Interorganizatonal Networks

managing it in government, business & communities
Chapter 16 - Interorganizational Relationships, Strategic Alliances, and Networks: The Role of Communication Systems and Information Technologies
Managing IT in Government, Business & Communities
by Gerry Gingrich (ed) 
Idea Group Publishing 2003
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Networks and Interorganizational Networks

What are Networks?

Because the term "network" has broad meanings, it is very difficult to define precisely and perfectly. I use the term network in connection with the networks of organizations.

Rockart and Short (1991) stated that network concepts have been used primarily to study either interor intra-organizational activities. They listed seven key attributes of a network: shared goals, shared expertise, shared work, shared decision making, shared timing and issue prioritization, shared responsibility, accountability, and trust, and shared recognition and reward.

Therefore, these seven key attributes can be applicable to both the intra- and inter-organizational network.

Why Networks?

Lipnack and Stamps (1994) introduced five principles of organizing in the 21st century: the unifying purpose, the independent members, the voluntary links, the multiple leaders, and the integrated levels (Figure 4).

Unifying Purpose

Purpose is the glue and the driver. Common views, values, and goals hold a network together, A shared focus on desired results keeps a network in sync and on track.

Independent Members

Independence is a prerequisite for interdependence. Each member of the network, whether a person, company, or country, can stand on its own while benefiting from being part of the whole.

Voluntary Links

Just add links. The distinguishing feature of networks is their links, far more profuse and omnidirectional than in other types of organization. As communication pathways increase, people and groups interact more often. As more relationships develop, trust strengthens, which reduces the cost of doing business and generates greater opportunities.

Multiple Leaders

Fewer bosses, more leaders. Networks are leaderful, not leaderless. Each person or group in a network has something unique to contribute at some point in the process. With more than one leader, the network as a whole has great resilience.

Integrated Levels

Networks are multilevel, not flat. Lumpy with small groups and clustered with coalitions, networks involve both the hierarchy and the "lower-archy," which leads them to action rather than simply to making recommendation to others.

Source: Lipnack, J. and Stamps, J. (1994). The Age of the Network: Organizing Principles for the 21st Century. New York: John Wiley. p. 18


Figure 4: Five Key Organizing Principles for the 21st Century

The traditional hierarchical organizations are not always effective at turbulent environments in the age of globalization and IT like today, and the "network organizations" with the above five principles can be one of the possible effective forms of organizations.

In the cooperative relationship, two or more organizations get together and formulate network(s); and there the above new principles can be effective. In this case, strategic alliances should be formulated between/among members.

What Shape Can ION Take?

Vertical Versus Horizontal

Imai (1984) classified the network into the vertical network (tightly connected, well-planned, and concentrated) and the horizontal network (loosely connected, self-organized, and decentralized).

Mechanistic Versus Organic

Network can be divided by character, such as mechanistic and organic. Burns and Stalker (1994) discovered there are two types of management systems: the mechanistic management system and the organic management system.

They stated that "a mechanistic management system is appropriate to stable conditions" (p. 119) and "the organic form is appropriate to changing conditions, which give rise constantly to fresh problems and unforeseen requirements for action which cannot be broken down or distributed automatically arising from the functional roles defined within a hierarchic structure" (p. 121). As for ION, mechanistic ION is suitable in a stable environment, and organic ION is suitable in a turbulent environment.

Homogeneous Versus Heterogeneous, or Complementary Versus Division of Labor

Network formulated by two or more organizations can be classified into the homogeneous network (members share the same function) and the heterogeneous network (members share a different function).

The former is, for example, the joint R&D, or the cooperative distribution, etc. In this case, as each member carries out the same function in cooperation with others, the network(s) will be the "complementary network."

The latter is, for example, in the distribution channel. Each member suppliers, manufactures, distributors, wholesalers, and retailers carries out each function in the distribution process. This network will be called as the "division-of-labor network."

ION Model Based on Barnard's Theory

Barnard (1968) called "a complex of physical, biological, personal, and social components which are in a specific systematic relationship by reason of the cooperation of two or more persons for at least one definite end" (p. 65) a "cooperative system"; and a "system of consciously coordinated activities or forces of two or more persons" (p. 81) formal organization. And he listed communication, willingness to cooperate, and purpose, as the elements of formulating a formal organization.

Among them, communication is the first premise. It enables one to form and share the purpose, to induce the willingness to cooperate, and to enable the cooperative work.

The next subject he took up is on the elements for survival of organization: "organizational effectiveness" and "organizational efficiency."

Generally, effectiveness is considered as "the scale of matching the value or need of society and market" (Shimaguchi, 1986, p. 24), and efficiency is considered as "the scale of indicating the relationships between effort of input and effect of output" (Shimaguchi, 1986, p. 24).

Different from the general definition, on "effectiveness" and "efficiency" Barnard (1968) explained, "Accordingly we shall say that an action is effective if it accomplishes its specific objective aim. We shall also say it is efficient if it satisfies the motives of that aim, whether it is effective or not, and the process does not create offsetting dissatisfactions" (p. 20). According to his explanation, we can define effectiveness as "to what degree does organization achieve its purpose (or goal)" and efficiency as "to what degree does an individual satisfy his motivation of purpose." Organizational effectiveness is related to effectiveness and efficiency of the activities in organization. In this case, the terms effectiveness and efficiency shall be understood meaning as generally defined. Efficiency that Barnard defined is to what degree an individual satisfy his motivation of purpose; and we can call it "organizational satisfaction."

Morimoto (1985) illustrated the relationship between three elements of the formal organization, and the effectiveness of cooperation and the organizational efficiency (Figure 5).


Figure 5: Elements and Problem Area of Ion and IT

He, at first, saw that the fundamental problem of organization is in the reciprocal-promotive progress of organizational effectives and organizational efficiency (or satisfaction). Organizational effectiveness is the degree of attainment of organizational purpose and its base is in organization structure. Organization structure is made of allocated tasks and a communication system that connects among tasks. A task is grasped in the unit of job or department and connected through formalized communication systems of authority and responsibility.

Once willingness of contribution of members as organizational personality is added to organization structure, and a certain communication is put into it, then organizational activity begins.

The outcome of organizational activity is organizational result. Organizational effectiveness is the degree of achievement of result compared to the initial purpose or goal. And the higher such effectiveness is, the better an organization can keep the balance with its environment.

An organizational result is also shared and distributed. As the result, it becomes an incentive of organizational members' willingness of contribution. The degree of satisfaction is organizational efficiency - the degree of satisfaction of individual purpose. And the higher such efficiency is, the better an organization can keep the balance with the individual.

Thus, an organization and its environment can keep good balance by organizational effectiveness, and the organization and the individual can keep good balance by organizational efficiency; then, an organization can survive.

In utilizing this model, the problem is whether a "member" of the inter-organizational networks can be handled the same as a "person." or whether a "member" can be personalized or not.

Based on the general system theory, certain systems have sub-system components and are also a part of a supra-system. Thus, the general system has characteristics of hierarchy and whole-and-part (Kast and Rosenzweig, 1972). Using this theory, if we consider ION as organizations consisting of member organizations, then ION is a supra-system and member organization are sub-systems; there is a recursive relationship in ION.

Thus, it can be explained by considering the relationships among ION, their members, and the persons in the members as the recursive relationship in the networks.

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Managing IT in Government, Business & Communities
Managing IT in Government, Business & Communities
ISBN: 1931777403
EAN: 2147483647
Year: 2003
Pages: 188

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