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Summary Relations And Networks Of Organizations (441057-B-6)
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Lecture 1Short introductory session
Understanding relations & networks of organizations
What are IORs and IONs? Why are they important?
Overview of ‘classic’ approaches and studies about IORs and IONs
Social network analysis (SNA)
Empirical analyses of causes and consequences of IORs and IONs
Management of IORs and IONs
Social capital: Why does it matter?
“Social”: resources available in and through personal and business networks. “Capital”: it
is productive, it creates value
- e.g., information, business opportunities, financial resources, power, emotional
support, trust, cooperation, and so on,
Social capital is not a feature of an entity (attribute variable), but it is a feature of a
relationship (relational variable)
Relational variables often have an equal/higher explanatory power than attribute variables.
“The friction is that society consists of a set of independent individuals, each of whom acts
to achieve goals that are independently arrived at, and that the functioning of the social
system consists of the combination of these actions of independent individuals.” (James
Coleman)
IORs and IONs: A relational view of organizations
Social capital and IORs and IONs (Baker, 2000):
Interorganizational networks are “relatively enduring transactions, flows, and linkages that
occur among and between an organization and one or more organizations in its
environment” (Oliver 1990: 241)
Relationships and networks of organizations are about the exchange and flow of resources
between organizations.• For an individual organization, relations and networks mean
access to and dependency on resources (e.g., information, ideas, reputation, trust).
The notion of ‘social capital’ captures the resources available through relationships and
networks, i.e., relational view of organizations.
,Social capital and success: Multi-level effect
Individual success and performance:
- Talent: nature or nurture? Relations are important for developing
talents•Intelligence: genetically determined but also developed and strengthened by
relations (social interactions, quality of education)
- Education: writing and reading skills are a result of social interaction
- Dedication: supportive settings (e.g., friends and family)
- Chance? the importance of ‘spider web networks’
Social capital and individual’s quality of life
Well-being:
- sensemaking work and social relations are important predictors of well-being
Health:
- networkers are often healthier
Life expectancy:
- networkers live longer
Social capital in the economy
Payment and career development:
- people who are strongly embedded tend to earn higher salaries and experience
faster career development (“structural holes”, Ronald Burt)
raising financial capital:
- informal financial capital market.
Learning in organizations:
- informal relations and learning.
Marketing:
- verbal advertising, the importance of social networks for the diffusion of new
products
strategic alliances:
- importance of relationships between organizations (learning and reputation effects)
, Lecture 2
Organization and environment
Closed and open systems.
An open system has connections with its environment.
Organizations convert the input to output
They get inputs from the environment, and they deliver to the environment.
PESTEL analysis
This provides a framework to look at different factors.
The environment matters for organizations. It is important to understand the environment
Are there closed organizations then if every organization has connections with their
environment> yes, there are organizations that have very few connections, like prisons,
religious organizations, etc.
It is also a continuum. Some organizations are more closed or more open. It is not one or
the other.
, Social networks: a researchers perspective:
The inter-organizational problem
IORs are “relatively enduring transactions, flows, and linkages that occur among and
between an organization and one or more organizations in its environment”
When studying IORs and IONs, keep in mind the following:
- There are important differences between (social) networks within (intra) and
between (inter) organizations
● E.g., networks between business units inside one firm vs networks between
different firms
- IORs display an absence of ‘true’ hierarchy
● absence of ‘boss’ >>> Implications for coordination, ownership, profit-sharing
etc
There are networks between organizations and within organizations. Networks within
versus outside there is a difference in the hierarchy. Inter-organization networks there are
not hierarchies. There is a connection, there is no CEO of this connection. This can create
challenges in coordination. A tie is not a legal entity.
You can look at IORs and IONs as dependent variables and independent variables.
IORs & IONs as dependent variable:
- Why do organizations form relationships with other organizations?
- How do IORs form, develop, dissolve and how are they managed?
- Which factors explain changes in network structure over time?
IORs & IONs as an independent variable
- What are the effects of IORs and IONs on the behavior and strategies of
organizations?
- What are the effects of IORs on the outcomes of organizations?
- To what extent do different network structures impact on project success?
Why are IORs & IONs common?
Why do organizations work together
- common goal
- resource deficit
● e.g. lack financial funds to launch a new product
- exchange resources
● expertise
Exchange theory of IOR’s
- organization exchange resources
What factors might trigger these exchange relations
- goals and functions
- access to resources from outside the system
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