The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic “super-entity” that raises new important issues both for researchers and policy makers.

The computation of control requires a prior analysis of the topology. In terms of connectivity, the network consists of many small connected components, but the largest one (3/4 of all nodes) contains all the top TNCs by economic value, accounting for 94.2% of the total TNC operating revenue (Tbl. 1). Besides the usual network statistics (Figs. S5, S6), two topological properties are the most relevant to the focus of this work. The first is the abundance of cycles of length two (mutual cross-shareholdings) or greater (Fig. S7 and SI Appendix, Sec. 7), which are well studied motifs in corporate governance [19]. A generalization is a strongly connected component (SCC), i.e., a set of firms in which every member owns directly and/or indirectly shares in every other member. This kind of structures, so far observed only in small samples, has explanations such as anti-takeover strategies, reduction of transaction costs, risk sharing, increasing trust and groups of interest [20]. No matter its origin, however, it weakens market competition [13, 14].

The second characteristics is that the largest connect component contains only one dominant strongly connected component (1347 nodes). Thus, similar to the WWW, the TNC network has a bow-tie structure [21] (see Fig. 2 A and SI Appendix, Sec. 6). Its peculiarity is that the strongly connected component, or core, is very small compared to the other sections of the bow-tie, and that the out-section is significantly larger than the in-section and the tubes and tendrils (Fig. 2 B and Tbl. 1). The core is also very densely connected, with members having, on average, ties to 20 other members (Fig. 2 C, D). As a result, about 3/4 of the ownership of firms in the core remains in the hands of firms of the core itself. In other words, this is a tightly-knit group of corporations that cumulatively hold the majority share of each other.

Notice that the cross-country analysis of [11] found that only a few of the national ownership networks are bow-ties, and, importantly, for the Anglo-Saxon countries, the main strongly connected components are big compared to the network size.