Network Organizations: The Question of Governance

Abstract

The past 40 years have witnessed quantum environmental changes, which have driven business organisations to constantly adopt and change so as to attain sustainability over time. The quest for survival entails the effort of every business organization to strike a delicate balance between environmental and organizational imperatives. These deep and continuous and many of times chaotic changes have propagated a number of novel organizational forms. The terms “network organization” have been used by researchers in some variety and without a clear consensus as to what they mean. Most of the scholarly research has focused on the dyadic relations on a network with a number of notable exceptions analyzing the network as a whole integrated entity and not its constituting organization. This paper analyzes the network organization on the network level and not on the organizational level. Consequently, and because of the lack of any formal mechanisms of coordination and control in a such entity, which conversely exists on the organizational level of analysis, the issue of network governance becomes very prevalent. In that respect, a number of different forms of governance are conveyed along with their differentiating characteristics and the extent to which a given network organization is governed by the participant organizations in the network collectively, by a participant in the network organization on the basis of its power, legitimacy etc in a highly centralized manner or by an external to the network organization entity established exactly for the specific purpose of governing the network. The successful adoption of a particular form of governance is founded on four key structural and relational presuppositions: trust, number of the organizations comprising the network, goal consensus and the nature of the task which determines the competence level required. A basic postulation is that when focusing on network – level analysis and outcomes, the governance form adopted is critical for explaining network effectiveness. Salient items in the research agenda may be the validation of the different forms of governance in conjunction with the contextual framework of operations, the determination and the relationship of the governance form selection criteria and the power symmetry among the participant organizations in the network.