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A GENERAL THEORY OF NETWORK GOVERNANCE
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发布日期: 2006/4/12   作者:    版权: 原创

A GENERAL THEORY OF NETWORK GOVERNANCE:
EXCHANGE CONDITIONS AND SOCIAL MECHANISMS

 

[To appear in Academy of Management Journal 1997] 

 

CANDACE JONES
Organization Studies Department
Carroll School
of Management
Boston College
Chestnut Hill
, MA 02167

TEL: (617) 552-0457
FAX: (617) 552-0433
INTERNET: JONESCQ@BCVMS.BC.EDU

WILLIAM S. HESTERLY
David Eccles School
of Business
University
of Utah
Salt Lake
City, UT 84112
TEL: (801) 581-6378
FAX: (801) 581-7214
INTERNET: MGTWH@BUSINESS.UTAH.EDU

STEPHEN P. BORGATTI
Organization Studies Department
Carroll School
of Management
Boston College
Chestnut Hill
, MA 02167

TEL: (617) 552-0452
FAX: (617) 552-0433
INTERNET: borgatts@bc.edu

Acknowledgments: We thank Susan Jackson as AMR editor, Jim Walsh as Consulting editor, and five anonymous reviewers for their insights, suggestions, and comments which pushed us to substantially improve the manuscript. We also thank our colleagues Charles Kadushin, Benyamin Lichtenstein, Aya Chachar, Steve Tallman, and Anoop Madhok for their comments on earlier drafts. The errors and omissions are our own.

ABSTRACT

A phenomenon of the last twenty years has been the rapid rise of the network form of governance. This governance form has received significant scholarly attention, but to date no comprehensive theory has been advanced, nor has a sufficiently detailed and theoretically consistent definition appeared. The objective of this paper is to provide a theory that explains under what conditions network governance, rigorously defined, has comparative advantage, and is therefore likely to emerge and thrive. The theory integrates Transaction Cost Analysis and Social Network theories. In broad strokes, the theory says that the network form of governance is a response to exchange conditions of asset specificity, demand uncertainty, task complexity, and frequency. These exchange conditions drive firms toward structurally embedding their transactions. Structural embeddedness enables the use of social mechanisms for coordinating and safeguarding exchanges. When all these conditions are in place, the network governance form has advantages over both hierarchy and market solutions in simultaneously adaptating, coordinating, and safeguarding exchanges.

INTRODUCTION

Network governance coordination characterized by informal social systems rather than by bureaucratic structures within firms and formal contractual relationships between them is increasingly used to coordinate complex products or services in uncertain and competitive environments (Piore & Sable, 1984; Powell, 1990; Ring & Van de Ven, 1992; Snow, Miles & Coleman, 1992). Network governance has been observed in industries such as semiconductors (Saxenian, 1990), biotechnology (Barley, Freeman & Hybels, 1992), film (Faulkner & Anderson, 1987), music (Peterson & Berger, 1971), financial services (Eccles & Crane, 1988; Podolny, 1993, 1994), fashion (Uzzi, 1996a, 1996b), and Italian textiles (Lazerson, 1995; Mariotti & Cainarca, 1986). Although network governance is widely acknowledged and seen as producing important economic benefits, "…the mechanisms that produce these benefits are vaguely specified and empirically still incipient (Uzzi, 1996a: 677)." This vague specification takes the form of a lack of clarity on what network governance is, when it is likely to occur, and how it helps firms (and non-profit agencies) resolve problems of adapting, coordinating, and safeguarding exchanges.

    A synthesis of transaction cost economics (TCE) and social network theory can resolve this vague specification of network governance in multiple ways. TCE provides a "relentlessly comparative" framework for assessing alternative governance forms (Williamson, 1994). It allows us to go beyond descriptive observations of where network governance has occurred and identify the conditions that predict where network governance is likely to emerge. Prior work within the TCE framework has shown that relational contracting is the basis for an alternative governance form between markets and hierarchies (Eccles, 1981; Jarillo, 1988; Mariotti & Cainarca, 1986). These studies, while important, rarely define network governance and do little to show how network governance resolves fundamental problems of adapting, coordinating, and safeguarding exchanges. In addition, since these studies most often focus on exchange dyads rather than the network’s overall structure or architecture, they cannot adequately show how the network structure influences exchanges.

    A synthesis of TCE and social network theory also advances our understanding of transaction costs and governance. Although the social context referred to as structural embeddedness surrounding economic exchange has been recognized as critical since Granovetters (1985) widely cited critique, it has not been integrated into the TCE framework. "Embeddedness refers to the fact that economic action and outcomes...are affected by actors’ dyadic (pairwise) relations and by the structure of the overall network of relations" (Granovetter, 1992: 33). As Williamson (1994: 85) acknowledges, "network relations are given short shrift" partly because of TCEs preoccupation with dyadic relations. We integrate social context into the TCE perspective by explaining how social mechanisms influence the costs of transacting exchanges. Specifically, we show that exchange conditions characterized by needs for high adaptation, high coordination, and high safeguarding influence the emergence of structural embeddedness. We also show how structural embeddedness provides the foundation for social mechanisms such as restricted access, macrocultures, collective sanctions, and reputations to coordinate and safeguard exchanges in network governance. We move beyond recent work on embeddedness by explaining how structural embeddedness arises and provides a foundation for social mechanisms to coordinate and safeguard exchanges. Finally, we show how social mechanisms interact to create an exchange system where coordination and cooperation among autonomous parties for customized exchanges is not only possible but probable.

    By integrating TCE and social network theory, we provide a simple yet coherent framework for identifying the conditions under which network governance is likely to emerge, and the social mechanisms that allow network governance to simultaneously coordinate and safeguard customized exchanges in rapidly changing markets.

    We organize the paper as follows. First, we review the literature defining network governance and provide our own definition. Second, we identify conditions for network governance and explore why networks are employed rather than markets or hierarchies. Third, we explain how structural embeddedness arises out of exchange conditions and provides the foundation for social mechanisms used in network governance. In addition, we specify how key social mechanisms enhance coordination and reduce behavioral uncertainty among exchange parties. These social mechanisms in network governance reduce transaction costs to gain comparative advantage over markets and hierarchies. This enables network governance to emerge and thrive. Finally, we suggest future directions for research on network governance.

 WHAT IS NETWORK GOVERNANCE?

Definitions in the Literature

The terms "network organization" (Miles & Snow, 1986), "networks forms of organization" (Powell, 1990), "interfirm networks", "organization networks" (Uzzi, 1996a, 1996b), "flexible specialization" (Piore & Sable, 1984), and "quasi-firms" (Eccles, 1981) have been used frequently and somewhat metaphorically to refer to interfirm coordination that is characterized by organic or informal social systems, in contrast to bureaucratic structures within firms and formal contractual relationships between them (Gerlach, 1992:64; Nohria, 1992). We call this form of interfirm coordination network governance. Network governance constitutes a "distinct form of coordinating economic activity" (Powell, 1990:301) which contrasts (and competes) with markets and hierarchies.

    A number of scholars have offered definitions (see Table 1), typically using different terms and providing partial definitions. These definitions cluster around two key concepts: (1) patterns of interaction in exchange and relationships; and (2) flows of resources between independent units. Those who emphasize the first concept focus on lateral or horizontal patterns of exchange (Powell, 1990), long-term recurrent exchanges that create interdependencies (Larson, 1992), informal interfirm collaborations (Kreiner & Schultz, 1993) and reciprocal lines of communication (Powell, 1990). Some highlight patterned relations among individuals, groups, and organizations (Dubini & Aldrich, 1991), strategic long-term relationships across markets (Gerlach & Lincoln, 1992), and collections of firms using an intermediate level of binding (Granovetter, 1994). Those who emphasize the second concept focus on independent flows of resources (Powell, 1990) between nonhierarchical clusters of organizations made up of legally separate units (Alter & Hage, 1993). They emphasize the independence of interacting units.

    Our own definition includes elements from all of these definitions, and is intended to be more complete and specific than its predecessors.


 

 
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