Network Organizational Forms

1
Network Organizational Forms

• Marni Heinz

2
Core Concepts

• What is an Organization?
• Two or more people working together towards some
  common goal
• What is an Organizational Form?
• the structural features or patterns that are
  shared among many organizations (Fulk
  DeSanctis, 1999)

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Classic Organizational Forms

• Markets vs. hierarchies - viewed in terms of
  efficiency (Williamson, 1975)
• Also known as transaction cost economics
• Markets are preferred when
• Transactions/exchanges are straightforward,
  non-repetitive, and dont require time, money or
  energy
• Hierarchies are preferred when
• Transactions/exchanges are uncertain, repetitive,
  and require time, money or energy (which are
  difficult to transfer)

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An Alternative The Network Organizational Form

• Critique Markets vs. hierarchies approach is too
  mechanistic, doesnt reflect reality, and ignores
  the importance of reciprocity and collaboration
  in economic exchanges (Powell, 1990)
• Insteadnetwork organizational form proposed as
  an alternative to markets or hierarchies
• Emphasis placed on dynamic, multiparty
  cooperative relationships across geographic
  boundaries (DeSanctis Poole, 1997)
• Assumes that economic action is embedded in
  social relations (Granovetter, 1985)
• Applicable both within (intraorganizational
  networks) and across organizational boundaries
  (interorganizational networks)

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Comparison of Organizational Forms
Key Features Market Hierarchy Network
Means of Communication Prices Routines Relational
Actor Choices Independent Dependent Interdependent
Methods of Conflict Res. Haggling resort to courts for enforcement Administrative fiat Supervision Norm of reciprocity Reputation concerns
Normative Basis Contract Property Rights Employment Relationship Complementary Strengths
Degree of Flexibility High Low Medium
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What Factors Support the Formation and
Proliferation of Networks?

• Know How Fields that are highly dependent on a
  knowledgeable or skilled workforce
• Demand for Speed Industries that require fast
  access to information, flexibility, and
  responsiveness to changing tastes
• Trust Work settings where people have a common
  background (e.g., ethnic, ideological,
  professional) since this promotes trust

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Examples of Network Organizations

• Entrepreneurial firms (Nohria, 1992)
• Professional services (Eccles Crane, 1988)
• Biotechnology industry (Barley et al., 1992
  Powell Brantley, 1992)
• Craft industries (e.g., construction, publishing,
  film and recording, Powell, 1990)
• Strategic alliances (e.g., joint ventures,
  Gulati, 1998)

Note Network perspective applies across
various levels of analysis small and large
groups, subunits of organizations, entire
organizations, regions, industries, and national
economies
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Network Organizations or

• Virtual organizations (Markus et al., 2000)
• Horizontal organization (Castells, 1996)
• Hybrid organizations (Powell, 1987)
• Dynamic networks (Miles Snow, 1986)
• Post-bureaucratic (Heydebrand, 1989)
• Post-industrial (Huber, 1984)
• Community (Adler, 2001)

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What is the Role of Technology?

• Technological Perspective
• Network form relies on new technology to enable
  the emergence of flexible and informal exchange
  patterns (Nohria Eccles, 1992)
• Organizational Perspective
• New technologies are designed or modified to
  support new organizational forms (Fulk
  DeSanctis, 1999)

Technology makes network organizational forms
possible and new organizational forms shape
technology
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More on the Role of Technology

• Common misguided assumption
  network organizations electronic networks
  (Nohria Eccles, 1992)
• Tendency to think that electronically mediated
  exchanges will replace face-to-face interaction
  (based on efficiency argument)
• Instead, effectiveness of an electronic
  organization is dependent on a pre-existing
  social network of face-to-face interaction
• Exception When relations are impersonal,
  routine, unambiguous, and atomistic

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Complementary Perspective Communities of Practice

• Communities of practice are groups of people who
  share a concern, a set of problems, or a passion
  about a topic, and who deepen their knowledge and
  expertise in this area by interacting on an
  ongoing basis (Wenger et al., 2002, p. 4)
• Orunique types of networks in which a shared
  practice binds members together
• Practice
• Includes shared participation in a task, job, or
  profession, and can extend beyond work to include
  hobbies, a shared passion about a topic, or a
  common set of concerns (Brown Duguid, 2000,
  2001).

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Also, Networks of Practice
Key Features CoP NoP
Shared Practice
Strength of Ties Strong Weak
Spatial Characteristics Physical copresence Geographically dispersed (strangers)
Form of Communication Direct/Face to face Indirect/Mediated (e.g., listserves, newsletters, conferences)
Reciprocity High Low
Coordination Easy Difficult
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Study Collective action in an electronic NoP

• Social capital (SC)
• A theory that provides a link b/w social
  structure and action
• Defn Social relations that are accessed or
  mobilized for purposive action (Lin, 2001, p.
  29)
• Wasko and Faraj (2005) hypothesize that social
  capital positively influences individual
  knowledge contributions to an electronic NoP
• Sample Members of a U.S. legal professional
  association using an electronic message board
• Structural capital operationalized as centrality
  based on messages posted to a discussion thread
• Results A users network centrality predicted
  volume of contributions

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Conceptual Similarities between Networks,
CoPs/NoPs, and SC

• Cohen and Prusak (2001) describe networks and
  communities as the source and shape of social
  capital in organizations, the primary
  manifestation of cooperative connections between
  people (p. 55).
• Community and social capital constructs are
  conceptual cousins (Putnam, 2000, p. 21).
• Mutual engagement in a CoP identifies a
  condition that is similar to connection in a
  network but describes such relations as grounded
  in common interest and activity, rather than mere
  interaction (Iverson and McPhee, 2002, p. 262).

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References

• Adler, P. (2001). Market, hierarchy, and trust
  The knowledge economy and the future of
  capitalism. Organization Science, 12(2), 215-234.
  
• Barley, S., Freeman, J, Hybels, R. (1992).
  Strategic alliances in commercial biology. In N.
  Nohria R. G. Eccles (Eds.), Networks and
  organizations Structure, form, and action (pp.
  365-394). Boston, MA Harvard Business School
  Press.
• Brown, J.S., Duguid, P. (2000). The social life
  of information. Boston Harvard Business School
  Press.
• Brown, J. S., Duguid, P. (2001). Knowledge and
  organization A social-practice perspective.
  Organization Science, 12(2), 198-213.
• Castells, M. (1996). The rise of the network
  society. Oxford, UK Blackwell Publishers.
• Cohen, D., Prusak, L. (2001). In good company
  How social capital makes organizations work.
  Harvard Business School Press Boston, MA.

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References (continued)

• DeSanctis, G., Poole, M. S. (1997). Transitions
  in teamwork in new organizational forms.
  Advances in Group Processes, 14, 157-176.
• Eccles, R. G., Crane, D. B. (1988). Doing
  deals Investment banks at work. Boston Harvard
  Business School Press.
• Fulk, J. DeSanctis, G. (1999). Articulation of
  communication technology and organizational Form.
  In G. DeSanctis J. Fulk (Eds.), Shaping
  organizational form Communication, connection,
  and community (pp. 5-32). Thousand Oaks, CA Sage
  Publications.
• Granovetter, M. (1985). Economic action and
  social structure The problem of embeddedness.
  The American Journal of Sociology, 91(3),
  481-510.
• Gulati, R. (1998). Alliances and networks.
  Strategic Management Journal, 19(4), 293-317.

17
References (continued)

• Heydebrand, W. (1989). New organizational forms,
  Work and Occupations, 16(3), 323-357.
• Huber, G. P. (1984). The nature of design of
  post-industrial organization. Management Science,
  30(8), 928-951.
• Iverson, J. O., McPhee, R. D. (2002). Knowledge
  management in communities of practice. Management
  Communication Quarterly, 16(2), 259-265.
• Markus, M. L., Manville, B., Agres, C. E.
  (2000). What makes a virtual organization work?
  Sloan Management Review, 13-26.
• Miles, R. E., Snow, C. C. (1986). Network
  organizations New concepts for new forms.
  California Management Review, 28(3), 62-73.

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References (continued)

• Nohria, N. (1992). Is a network perspective a
  useful way of studying organizations? In N.
  Nohria R. G. Eccles (Eds.), Networks and
  organizations Structure, form, and action (pp.
  1-22). Boston, MA Harvard Business School
  Press.
• Nohria Eccles (1992). Face-to-face Making
  network organizations work. In N. Nohria R. G.
  Eccles (Eds.), Networks and organizations
  Structure, form, and action (pp. 288-308).
  Boston, MA Harvard Business School Press.
• Powell, W. W. (1987). Hybrid organizational
  arrangements. California Management Review, 30,
  67-87.
• Powell, W. W. (1990). Neither market nor
  hierarchy Network forms of organization.
  Research in organizational behavior, 12, 295-336.
  
• Powell Brantley, (1992). Competitive
  cooperation in biotechnology Learning through
  networks? In N. Nohria R. G. Eccles (Eds.),
  Networks and organizations Structure, form, and
  action (pp. 365-394). Boston, MA Harvard
  Business School Press.

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References (continued)

• Putnam, R. (2000). Bowling alone The collapse
  and revival of American community. New York
  Free Press.
• Wasko, M. M., Faraj, S. (2005). Why should I
  share? Examining social capital and knowledge
  contribution in electronic networks of practice.
  MIS Quarterly, 29(1), 35-37.
• Williamson, O. (1975). Markets and Hierarchies.
  New York Free Press.
• Wenger, E., McDermontt, R., Snyder, W.M.
  (2002). Cultivating communities of practice A
  guide to managing knowledge. Boston, MA Harvard
  Business School Press.