Managing an Interorganizational Network: A Framework of the Institutional Mechanism for Network Control

Organization Studies · 1996 · Volume 17 · Issue 5

Abstract

'The interorganizational network is viewed as a strategic mechanism to improve a firm's competitive advantage through cost minimization while maintaining flexibility. The change in orientation from competition to cooperation in interfirm relationships is rationalized according to the transaction-cost econom ics perspective. We address the selection of a control mode as a critical issue in managing an interorganizational network, considering the risk and cost involved in working with others. Various forms of network structure are illus trated as the proper control modes according to the interaction of the type of interdependence and the nature of network governance.

Keywords

Descriptors: interorganizational networks, vertical vs. horizontal networks, modes of network control, bilateral vs. trilateral governance, transaction-cost economics perspective

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