Exploring Network Organizations in Practice: The Duality and Triplicity of Market, Hierarchy and Network

Abstract

Constructing a network organization for global R&D is presented as a common sense practice in existing literature. However, there are still queries about the network organization, such as the persistence of hierarchies which make a network organization merely a “bureaucracy-lite” organization. Furthermore, in practice, we rarely see radical organizational change towards a network organization that adopts an internal market. The co-existence of market, hierarchy and network triggered research interest. A multiple case study of three transnational corporations’ global R&D organization shows that there are different logical considerations when designing a network organization to facilitate innovation. I identify three types of network organizations: market-led, directed and culture-led network organizations. Different types of network organizations show that organizations are dual and even ternary systems of three coordination modes, i.e. market, hierarchy and network. The three coordination modes are not discrete, but instead are complementary and mutually enhancing. The interactions of the three coordination modes and the dynamism of their interplay over time could be an interesting future research topic.