HC 1
Inter-organizational networks: the relatively enduring transactions, flows, and linkages
that occur among and between an organization and one or more organizations in its
environment (Oliver, 1990)
RANO is about the exchange and flow of resources between organizations
For an individual organization, relations and networks mean access to and
dependency on resources (information, ideas, influence, trust…)
Resources available through relations and networks can be labeled as ‘social capital’
Attribute variable: a feature of an individual organization
Relational variable: a feature of a relationship between one or more organizations
Relational variables have a higher explanatory power than attribute variables
Social capital: resources available in and through personal and business networks
(information, ideas, business opportunities, financial resources, power, influence, emotional
support, goodwill, trust, cooperation)
Success and social capital / networks Effects on different levels
Individual success and performance
o Talent: relations are important for developing talents
o Intelligence: genetically determined but also developed and strengthened by
relations
o Education: writing and reading skills are a result of social interaction
o Dedication: supportive environments
o Chance: the importance of ‘spider web networks’
Success of organizations / economy
o Finding a job: importance of informal relations
o Payment and career development: people who are strongly embedded, have
higher salaries, and develop their careers faster (structural holes)
o Influence: importance of expertise and network position in excising influence
and power
o Acquiring financial capital: informal financial capital market
o Learning in organizations: informal relations and learning
o Marketing: verbal advertising, importance of social networks for diffusion of
new products
o Strategic alliances: importance of social capital for use and results of
strategic alliances (reputation effect)
o Mergers and takeovers: social capital as defence mechanism in case of
hostile takeovers
Social capital and quality of life
o Well-being: phychological research, sensemaking work and social realtions
are important predictors of well-being
o Health: networkers are more healthy
, o Life expectancy: networkers live longer
Ethical considerations with regard to the use of social capital or manipulation of
relations
Is the conscious use or management of social capital un-ethical?
Inevitable?
Misuse is unethical
Neglect is unethical
HC2
Stern, Mitsuhasi & Oliver (2001) An introductory essay: research on interorganizational
relations (IORs) – overview of classic approaches and studies
Introduction
Aim: to gain insight into how the field of IOR studies and its key ideas developed
over time
Definition: IORs are relationships between or among organizations that involve the
concrete exchange of products, services, and resources
Subject of the study: networks of non-profit and public organizations, joint ventures
and strategic alliances, supply chains, interlocking directorates, etc
IORs and IONs can be the dependent or the dependent variable
,Definitions
Network: a certain structure of ties and nodes
Node: can be many things (artifact, human being, organization, a country…) but in
light of this course the nodes are organizations
Tie: a certain type of exchange. A relationship between two nodes. Stands for
interaction and exchange. Something is moving from one node to another and vice
versa
The interorganizational problem: exchange between two nodes that belong to different
organizatioins. Thus, boundaries or borders are crossed (remember boundary theories in
OT!). These two organizations are legally interdependent, they have ownership over their
own resources. But still, they exchange something. However, the area in between the
organizations (where the exchange actually happens) does not have a leader or a boss who
decides which organization gets ownership of the resources? Who resolves conflict? That’s
the interorganizational problem.
Different levels of analysis
Inter-organizational tie (diad)
Ego-centric network (ego + alters)
Triad (relationship between 3 organizations)
Whole network (serendipitous vs goal directed)
o Serendipitous: the nodes are not aware of a goal or there is no goal
o Goal directed: the nodes know about the goal of the network
IORs and IONs as dependent variables
Why and when do organizations form relationships with other organizations and
what determines partner selection?
How do IORs form, develop dissolve and how are they managed
What explains the form and sahape of an IOR?
Which factors explain changes in network structure over time?
IORs and IONs as independent variables
What are the effects of IORs and networks on the behavior of strategies of
organizaitons?
What are the effects of IORs on the outcomes of organization?
To what extent do different network sturctures impact on project success?
IOR field of study: diversity and fragmentation
Different types of IORs require different theoretical perspectives and analytical approaches
(for example, networks of non-profit vs networks of profit organizations differ in goals and
governance)
Fragmentation of the field difficult to formulate general propositions about IORs
based on prior research findings
Galaskiewicz (1985): The body of accumulated iknowledge is highly fragmented, and the
scholarship uneven. Few studies have been replicated, thus we heave a host of ‘tentative
findings’ to sort through and analyze.
,Possible reasons for the fragmentation
Likelihood of replication of studies is low: more diversification and less
cumulativeness
Different types of IOR are studied and different analytical schemes employed – few
attempts at generalizability
Conceptualizations of IORs differ
Unit of analysis is a broad category (diad, triad, network, etc)
CLASSICS
Levine & White (1961)
o Exchange as a conceptual framework for the study of interorganizational
relationships
o IORS are important for running organizations and achieving their goals
They lack all the necessary resources to attain their goals resource
deficit
Resource deficit drives organizations to form ties with other
organizations to obtain resources
Organizations exchange resources (form IORs) with each other to
achieve mutual benefit
The above are the main elements of the exchange theory of IORs
o What affects interorganizational exchange relations?
Organizational goals/functions (need)
Access to resources from outside the system (access)
To what extent is there agreement on their claims to pursue particular
goals (domain consensus)
o Most important contributions:
Levine & White established IORs as a crucial unit of analysis
They founded the field of IOR research
Thompson (1967)
o Organizations in action
o Open systems perspective
Organizations faces with resource deficit
Thus they depend on their environment/other organizaitons for
survival
They have limited control over the environment ( uncertainty)
, Yet they need certainty
o Ways of eliminating environmental uncertainty
Internal: designing organizational structures to produce a closed and
stable system in the core technology component
External: management of the IORs and the dependence inherent in
them. Organizations can make relations with other organizations
more reliable and predictable
o Two strategies for managing dependence inherent in IORs
Cooperative strategy: to reduce dependence and uncertainty,
organizations can obtain reliable commitments from other actors
(this, of course, requires making a commitment in return)
Contracting (agreements)
Co-opting (absorbing new elements into the power structure)
Coalescing (joint ventures)
Downside while such commitments reduce uncertainty,
they also place constraints on future action
Competitive strategy: avoiding to become interdependent on the
environment
Maintaining alternative resources (prevents concentration of
power over the organization)
Seeking more power or prestige (gaining power without
increased commitment)
o Thompsons contribution: broadened notion of IORS
IORS are not only a tool of resource exchange, but complex
interdependency that needs to be managed strategically to ensure
organizational stability and success
Pfeffer & Salancik (1978)
o The external control of organizations
o Organizations are not self-sufficient and need to manage resource
dependencies to reduce uncertainties in their environment
o Resource depencence perspective:
Other actors in the environment hold resources that the organization
needs
This gives them political power over the organization. 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 this political power to impose their interests and
demands on the organization
o Organizations can limit resource dependence and increase their autonomy
by formal as well as informal interorganizational activities (cooption, trade
associations, joint ventures, formation of social norms between
organizations…)
o Aims of inter-organizational activities:
Access to resources
Stabilize outcomes
Prevent environmental control
, Stabilize and coordinate the respective interests of actors
o Contribution:
Pfeffer & salancik developed a cohesive theory of resource
dependence relations among organizations
Extended the IOR theory by
Inclusion of political and power aspects of IORs
Elaborating strategies for managing assymetric power
relations
DiMaggio and Powell (1983)
o The iron cage revisited: instituational isomorphism and collective rationality
in organizational fields
o Institutional theory
Organizations compete for resources and customers, political power,
institutional legitimacy, and social and economic fitness
In order to achieve legitimacy and social fitness, oerganizations tend
toward isomorphism with their institutional environents
Isomorphism = mechanism by which organizations conform to rules,
values and beliefs of their institutional context
o Different forms of isomorphism
Coercive: state, regulators that exercise legitimated power over
organizations, impose norms with fines, sanctions
Mimetic: organizations tend to imitate other organizations (especially
successful ones)
Normative: pressure for conformity arising from culture and norms of
professionalis,
o Contributions:
Inclusion of social and cultural facets of the environment (next to
technical)
Other organizations are not only resource providers but also sources
of institutional pressures and creators of institutional norms and
values
HC3
Background on the study of social networks
Network as perspective and empirical tool social network analysis
Social structure is conceptualized as nodes and linkages
Relational ties (linkages) between actors are channels for transfer or flow of
resources (either material or nonmaterial)
Actors and their actions are viewed as interdependent rather than independent,
autonomous units
Key assumption: relations are at least as important for the explanation of social,
political and organizational phenomena as attributes
Structure of a system determines at least in part the outcome
Individual’s position determines opportunities and constraints
Social structure determines the operation of dyadic relationships, not only direct
links but also indirect links are important
, Social network analysis is therefore not a collection of neutral statistical
procedures, but an analytical toolbox resting on very specific sociological
assumptions
, Basics of social network analysis
Network: set of objects (often also called nodes, positions, vertices or actors) and a
set of relations (also called edges, ties, or links)
o Nodes
o Linkages
o Present and absent ties
o Boundaries
Levels of analysis
o Actor
o Dyad (inter organizational relation)
o Triad
o Egocentric network
o Complete network (inter-organizaitonal network)
Attribute data: relate to the attitudes, opinions and behavior of agents, in so far as
these are regarded the properties, qualities or characteristics that belong to them as
individuals or groups (scott, 2000)
Relational data: the contracts, ties, and connections, the group attachments and
meetings, which relate one agent to another and so cannot be reduced to the
proiperties of the individual agents themselves (Scott, 2000)
Inter-organizational networks: the relatively enduring transactions, flows, and linkages
that occur among and between an organization and one or more organizations in its
environment (Oliver, 1990)
RANO is about the exchange and flow of resources between organizations
For an individual organization, relations and networks mean access to and
dependency on resources (information, ideas, influence, trust…)
Resources available through relations and networks can be labeled as ‘social capital’
Attribute variable: a feature of an individual organization
Relational variable: a feature of a relationship between one or more organizations
Relational variables have a higher explanatory power than attribute variables
Social capital: resources available in and through personal and business networks
(information, ideas, business opportunities, financial resources, power, influence, emotional
support, goodwill, trust, cooperation)
Success and social capital / networks Effects on different levels
Individual success and performance
o Talent: relations are important for developing talents
o Intelligence: genetically determined but also developed and strengthened by
relations
o Education: writing and reading skills are a result of social interaction
o Dedication: supportive environments
o Chance: the importance of ‘spider web networks’
Success of organizations / economy
o Finding a job: importance of informal relations
o Payment and career development: people who are strongly embedded, have
higher salaries, and develop their careers faster (structural holes)
o Influence: importance of expertise and network position in excising influence
and power
o Acquiring financial capital: informal financial capital market
o Learning in organizations: informal relations and learning
o Marketing: verbal advertising, importance of social networks for diffusion of
new products
o Strategic alliances: importance of social capital for use and results of
strategic alliances (reputation effect)
o Mergers and takeovers: social capital as defence mechanism in case of
hostile takeovers
Social capital and quality of life
o Well-being: phychological research, sensemaking work and social realtions
are important predictors of well-being
o Health: networkers are more healthy
, o Life expectancy: networkers live longer
Ethical considerations with regard to the use of social capital or manipulation of
relations
Is the conscious use or management of social capital un-ethical?
Inevitable?
Misuse is unethical
Neglect is unethical
HC2
Stern, Mitsuhasi & Oliver (2001) An introductory essay: research on interorganizational
relations (IORs) – overview of classic approaches and studies
Introduction
Aim: to gain insight into how the field of IOR studies and its key ideas developed
over time
Definition: IORs are relationships between or among organizations that involve the
concrete exchange of products, services, and resources
Subject of the study: networks of non-profit and public organizations, joint ventures
and strategic alliances, supply chains, interlocking directorates, etc
IORs and IONs can be the dependent or the dependent variable
,Definitions
Network: a certain structure of ties and nodes
Node: can be many things (artifact, human being, organization, a country…) but in
light of this course the nodes are organizations
Tie: a certain type of exchange. A relationship between two nodes. Stands for
interaction and exchange. Something is moving from one node to another and vice
versa
The interorganizational problem: exchange between two nodes that belong to different
organizatioins. Thus, boundaries or borders are crossed (remember boundary theories in
OT!). These two organizations are legally interdependent, they have ownership over their
own resources. But still, they exchange something. However, the area in between the
organizations (where the exchange actually happens) does not have a leader or a boss who
decides which organization gets ownership of the resources? Who resolves conflict? That’s
the interorganizational problem.
Different levels of analysis
Inter-organizational tie (diad)
Ego-centric network (ego + alters)
Triad (relationship between 3 organizations)
Whole network (serendipitous vs goal directed)
o Serendipitous: the nodes are not aware of a goal or there is no goal
o Goal directed: the nodes know about the goal of the network
IORs and IONs as dependent variables
Why and when do organizations form relationships with other organizations and
what determines partner selection?
How do IORs form, develop dissolve and how are they managed
What explains the form and sahape of an IOR?
Which factors explain changes in network structure over time?
IORs and IONs as independent variables
What are the effects of IORs and networks on the behavior of strategies of
organizaitons?
What are the effects of IORs on the outcomes of organization?
To what extent do different network sturctures impact on project success?
IOR field of study: diversity and fragmentation
Different types of IORs require different theoretical perspectives and analytical approaches
(for example, networks of non-profit vs networks of profit organizations differ in goals and
governance)
Fragmentation of the field difficult to formulate general propositions about IORs
based on prior research findings
Galaskiewicz (1985): The body of accumulated iknowledge is highly fragmented, and the
scholarship uneven. Few studies have been replicated, thus we heave a host of ‘tentative
findings’ to sort through and analyze.
,Possible reasons for the fragmentation
Likelihood of replication of studies is low: more diversification and less
cumulativeness
Different types of IOR are studied and different analytical schemes employed – few
attempts at generalizability
Conceptualizations of IORs differ
Unit of analysis is a broad category (diad, triad, network, etc)
CLASSICS
Levine & White (1961)
o Exchange as a conceptual framework for the study of interorganizational
relationships
o IORS are important for running organizations and achieving their goals
They lack all the necessary resources to attain their goals resource
deficit
Resource deficit drives organizations to form ties with other
organizations to obtain resources
Organizations exchange resources (form IORs) with each other to
achieve mutual benefit
The above are the main elements of the exchange theory of IORs
o What affects interorganizational exchange relations?
Organizational goals/functions (need)
Access to resources from outside the system (access)
To what extent is there agreement on their claims to pursue particular
goals (domain consensus)
o Most important contributions:
Levine & White established IORs as a crucial unit of analysis
They founded the field of IOR research
Thompson (1967)
o Organizations in action
o Open systems perspective
Organizations faces with resource deficit
Thus they depend on their environment/other organizaitons for
survival
They have limited control over the environment ( uncertainty)
, Yet they need certainty
o Ways of eliminating environmental uncertainty
Internal: designing organizational structures to produce a closed and
stable system in the core technology component
External: management of the IORs and the dependence inherent in
them. Organizations can make relations with other organizations
more reliable and predictable
o Two strategies for managing dependence inherent in IORs
Cooperative strategy: to reduce dependence and uncertainty,
organizations can obtain reliable commitments from other actors
(this, of course, requires making a commitment in return)
Contracting (agreements)
Co-opting (absorbing new elements into the power structure)
Coalescing (joint ventures)
Downside while such commitments reduce uncertainty,
they also place constraints on future action
Competitive strategy: avoiding to become interdependent on the
environment
Maintaining alternative resources (prevents concentration of
power over the organization)
Seeking more power or prestige (gaining power without
increased commitment)
o Thompsons contribution: broadened notion of IORS
IORS are not only a tool of resource exchange, but complex
interdependency that needs to be managed strategically to ensure
organizational stability and success
Pfeffer & Salancik (1978)
o The external control of organizations
o Organizations are not self-sufficient and need to manage resource
dependencies to reduce uncertainties in their environment
o Resource depencence perspective:
Other actors in the environment hold resources that the organization
needs
This gives them political power over the organization. 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 this political power to impose their interests and
demands on the organization
o Organizations can limit resource dependence and increase their autonomy
by formal as well as informal interorganizational activities (cooption, trade
associations, joint ventures, formation of social norms between
organizations…)
o Aims of inter-organizational activities:
Access to resources
Stabilize outcomes
Prevent environmental control
, Stabilize and coordinate the respective interests of actors
o Contribution:
Pfeffer & salancik developed a cohesive theory of resource
dependence relations among organizations
Extended the IOR theory by
Inclusion of political and power aspects of IORs
Elaborating strategies for managing assymetric power
relations
DiMaggio and Powell (1983)
o The iron cage revisited: instituational isomorphism and collective rationality
in organizational fields
o Institutional theory
Organizations compete for resources and customers, political power,
institutional legitimacy, and social and economic fitness
In order to achieve legitimacy and social fitness, oerganizations tend
toward isomorphism with their institutional environents
Isomorphism = mechanism by which organizations conform to rules,
values and beliefs of their institutional context
o Different forms of isomorphism
Coercive: state, regulators that exercise legitimated power over
organizations, impose norms with fines, sanctions
Mimetic: organizations tend to imitate other organizations (especially
successful ones)
Normative: pressure for conformity arising from culture and norms of
professionalis,
o Contributions:
Inclusion of social and cultural facets of the environment (next to
technical)
Other organizations are not only resource providers but also sources
of institutional pressures and creators of institutional norms and
values
HC3
Background on the study of social networks
Network as perspective and empirical tool social network analysis
Social structure is conceptualized as nodes and linkages
Relational ties (linkages) between actors are channels for transfer or flow of
resources (either material or nonmaterial)
Actors and their actions are viewed as interdependent rather than independent,
autonomous units
Key assumption: relations are at least as important for the explanation of social,
political and organizational phenomena as attributes
Structure of a system determines at least in part the outcome
Individual’s position determines opportunities and constraints
Social structure determines the operation of dyadic relationships, not only direct
links but also indirect links are important
, Social network analysis is therefore not a collection of neutral statistical
procedures, but an analytical toolbox resting on very specific sociological
assumptions
, Basics of social network analysis
Network: set of objects (often also called nodes, positions, vertices or actors) and a
set of relations (also called edges, ties, or links)
o Nodes
o Linkages
o Present and absent ties
o Boundaries
Levels of analysis
o Actor
o Dyad (inter organizational relation)
o Triad
o Egocentric network
o Complete network (inter-organizaitonal network)
Attribute data: relate to the attitudes, opinions and behavior of agents, in so far as
these are regarded the properties, qualities or characteristics that belong to them as
individuals or groups (scott, 2000)
Relational data: the contracts, ties, and connections, the group attachments and
meetings, which relate one agent to another and so cannot be reduced to the
proiperties of the individual agents themselves (Scott, 2000)
