roperties of the small world remain intact even when ownership ties are cha nged. These findings suggest that a more global economy in Germany need not lead to the dissolution of the ownership structure, bur rather may be asso ciated with a deepening of network ties.