A few powerful “big tech” firms from the US dominate more and more parts of the global digital economy. How does this influence elite power in other countries? In this blog post, Lion Hubrich discusses his research on German tech elites. In contrast to many expectations about the supposedly “disruptive” nature of digitalisation, he finds that persistent and established patterns of national elite formation and strongly integrated national networks continue to dominate in this field.

There is no hiding it anymore: At Donald Trump’s second presidential inauguration ceremony, the CEOs of the largest US tech companies have proudly demonstrated their positions of power by taking first row seats. However, the political power now wielded by tech elites in America is only the culmination of a development that has long unfolded. In the past two decades, many critical scholars from sociology and adjacent disciplines have spelled out how the winner-takes-all logic of digital markets, combined with the prowess of US financial markets, created ‘big tech’ oligopolies that dominate more and more parts of the political economy.

Traditionally, the realm of the big tech companies was consumer-oriented service platforms – think of Amazon’s shopping platform, Google’s and Apple’s smartphone platforms, or Meta’s social networks. Digital capitalism and its leading companies are now expanding into diverse sectors of the global economy. This especially concerns the field of industrial production, where cloud computing and AI have become increasingly important. Against this backdrop, it is unclear what happens when digital capitalism hits the power structure of an economy that is traditionally dominated by high-tech industrial production – such as the German one. Many observers consider the economic model of Germany, with its focus on incremental innovation and cooperative industrial ecosystems, to be outdated in the face of competition with the capital-loaded and “disruptive” global tech giants. However, the incumbent elites of German capitalism have so far always been able to maintain and expand their positions of power in the face of varying macro-dynamics since the post-war era, such as those of globalisation and financialisation.

In my research, I examine how the reproductive patterns of economic elites in Germany develop in the context of digitalisation. I ask whether the power of established national elites is broken, or if they will once again be able to land on their feet. To approach this question, I gauged the structure of German tech elites by building a novel data set on 254 relevant elite individuals. In my understanding of who can be considered “elite”, I follow the positional approach of C. Wright Mills, who proposed the study of those individuals who occupy the “command posts” of institutional hierarchies. This means that I analysed the CVs and networks of CEOs and other top-ranking personnel of the most relevant and valuable tech companies in Germany. Crucially, my sample includes both established industry leaders, now undergoing processes of digitalisation, as well as start-ups.

In short, the data show the following (full analysis available in Berliner Journal für Soziologie):  

• Firstly, my analysis demonstrates that a strong national elite network continues to exist in Germany’s digital economy. This network leaves younger tech companies in the periphery and is instead centred around very established industrial companies which are well-connected via overlapping supervisory board memberships as well as mutual activities in consultation and association bodies.
• Secondly, I found a low amount of internationalisation, both in terms of the elite’s origins as well as their deciding career steps. While 13.4 per cent of the analysed elites grew up abroad, this includes many who grew up abroad in German manager families or who are from neighbouring countries like Austria or Switzerland. Overall, only 2.4 per cent of the German tech elites are from outside of Europe. Similarly, while short stays abroad are common for German nationals, the deciding career steps are usually taken domestically, and work experience at leading US tech firms is not very important.
• Thirdly, characteristic traditional features of German elite formation continue to dominate in the digital economy. This especially concerns university education, where stays at prestigious and expensive international business schools are neither common nor necessary (for example, only a single person in the data set attended Stanford University). Instead, German tech elites studied at various German-language public universities, and no single university was attended by more than 6.7 per cent of the studied elite population. Finally, there is no adaptation to the US-American model of hopping between companies to reach top positions, as almost half of tech elites completed an “in-house” career in the sense that they started to work for their current company within 5 years of graduating from university.

Overall, my research on German tech elites therefore suggests that the persistence of established national power structures outweighs the supposedly “disruptive” effect of global macro dynamics such as digitalisation. While these findings might sound like a relief when contrasted with the worrying role of tech elites in the US, it should be kept in mind that this persistence of elite formation structures also points at strong reproductive patterns of social inequality within German society itself. Yet, these results are only a snapshot in time. Further developments are hard to predict given the current volatility of the global political economy. One may, of course, wonder whether German elites will eventually leave their beaten paths, if the German economy continues to stagnate while the earnings and valuations of US big tech keep on skyrocketing.

All articles posted on this blog give the views of the author(s), and not the position of the Department of Sociology, nor of the London School of Economics and Political Science.

Image credit: Diego Delso, delso.photo, License CC BY-SA