Business network theory and the Canadian telecommunications industry

Abstract

In this paper, we introduce the five partners model of the “business network”. We argue that the cooperative, inter-industry and inter-firm relationships of the business network can ameliorate some of the costs found in markets and hierarchies. The business network is distinguished by a multinational enterprise's asymmetric strategic control over the network. We propose that it is this asymmetry which facilitates the establishment of credible commitments among the network partners. The business network, as a governance structure, embodies the findings of current research on inter-organizational learning and the embeddednes of economic action in social relations. As a case study we apply our business network theory to the Canadian telecommunications industry. The industry faces significant new challenges in terms of the pace of technological innovation and exposure to global competition. The organization of Canadian industry participants into the Stentor alliance is evaluated as a nascent business network