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Summary relations and networks of organizations (441057-B-6)
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SUMMARY RELATIONS AND NETWORKS OFORGANIZATIONS
LECTURE 1
ION – interorganizational network
IOR – interorganizational relationship
The myth of individualism & the relational basis of success
- “Social” – resources are available in and through personal and business
networks.
- “Capital” – it is productive, it creates value.
o 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).
o Empirical example – alliance network in a sector.
- Relationships and network 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” – Ronal Burt).
- Raising financial capital: informal financial capital market.
- Learning in organizations: informal relations and learning.
- Marketing: verbal advertising, importance of social networks for diffusion
of new products.
- Strategic alliances: importance of relationships between organizations
(learning and reputation effect).
LECTURE 2
Closed vs open systems
Closed system – no relations
because they operate alone.
Open systems – how they
relate to the environment.
Networks are only available in
open systems.
Input and output
,Environment and its components
The interorganizational 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.
o Networks between business units inside one firm vs networks
between different firms.
o Who is the firm? Is it a manager (boundary spanner)? Is it a team or
an entire department?
- IORs display absence of ‘true’ hierarchy.
o Absence of ‘boss’ > implications for coordination, ownership, profit-
sharing etc.
o We don’t have a hierarchy in IORs, and it does not matter if it is
formal or informal.
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 independent variable
- What are the effects of IORs and IONs on the behavior/ 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?
IORs are important for running organizations and achieving their goals.
Why?
- Organizations lack all the necessary resources to attain their goals –
resource deficit.
o Resource deficit drives organizations to form ties with other
organization to obtain resources.
For example, Tilburg university cannot survive without
support from the government.
o Organizations exchange resources (form IORs) with each other to
achieve mutual benefit.
- These are the main elements of the exchange theory of IORs.
What factors affect interorganizational exchange relations?
- Organizations goals/ functions (‘need’).
- Access to resources from outside the system (‘access’).
- If there is domain consensus: to what extent is there agreement on their
claim to pursue particular goals?
IORs offer a way of reducing environmental uncertainty.
Internal and external are interdependent.
- Internal: designing organizational structures to produce a closed and
stable system in the core technology component.
- External: organizations can make relations with other organizations more
reliable and predictable.
Two strategies to deal with environmental uncertainty:
- Cooperative strategy
o To obtain reliable commitments from other actors (this require
making a commitment in return).
o While such commitments reduce uncertainty, they also place
constraints on future action.
- Competitive strategy
o Maintaining alternative resources (prevents concentration of power
over the organization).
o Seeking more power or prestige (gaining power without increased
commitment).
Resource dependence theory
Organizations are not self-sufficient and need to manage resource dependencies
to reduce uncertainties in their environment.
- Actors in the environment hold resources that the organization needs.
- The greater the organization’s dependence on the resources of other actor,
and the lesser the availability of alternative sources, the greater the power
of these actors over the organization.
- The actors use the political power to impose their interests & demands on
the organization.
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