STRATEGIC BUSINESS NETS – THEIR TYPES AND MANAGEMENT
© Kristian Möller, Arto Rajala, Senja Svahn
Abstract
This conceptual paper focuses on the management challenges of different types of strategic
business nets. First, we propose a value-system continuum that forms the basis for classifying different types of strategic nets. Second, a classification of these nets is suggested and discussed.Finally, the core managerial questions and capabilities required in net management are illustrated. A discussion of the theoretical and managerial implications, and of future research needs, concludes the paper.
Key Words: Network Management, Strategic Networks, Business networks
Introduction
The way economic value is created is fundamentally changing. The increasing importance of knowledge,technological complexity, global competition, and the availability of digital information technology are driving this change (Castells 1996). Individual companies, even major MNCs such as ABB, IBM, Microsoft and NOKIA, cannot internally master all the relevant value activities of the value chain from product innovation to customer care, nor is it economically sensible for them to try. In consequence,firms and other social actors are creating increasingly complex webs of knowledge and technological bonds. Emerging networks of firms are replacing traditional markets and vertically-integrated companies. Networks are claimed to be better adapted to knowledge-rich environments because of their superior information- processing capacity and flexible governance compared to markets and hierarchicalorganizations (Achrol and Kotler 1999, Eisenhardt and Marting 2000, Foss 1999, Snow1992). Empowered by the new digital media, network organizations are expected to take the leading role in the creation of economic and social innovations (Castells 1996, Grabher 1993,Jarillo 1993, Parolini 1999, Thompson et al. 1994). In a nutshell, it is a question of how to combine the value activities of multipleactors in order to form ‘value-creating’ end products (Anderson and Narus 1999, Cravens et al., 1997, Doz and Hamel 1998, Norman and Ramirez 1993).
The view that companies are closely interrelated through resource ties and activity links is, of course, the core proposition in Industrial Network Theory (Axelsson and Easton 1992, Håkansson and Snehota 1995, Möller and Wilson 1995). This viewpoint isalso put forward in the more recent network propositions from the fields of economic sociology,which are primarily based on the resource/capability view (RBV) of the firm (Amit and Zott 2001, Eisenhardt and Martin 2000, Gulati and Zaheer 2000, Gulati and Gargiulo 1999, Gulati
1998). Why, then, do we need another study of networks?
We argue that the majority of research has focused on the generalcharacteristics of
organically evolved networks, basically examining their structure and, to a lesser extent, their development processes. Much less attention has been paid to the issues of intentionally developed nets, and specifically to their management. Our work is based on the premise that different managerial capabilities are needed in operating in different types of nets. In exploring thisnotion we need to deal with the following fundamental questions. (1) What are the basic types of strategic business networks?
(2) What factors influence the formation of these networks?
(3) What kinds of organizational structures and managerial processes are used?
(4) What kinds of managerial capabilities are required in the basic types of strategic network?
The primary focus in this study is onquestions one and four. First, we propose a value-system continuum that forms the basis for classifying different types of strategic nets.
Second, a classification of these nets is suggested and discussed. Finally, the core managerial questions posed and the capabilities required in net management are identified and discussed through two conceptual frameworks.
Characteristics of Strategic Nets…
