Last week, we discussed resource dependents theory, and we described how that theory concern the firms power dependence relationships in the environment. This week, a variety of networks are described in the readings, and if we inspect them a little closer, we see they are built up by some of the bridging efforts discussed last week, in resource dependence theory. Such as joint ventures, associations, interlocking boards of directors, strategic alliances, and partnerships. For example, this week, several authors describe project based networks or issue networks where the effort is to organize around a specific project or to work together to push a single issue. Now if you recall, last week in resource dependance theory, we discussed on how this arose in pairs of firms through joint ventures. Some of the authors this week discuss professional networks and trade associations as well as interlocking boards of directors that bring firms into greater communication with one another. In resource dependence theory these were seen as a means of co-opting other firms and sharing resources like information. This week Smith and Wallsteter describe organizations forming a group affiliation or where sets of, of organizations form a family and they work together voluntarily In resource dependence theory, these was pair wise efforts similar to this nd they were called strategic alliances or agreements and they are performed to secure and or prevent advantages or to pull resources together for a group. Last, Goldsmith and Eggars discuss external partnering such as when governmental agencies contract out particular tasks to private companies and non profits and the belief that coordinating providers will enable government agencies to serve citizens more efficiently. It's important to note that these sorts of partnerships aren't mergers, where total absorption of one firm into another occurs. Instead, they are all partial absorptions and strategic alliances. So the readings this week describe networks formed by bridging efforts that resource dependency theory discussed. Nonetheless, the focus shifts from pair wise relations to the entire network. An issue for network organization is how to co-ordinate and manage organizations that handle different facets of provision. If I had to put my finger on one key difference between Resource Dependence Theory and Network Organization, I'd say an important one is their unit of focus. Resource Dependence Theory considers the view of an organization and it's immediate relations. By contrast, Network Organizations consider the global socio-centric view of both direct and indirect relationships. Network forms of organizations see the network as constraining an enabling action. And at the wider network of organizations is a source of stability and change for the focal organization. The reading by Davis and Powell describes difference between resource dependence theory and network organizations best. They argue resource dependence theory views a traffic jam of cars from your own car, while network organization views the traffic jam from a helicopter. From which perspective do you think you get the best understanding of your car's movement in that situation. So if we schematize this, we can see resource dependence theory's view of a firm in the far image. The direct egocentric network is in focus. In contrast, network organization looks at the broader array, of indirect ties beyond the focal firm. And depending on how broadly one looks into that network, the situation can change. Here from one, being of a peripheral to a group, to one of brokering groups. One could also consider similarities between network organization and coalition theory. If you recall, coalitions were like an interest network or a temporary alliance. By contrast, network forms of organizing reflect a persistent structural pop, property or a particular coordination pattern that's maintained over time. In short, the network form of organization is neither a coalition nor a resource dependent set. Network organization even has similarities with organizational learning theories description of community practice and networks of practice. Many of you will recall this image. For organizational learning, the focus was on practice and the individual relations between participants employing those practices. Each cluster resembles a community, wherein discussions of practice occurred. If we stop there, each group would come to their own optimal solution or a local optima. The linkages across communities reflect the network of practice. And that enables the transfer of solutions across groups, and thereby facilitates their reaching a global optima. As such, organizational learning focuses on individual actors and their relations within and between organizations. By contrast, network organization focuses on organizations as the unit of analysis and discusses the patterns of interconnections across firms or the inter-organizational network. Hence if we aggregated the far image we require some sense of how a network organization views the same situation. But it's also important to note that it considers multiple types of relations across firms, not just ones about practice. So network organization had some similarity to prior theories, but it also differs. Let's look more closely at how organizational theorers have related the details of this theory. In the list of additional readings, there is an article by [UNKNOWN] and Fosters that relates a brief history of network organization. They argue that at the turn of the twentieth century, network organization was a fashionable description for repetitive exchanges among semi-autonomous organizations relying on trust and embedded social relations to protect their transactions and a lower cost. At the time, proponents of network organization argued that markets and hierarchical structures had become inefficient, as commerce grew more global, hyper-competitive, turbulent, and technologically dynamic. In their stead rose a network form of organization that balanced the flexibility of markets with the predictability and stability of hierarchy. And this brought intelligence, flexibility, and speed of response to organizations adopting the model. Network organizations had more enduring and diffuse connections than did markets. And they had more reciprocal and egalitarian arrangements than hierarchies. As such, they were sort of a middle ground, distinct from markets and hierarchical forms of organizing. The network form of organization entailed interdependent firms that competed successfully with larger corporations. Network organizations had become possible because many organizations had become increasingly specialized. And information technologies like phone, fax, email, teleconferencing, computing and so on made it feasible for them to coordinate delivery of services across multiple firms. [UNKNOWN] Powell was one of the first to describe network organizations as an intermediary form of hierarchies and markets and he elaborated his distinct logic of exchange. You can find his paper in the additional readings of the week. There Powell argues that network organizations are neither market nor hierarchy and tell more in during diffuse connections the markets But more reciprocal in egalitarian arrangements than hierarchies. So lets look an adapted table from Powell's 1990 article, where these forms of organizing are compared. I've re-ordered and slightly edited the table for ease of presentation here, but Powell goes through a variety of organizational features. And processes and constraints and then you contrast them for each type. So, you'll see market network form of organization and hierarchical forms of organization. Most of you recall what a hierarchical form of organization is. It's a centralized organizational chart with levels of reporting that winnow down like a pyramid. From the top. And in these systems the normative basis of association is an employment relation of reporting. And the means of communicating until established routines. Conflict is resolved administrative oversight and there's little flexibility in procedures. And these context worker commitment to the firm is medium to high. The tone of the climate is formal and bureaucratic, and actor preferences are dependent on the firm and its centralized actors. At the opposite spectrum, we have a market form of organization, and there, associations are guided by formal contracts and transactions. The means of communication consist of pricing and prices. Conflict is resolved by bargaining and haggling. Here flexibility is very high. But commitment is low. Everyone is out for themselves without constraint after all. And, the tone here is based on precision and suspicion of competition. And actor preferences are independent of each other. Just as you would expect in a free market. Many scholars in economics view organizational fields in this way, and they have models following these logics. Between the two poles here, is network organization. It has characteristics that distinguish it from market and hierarchical forms of organization. Through network organization, firms seek out complimentary strengths in forming collaborations. They communicate through their network of relationship and they resolve conflicts by norms of reciprocity. In network organizations, flexibility is moderate as the actors are constrained by their pre existent ties. But they're not more fully determined as in the hierarchical organization. So, participants of network organization experience moderate to high levels of commitment. They find the climate to be one where mutual benefits are sought. And where most of the firm preferences are interdependent, if not complimentary. So you have this kind of interdependence that occurs within the network form of organization, that creates a sense of integration. Different forms of network organization are feasible. And each form can address different kinds of problems. Rob Cross has a nice article describing different network forms of organization. And the sorts of problems they are best suited for. Cross discusses networks within and between firms, but I think you can imagine sets of firms, even small firms, forming similar patterns of collaboration, so as to compete with larger firms, adopting this sort of internal patterning. The first firm in network form is on the far side here. And it's a, a core periphery structure where they're dense internal ties and extensions into the environment for novel information. These networks are like those proposed in organizational learning. There's a central hub where it can process and transfer information. Ad the external ties reach out into the environment looking for novel information. this type of network is arguably well suited to addressing ambiguous problems in need of innovative solutions. And finding ways to implement them in local conditions. One can imagine a network of organizations arranged in a similar way to address ambiguous problems. The second form of network is in the middle, and it has a linked [UNKNOWN] that afford a modular response to problems. Here, a complex problem can be broken into components addressed by each unit or cluster, and they can be dealt with in a sequence. Again, a set of organizations can arrange their relationships in this manner to do the same. The final network here is closest, to the edge of the screen on my side. the, the final note, network is a simple chain format. And there the network organization can deal with familiar problems. With known responses. It's a format you might see in a streamline organizational process model. Where efficiency is really an issue and the goal. Then clearly the first two forms are more in line with what scholars mean by network organization. They have clusters, they have kind of, interdependencies that exist. Cross actors However, it's helpful to consider the fact that even between the first two forms of network organization, there is some variants in form that might influence coordination and delivery within that kind of context. In addition to Powell's theoretical exposition on network organization We have Goldsmith and Eggers applied look at network organizing. Goldsmith and Eggers discuss U.S. government agencies and again I I know this is a recurring case on the course to focus on U.S. government agencies. However, I think you'll find this sort of network organization may be relevant to many other governments around the world. As well as, kind of, small firms around the world. And perhaps they're especially salient as a form of organizing for markets at the margin such as alliance networks on environmental sustainability. Now, when I say markets at the margin what I mean is that most firms see environmental issues as secondary to their main interest in profit and survival. So altruistic goals, per se may be more at the margin for a lot of firms. So, it's a minor interest, where other firms, like a government agency or lab, try to foster in that work that facilitates change on this issue within firms. So they create an alliance that has kind of norms and exchange of information about energy saving devices, that they wouldn't find otherwise. And through that alliance, they pressure change. In the United States, all too often, agencies adopting network forms of organization Are one's that have fewer resources. And work to become more efficient, or they're agencies that find themselves unable to perform the task required, or they want to distance themselves from a work they need performed. As such, the agency coordinates the web of service providers, or they hire a coordinator to do it for them. Now, many US Government agencies have adopted the network form of organizing. Government agencies cra, contract out more and more tasks to private companies for profit and not for profit. And the belief that competition among providers will increase efficiency. Today, public agencies find themselves working in a war with partnerships and networks. They form alliances that include mixtures of agencies, large and small organizations, and so on. And this sort of network form of organization is seen as a viable alternative to large scale corporations, and large scale hierarchical public bureaucracies. Goldsmith and Eggers describe how government agencies hire contractors. And they hire sub contractors in an effort to provide a service. In those instances the agency integrates and coordinates the web of service providers. But, in other instances the Government agency, either wants more distance with the service or they find a third party provider. Who can co-ordinate better than they can. And here we see a slightly different structure where the government is one step removed. So government organizations find themselves working in a context of partnerships and alliances. In short, they're engaged in networks of smaller and larger organizations that span public and private sectors. And this is widely seen as an alternative form of organizing. Particularly in comparison to large scale corporations and public bureaucracies. Now many of you can probably relate a variety of examples of network forms of organizing that you've observed in your respective industries and parts of the world. I'd love to hear about them on the forum. So I'll post, probably, a question asking people to kind of list some that they've been involved in. But here I'm going to give you a few examples, Gold Smith and Eggers describe the Golden Gate National Recreation area and how it heavily relies on partners to take care of the parks and their services. Only 18% of park services rely on for its service employees, and the rest of it is done by partners that are contracted and sub contracted out, as a way of providing efficient cheaper service For the parks. Which is arguably again a market at the margin for a lot of government agencies.
