Hello. I am Ted Forbes at the Darden Business School, Charlottesville,
Virginia. I've followed the LO Digest for months with interest. I'd like
to offer a comment:
>Dr Russ Vince and Charles Booth wrote:
>>How may network organizations be both effective (implying the
minimisation of transaction costs) and simultaneously safeguard
and promote equality strategies (implying the imposition of
transaction costs through formal regulation, contracts and
protocols)? <<
I am part of a research team studying strategic alliances, and I think
that one of our findings could add value to this interesting question.
I'm not convinced that organizations *have* to promote equality through
cost adding processes. In alliance (and by extension network)
organizations, partners promote equality as much through psychological
contracts as through written documents. One of our key findings is that
in effective alliance networks, participants cite the existence of an
"alliance spirit" [their word, not ours] that binds them together around
the goals of the alliance. This spirit was a psychological contract that
implied ethical standards of fair-dealing, equitable distribution of work
and reward, and an open, honest recognition of the strengths and
limitations each party brings to the table. (in fact in our most
succeesful alliance [27 years and a $6B global business], the contract was
only two pages and governance consisted of strong personal relationships
maintained through telephone calls and an annual meeting - that's pretty
cheap cost!)
It seems to me that this same "spirit" can apply to LO's and networks
where the "shared vision" becomes an underlying "spirit" that captures how
individuals interact. Thus, while networks do in fact provide efficient
ways to reduce transaction costs, the concomitant spirit, being
psychological, increases costs only in the sense that it will take time
for members to develop that same spirit.
You might find Walter Powell's 1987 article interesting. See "Neither
Market nor Hierarchy: Network Forms of Organizations" in 1987, 12, pp.
295-336; Research in Organizational Behavior. Also Ring and Van de Ven,
Academy of Mangement Journal (I think February) 1994. I hate to cite our
own work yet we do have some papers that address the allaince spirit if
anyone is interested.
Best regards,
-- Ted Forbes Darden Graduate Business School University of Virginia Charlottesville, VA ForbesT@Virginia.edu