NETWORK
ORGANIZATIONS
ORHAN BALIKÇI
Introduction
1.
The Notion of Network
2.
Define of Network Organizations
3.
Functions of Network Forms Of Organizations
4.
Disadvantages of Network Organizations
5.
Kinds of Network Organizations
6.
Virtual Organizations versus Network Organizations
7.
Examples of Network Organizations
8.
References
What’s Network?

A network is a pattern of social relations over a set of persons,
positions, groups, or organizations.

A strategic view of networks is that «long term purposeful
arrangements among distinct but related for-profit organizations that
allow those firms in them to gain or sustain competitive advantage.»

The notion of a network implies nodes and links. The nodes can be
people, teams or even organizations - networks operate at many
levels.
Define of Network Organization

Network organizations are defined by elements of structure, process,
and purpose. Structurally, a network organization combines cospecialized, possibly intangible, assets under shared control.

We can characterize network structures as long-term agreements
among companies, which enable them to obtain and maintain
competitive advantages in relation to other companies not belonging
to the network.

In network structures a managerial center is created for the purpose
of a coordination of all cooperating companies on the basis of the
contract. The responsibility is divided among all parts of the network.
Functions of Network Forms Of
Organizations

Network forms of organization foster learning.

If an actor’s partner in a network form of organization possesses
considerable legitimacy or status, then the actor may derive
legitimacy or status through the affiliation.

The network form of organization is the adaptability of this
form to unanticipated environmental changes.

These organizations can alleviate sources of external constraint
or uncertainty by strengthening their relationship with the
particular sources of dependence.
Disadvantages of Network Organizations

The coordination problems arising from having different companies
perform different parts of the work process would be enormous.

There has to be trust between the different groups so that they can
share their ideas, something necessary of successful new product
development.

In general, the more complex the value creation activities necessary
to produce, market goods and services, the more problems there are
associated with using network structure.
Kinds of Network Organizations

The general network organization framework permits several
gradations in type. Network organizations are distinguished between
three kinds:

internal,

stable, and

dynamic.
Internal networks
SUPPLIER
MARKETER
BROKER
PRODUCER
DESIGNER
Stable networks
SUPPLIER
SUPPLIER
Core
Firm
SUPPLIER
SUPPLIER
Dynamic networks
SUPPLIER
MARKETER
BROKER
PRODUCER
DESIGNER
Virtual Organizations versus Network
Organizations
Network Organizations
Virtual Organizations


Virtual organization is a special form
of the network organizations.

The structure of virtual organizations
is temporary. When project is over,
virtual network is gone.

There is no only one leader firm.

Separation from network and joining
network can be at many levels.


All of virtual organizations are
network organizations. But All
network organizations are not
virtual.
Network organizations can be longterm or short-term.
Separation from network and
joining network are in the form of
units.
Examples of Network Organizations

Sun Microsystems:

it has been considered highly decentralized organization comprised of
independently operating companies. Sun positions information
systems as a top priority, trying to achieve faster and better
communication. With numerous "SunTeams," members operate across
time, space, and organizations to address critical business issues. Sun
managers identify key customer issues and then form teams with the
critical skills and knowledge needed to address the issue. This team
might include sales people, marketing personnel, finance, and
operations from various places around the globe; customers and
suppliers may become episodic members as necessary.
Examples of Network Organizations

Nike

It is a global brand with its Swoosh as the most recognizable logo.
Nike utilizes the network structure to outsource manufacturing
particularly because the company owns no manufacturing facilities
and are keen in moving production when the needs arise. Nike, as a
network organization, had dispersed members that is linked using
advanced technology.

Nike is outsourcing everything except two activities: Marketing and
Design. Nike keep them within the company, not only because they do
it better than anyone could do, but also outsourced activities are easy
target for copycat.
Examples of Network Organizations

Dell Computers (US)

Most of the components in a Dell computer are made by other
companies while Dell focuses on its strengths--marketing, customer
support and integration of these components into the final computer
products.
Examples of Network Organizations

REUTER

This financial information services company created virtual teams with
representatives from 12 companies around the world to work on user
interfaces for the company. Facilitated by the signing of nondisclosure
agreements, there has been savings in recruitment costs, staff benefits and
overhead as a result of this virtual organization approach
References

Koçel, Tamer. İşletme Yöneticiliği. İstanbul: Beta Yayınları, 2010.

Boonstra, Jaap. Dynamics of Organizational Change and Learning. The
Netherlands: John Wiley and Sons Ltd, 2004.

Jones, Gareth R. Organizational Theory, Design, and Change, Text and Cases.
Fourth Edition. London, Pearson.

Nemiro ,Beyerlein, Bradley, Beyerlein The Handbook of High Performance Virtual
Teams: A Toolkit for Collaborating Across Boundaries. John Wiley & Sons, 2008

The State Of Network Organization: A Survey In Three Frameworks, 1997.
http://ccs.mit.edu/papers/CCSWP192/ccswp192.html

Joel M. Podolny and Karen L. Page, Network Forms Of Organization, Annu. Rev.
Sociol. 1998. 24:57-76

Barbe and Alegre. Reshaping the Boundaries of the Firm in an Era of Global
Interdependence. Emerald Group Publising Ltd. 2010.