Features Of Inter-Organizational Network

FEATURES OF INTER- ORGANIZATIONAL NETWORK

Abstract:

This paper tries to study the different aspects of Inter-Organizational Network through literature survey method. It concentrates on the core reasons for forming networks from two different perspectives (transactional and sociological). The elements of network formation are identified dividing them into essential and facilitating factors. It discusses effects of inter-organizational network on the industry. The paper also highlights the feature of knowledge transfer in organizations through networks. Lastly, it tries to focus on the possible impacts that the formation of networks can have on Human Resource Management functions of the networked organization. The paper concludes by asserting the need for more in-depth study on the possible impact on Human Resource Management of a networked organization.

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1. Introduction:

Inter-organizational relations have taken shape in different forms. Organizations, among themselves, have formed contractual relationships or joint ventures or informal associations. Inter Organizational Network as a successful measure of increasing competitiveness has been recognized in various studies, e.g. the studies performed by Hartley et al (2002), Elworth (2000), Nooteboom et al (2000). Organizations form networks to be more successful in an increasingly competitive and uncertain market scenario. There have been studies to establish the effectiveness of forming and operating of these networks. (Samson Wong et al 2005, Downie et al 2002). The number and scope of inter-organizational networks have shown an increasing trend, especially in research oriented fields like biotechnology and pharmaceuticals. The growing phenomenon of inter- organizational network has also been referred as “virtual firm”.

2. Objectives:

The present study of Inter-organizational network limits itself to the following objectives-

• To understand the reason or motivation behind forming of networks from different view-points.

• To identify the different factors that are essential and helpful for the formation of inter-organizational network.

• To find out the different impacts these networks can have on the industry.

• To understand the important process of knowledge transfer within the network.

• To study the possible impact of the network on the networked organization’s Human Resource Management function.

3. Methodology:

This paper is based entirely on literature-survey. This is also a limitation of the study. Articles published in international journals on Organization Theory and related subject, have been studied and utilized to derive the conclusions to the objectives specified.

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4. Two perspectives: Transactional and Sociological-

The process of formation of inter-organizational network has been analyzed as a self-organizing process by Biggiero (2001). Examples of this kind of network in manufacturing sector in U.K. have been studied by Robertson (1996). The study of Cux et al (2003) about the Food processing industry in U.K. has revealed that the formation of inter-organizational network is an institutional response to technology.

Organization Theorists like Powell (1998) have generally explained the formation of networks from two distinct perspectives-

i) One perspective views inter-organizational networks as a form of transaction and mutual exchange of rights. The perspective is based on the tenets of organization economics and business strategy. It focuses on the mechanism of contracts to explain inter-organizational network.

ii) The second perspective views the phenomenon of inter-organizational network from a sociological point of view. It concentrates on the process rather than the output. This perspective also judges whether collaboration within the network is embedded in various networks. This perspective also focuses on the ability of organizations to combine their existing capabilities and competencies with those of the other networking partners.

Although these two perspectives have been seen as contrasting arguments, but they are not necessarily so. Because, the contractual and process elements that help in forming networks might vary from industry to industry.

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5. Process of network formation-

Inter вЂ" organizational network, as a distinct from personal network of entrepreneurs have been discussed by O’donell (2001). The factors those are responsible for the process of Inter-organizational network have been divided into- Reciprocity, Legitimacy, Stability and Resources, according to Kimberly (2005).

i) Among the four factors, Reciprocity is considered as necessary condition. The other three factors are facilitators in the network formation process. The might be present at the time of network formation or they can be developed in the early stages of network formation.

The main objective of the Inter-organizational network is the accomplishment of collective goals for the participating organizations. The goals require inputs or contributions from other organizations, as no single organization is capable of achieving the goals on its own. The organizations, connected through network, derive benefits from other organizations’ structures. The benefit derived from joining an organization is must also be greater than the cost involved. Otherwise, a single organization does not derive any incentive from joining inter-organization network, choosing over individual goals and objectives.

ii) Legitimacy is the first of the three facilitating factors. It is essential to establish and maintain the long term viability of the organization, as well as the network. Human and Provan (2000) has suggested the conferring of legitimacy to a network based on the form, entity and interaction. Still, legitimacy is not is not regarded as the prerequisite for network