Relations & Networks of Organizations ENG – MAX DE ROOIJ
Lecture 1
Main aim of this course: To recognize, describe, analyze, explain and assess relations between organizations and of
organizational networks
RANO: Learning goals
After taking this course, you can expect to be able to:
1. Describe and explain the concept of social capital and apply the theoretical ideas to empirical settings.
2. Know basic concepts in social network analysis, explain their meaning and apply them to analyze social network structures.
3. Describe, explain and compare determinants of IORs and IONs.
4. Describe, explain and differentiate consequences of relationships and networks at the organizational level and be able to link
consequences to characteristics of IORs and IONs.
5. Describe, explain and apply concepts with regard to the management of IORs and IONs.
6. Relate concepts of IORs and IONs to the field of organization studies.
7. Use and combine theoretical concepts in the area of IORs and IONs to analyze and interpret specific organizational, societal
or economic problems.
8. Apply a number of analytical tools in the context of the study of inter- organizational relations and networks.
Social capital: Why does it matter?
Social capital helps Dutch Entrepreneurs adapting the COVID-19 pandemic
The myth of individualism & the relational basis of success (exam)
Social: resources are available in and through personal and business networks.
Capital: it is productive, it creates value (bijv. info, business opportunities, financial resources, power, emotional support, trust)
• 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)
IOR - Interorganizational networks = relatively enduring transactions, flows, and linkages that occur among and between an
organization and one or more organizations in its environment”
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 educ)
• 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, importance of social networks for diffusion of new products
Strategic alliances: importance of relationships between organizations (learning and reputation effects)
,HC 2 - DEFINITIONS, TYPES AND CHARACTERISTICS OF RELATIONSHIPS BETWEEN ORGANIZATIONS AND
NETWORKS OF ORGANIZATIONS
RANO lectures 1-4: Understanding what are IORs and networks:
- Relations and networks: Introduction and importance (lec. 1)
- Definitions of network + overview of classic studies of IORs (lect. 2)
- Social network analysis + tools (lect.s 3 & 4 + computer lab)
Lecture 2: Learning goals
- Identify and distinguish open vs closed views about the organizational environment
(why do IORs and IONs exist? A manager’s perspective)
- Discuss key findings from classic studies in the field of social networks
(why do IORs and IONs exist? A researcher’s perspective)
- Specify the core definition of a social network
(how to study IORs and IONs?)
- Assess different levels of analysis in IORs and IONs?
Organization & environment: A manager’s perspective
Closed vs. Open systems (Distinction between open and closed systems)
Organization can function as an island where the organization operates without any kind of
connections to the environment
In reality organizations are somehow still connected, some more than others (bijv. suppliers)
This links to the general idea why networks matter
Input and output
- Organizations convert input to output
- You need to do things that add value to the product, they have to do some things with raw materials to create output
- Environment comes into the picture as a organization needs to obtain input from somewhere to create a product or experience
- Networks help to link the organization to the environment
Environment and its components Het gaat over het samenwerken en de sources die je gebruikt van anderen
PESTEL/DESTEP framework = looking at different
factors; political, economic, social, technological, environmental and legal
factors
If you want to start an organization in e.g. Brazil, you need to take the
different factors into consideration, based on political factors it can be more
efficient to start the organization in a Western Europe country
1) The environment matters for organizations
2) PESTEL framework can function as an example to consider the
environment
Social networks: A researcher’s perspective
The interorganizational problem IORs = ‘relatively enduring transactions, flows, and linkages that occur among and
between an organization and one or more organizations in its environment’ (recap Lecture 1)
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 absence of ‘true’ hierarchy (hiërarchie is als er een contract bij betrokken is)
Absence of ‘boss’ implications for coordination, ownership, profit-sharing etc.
,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 behaviour 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? (een connected network is goed, maar niet altijd
Equilibrium (balance in exchange) = Personen die veel geven, verwachten veel terug te krijgen. Personen die veel krijgen,
hebben de druk om meer te geven.
Why are IORs important for running organizations and achieving their goals.
Resource deficit = Organizations lack all the necessary resources to attain their goals
- Organizations exchange resources (form IORs) with each other to achieve mutual benefit
- Voluntary interaction based on reciprocity (als je iets doet, wil je er iets voor terug
- These are the main elements of the exchange theory of IORs
Factors that affect interorganizational exchange relations?
Organizational goals/functions (‘need’);
Access to resources from outside the system (‘access’)
If there is domain consensus: to what extent is there agreement on their claims to pursue paricular goals?
IORs as ways of reducing environmental uncertainty
Interdependence;
o Internal – Designing organizational structures to produce a closed and stable system in the core technology component
o External – Organizations can make relations with other organizations more reliable and predictable
Two strategies to deal with environmental uncertainty:
1, Cooperative strategy = To obtain reliable commitments from other actors (this requires making a commitment in return)
- While such commitments reduce uncertainty, they also place constraints on future action
2, Competitive strategy = Maintaining alternative resources (prevents concentration of power over the organization)
- 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 actors, 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
IORs & IONs aim (buffering and bridging):
- To access resources
- To stabilize outcomes / market rents
- To prevent environmental control
- To coordinate the respective interests of actors
Buffering = Using resources to protect your core system (technical system, where things are produced)
Bridging = Making ties with other actors in your environment. You can lower the dependency by making these ties
Organizations compete for:
Resources and customers
political power
institutional legitimacy (acceptance)
social and economic fitness
Therefore, organizations tend toward isomorphism with their institutional environments
Isomorphism = Mechanism by which organizations conform to rules, values and beliefs of their institutional context
1. Coercive isomorphism - State, regulators that exercise legitimated power over organizations; impose norms with fines,
sanctions
2. Mimetic isomorphism – Organizations tend to imitate other organizations (especially successful ones)
3. Normative isomorphism – Pressure for conformity arising from culture and norms of professionalism (als je strak in een
normale trein loopt)
, Part 2: Studying Social Networks 0;00
Nodes = Organizations or entities (for-profit, non-for-profit, government)
In principe kan het zijn wat je maar wilt zijn:- Computer- Persoon- Stad- Afdeling - Machine- Dier - etc...
Ties = Connection/link/edge between 2 nodes (e.g. alliances between firms)
Characteristics of inter-organization ties:
1. Tie strength (de hoeveelheid agreements)
2. Direct or indirect tie
3. Contractual form (e.g. joint ventures) (soort)
4. Singles vs. multiplex (zelfde tie met zelfde persoon maar verschillende functies; vriend waarmee je sport, en mee werkt)
5. Tie content (e.g. friendship, advice, research & development)
- Realized ties are meaningful (bijv. social closure)
- Absent ties also are meaningful (bijv. structural hole)
Network = Flows or connections between organizations and connected to the environment. Set of Objects (nodes, positions,
vertices or actors) + a set of relations (edges, ties or links)
Dyad = Connection between 2 nodes
Triad = Connection between 3 nodes
Strong tie = A tie that has a greater flow of resources (deelt norms, values, trust)
Structural hole = If D wants to connect A, it has to go via B.
This can be important in the context of Bijv. innovation; sometimes you do not have
access to the individual with great ideas, but you might have access to someone else
Structural holes and social structure
Structural hole can be seen as a broker or the individual who is connecting the structure when there
is an absent tie: In the structure hole there is an absence of a node and it finds connection via 3 rd
node (in this case the broker)
Conduit – Actor spanning the structural hole, e.g. the broker
A is the broker and is connecting B & C
Tertius gaudens – The third who benefits
Tertius iungens – The third who joins
What flows through ties?
Tie content = relational variable: Absence of a relationship between nodes no flow
What can flow?
1. Economic exchanges (e.g. goods, information, knowledge, money)
2. Social exchanges (e.g. trust, love, advice, power, emotional support, ideas)
3. The dark side of ties (e.g. corruption, cartels)
