New Organizational Forms for Competing in Highly Dynamic Environments: the Network Paradigm

Turbulence and rapid change in the business environment have been associated for some time with the development of new network organizational forms which put various types of strategic alliance and other inter-organizational collaborations into effect. This paper traces the rationale for the formation of such networks and the associated vertical disaggregation of functions and implications for internal organizational design. This leads to the proposal of a classification framework for network forms. Using the dimensions of volatility of environmental change on the one hand, and the type of inter-organizational relationship involved (collaborative or transactional) on the other hand, network forms are classified as: hollow networks, flexible networks, value-added networks and virtual networks. In each case it is possible to identify the environmental and organizational contingencies most likely to be associated with the emergence and adoption of a particular type of network arrangement. This argument leads to the identification of a new research agenda which has the goals of developing more robust conceptualizations of network characteristics; better understanding the contingencies surrounding the emergence of network forms and their relative efficiencies and specifying some of the major implications of network formation for internal organizational design. In parallel the paper identifies a number of managerial implications for setting strategic priorities and developing appropriate management systems in these new organizational contexts.