The Pebble and the Avalanche

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Current Revolutions in Business and Technology

by Dr. Moshe Yudkowsky,

author of The Pebble and The Avalanche: How Taking Things Apart Creates Revolutions


Mon, 2005-Oct-31, 07:44

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American Companies, International Boards

Today's print edition of the Wall Street Journal has an article on page B1, "Globalizing the Boardroom." According to the article, of the largest 149 firms in the U.S., "just" 35% of them have non-U.S. citizens on their boards of directors. In Europe, 90% of the largest firms (number unknown) have foreign members on their board of directors.

The article has many, many problems. The selection of 149 U.S. firms is a very odd number; what were the criteria for selecting the firms? What were the criteria for selecting the firms in Europe? And, most importantly, how many of the foreign members of European boards come from a different continent? After all, Europe fits more-or-less into a single time zone; a European member of a U.S. board faces a complete day of travel just to attend any board meeting.

Putting those questions aside, it's possible to understand this trend in terms of disaggregation. There's a concept that states that if you're a U.S. firm, you have U.S. residents on the board of directors. Proponents claim that by breaking this link, you gain insight, better advice, and a broader vision of how the world works — just as expected (that is, if you've read the book).

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