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  • Writer's pictureMatt Garris

Network Organizations and the Environmental Process




The following post is adapted from my personal academic coursework.


Network Organizations and the Environmental Process

Open system theorists emphasize that organizations can self-maintain “on the basis of throughput of resources from the environment.” Pondy and Mitroff emphasized that “it is precisely the throughput of nonuniformity that preserves the differential structure of an open system.” In other words, while the environment impacts the organization, the organization also impacts the environment through in-putting resources and out-putting different resources.


The natural world works very similarly. In the carbon cycle, people and animals take in oxygen, release carbon dioxide, and change the environment. Plants take in carbon dioxide and release oxygen, which balances the air chemistry. However, without plants, as in a coal mine or a primitive submarine, humans and animals eventually use all the oxygen and can die. In the natural world, each organism interacts with its environment.


As open systems, organizations also interact with their environments. Eacott argued in his relational approach that “Auctors generate spatio-temporal conditions through organising activity.” He explained further: “Auctor, meaning s/he who generates, recasts our way of thinking about relations with context. More commonly used terms such as ‘actor’ and ‘agent’ sustain a separation from context. Through its focus on generation rather than separation, auctor enables us to talk about embedded and embodied activities. As a result, instead of contexts, we have spatio-temporal conditions (…time and space). Context is therefore not something to be overcome or even worked through but is constitutive of and emergent from activity. Spatio-temporal conditions are constantly generated through activity.” In other words, the environment impacts the organization’s activities and the organization’s activities impact the environment.


The precise nature of these interactions between organizations and their environments remains the subject of much debate. Scott and Davis summarized the distinctions between ecological and institutional theorists as both examining “wider systems – comprised either of similar kinds of organizations (populations) or of organizations operating in the same domain (fields).” They further explained that ecologists consider competition while institutional theorists focus on the rules, norms, and beliefs affecting organizations. Analysts consider these wider systems as networks, “system[s] of relationships among parts” in which the parts are called “nodes” and the relationships are called “ties.” Understanding analysts’ framework for evaluating networks, common network organizations, and their impacts helps explain these network interactions and how organizations impact their environments.


Network Analysis

Scott and Davis identified three levels of network analysis. The lowest level is the ego network consists of all the direct contacts of a particular node. The middle level is the overall network and includes all the nodes and ties within a particular domain. The final level of analysis is network position, which describes the node’s location within the larger system. Within each of these levels, analysts utilize a variety of measures, including distance, centrality, clustering and structural holes, equivalence, density, and centralization. Analysts also consider whether networks function as pipes through which resources flow or prisms which reflect status.


Scott and Davis explained that “ties are often more influential in affecting behavior than the specific attributes of nodes” and that there are various levels and types of ties. While Scott and Davis acknowledged that “ties can take on endless forms,” they focused primarily on exchanges (pipes), interlocks (prisms), and alliances. Ihm related types of ties to network functionalities, including flow ties (pipes), representational ties (prisms), and affinity ties, which are socially constructed relationships.


While Ihm researched nonprofit organizations’ Twitter networks, the connection she proposed between ties and functionality transfers easily to other contexts. In the relationship between David and Jonathan, the Bible shows the flow ties, representational ties, and affinity ties the two men shared. The affinity tie between David and Jonathan is evident in 1 Samuel 18:1, which states that “the soul of Jonathan was knit to the soul of David, and Jonathan loved him as his own soul” (NKJV). Jonathan and David also shared a flow tie as shown by the flow of information in 1 Samuel 19:2, when Jonathan told David, “My father Saul seeks to kill you.” Finally, in 1 Samuel 19:4, “Jonathan spoke well of David to Saul his father.” David’s friendship with Jonathan served as a representational tie which helped him curry favor with King Saul.


Network Organizations

Researchers remain split on the exact nature of the network organization. Baker described it as “a social network… …integrated across formal boundaries” while Miles and Snow described it as groups “coordinated by market mechanisms instead of chains of command.” Scott and Davis also discussed networks which arise both inside and among organizations.


Miles and Snow

Miles and Snow viewed networks from the organization’s perspective and identified stable networks, dynamic networks, and internal networks as the three primary types of network forms. Stable networks have market-based ties to limited partners and these partners also operate separately from the network. Dynamic networks consist of temporary alliances between partners otherwise connected by the value chain. Internal networks bring market transactions into the organization.


Harrison

In contrast, Harrison’s typology identified four different varieties of network organizations – those of craft-type industries, small-firm industrial districts, large-firm industrial districts, and strategic alliances. Networks in craft-type industries are temporary and project-based. The industrial districts, whether led by small or large firms, have “both a community of people and a population of firms in one naturally and historically bounded area.” Scott and Davis suggested familiar examples of industrial districts, such as Silicon Valley for technology, “Detroit for cars, Hollywood for movies, and Wall Street for finance,” noting that, “In each case, the city or district came to be a metonym for an industry.”


Harrison’s strategic alliances are relatively formal and “entail genuine relationships among organizations.” Wang and Guan stated that “organizational alliance decisions are affected by structures… …and by whether different organizations can gain from each other.” Merida described the alliances during Solomon’s reign between Israel and its neighbors and compares it to the alliance prophesied by Micah: “The nations come into Zion and everyone sits without fear under their own vines and fig trees... …The nations are invited into the kingdom of God.” In these alliances, both Israel and the nations gain peace and prosperity from this partnership, yet both remain distinct entities.


Macrolevel Networks

Scott and Davis examined industry exchange networks and overall economies. A key metric of industry-level exchange networks is structural autonomy. Scott and Davis described structural autonomy as the ratio of competition to buyers and suppliers. Networks with few competitors and many suppliers and buyers are more structurally autonomous than those with many competitors or those who rely on limited suppliers or a limited customer base.


In analyzing public sector macrolevel networks, Laumann and Knoke found “issue publics” that forged alliance networks based on shared beliefs or issues related to policy development. Muhammad observed this trend when he identified two distinct networks of educators present at schools across the United States – believers and fundamentalists – which compete to establish their belief systems as the norm in campus culture. Yang suggested that “at the center of these collaboration networks is not a [non-governmental organization], a company, or a group of organizations; rather, the centers of issue networks are the issues relevant to all stakeholders.”


Cano-Kollmann et al. discussed another macrolevel issue – the rise of global innovation networks. They observed the rise of globalized value chains in which “narrow, highly specific activities… …are undertaken in economic clusters… [and] …produce intermediates (and not complete goods or services)… [that] compose the vast majority of all international trade today.” Cano-Kollmann et al. also stated that: “As product life cycles grow shorter, the availability of a wider array of specialized products creates the opportunities for ever newer orchestrators to recombine the modular products of specialized activities to disrupt extant mature industries. This renders traditional industry boundaries porous both in terms of products and services as well as geography. Examples of the former include software firms entering the automobile business and supermarkets and retailers offering banking services. Examples of the latter include Chinese and Indian [companies] beginning to compete in global markets with leading firms based in advanced market economies.” They also noted that “personal relationships are more likely to develop in today’s world of large global diasporas.”


Cano-Kollmann et al. make a compelling case for macrolevel global innovation networks and the benefits it affords all parties involved. It certainly seems like the next step in global development. However, the unity of purpose and communication is reminiscent of Genesis 11:6, when God saw that “the people are one and they all have one language, and this is what they begin to do; now nothing that they propose to do will be withheld from them.” Perhaps since humanity has now filled and subdued the earth, and their unity of purpose is now commerce instead of building a tower to the heavens, the modern global network will succeed.


Organizational Impact

As open systems, network organizations impact their environment in several ways. Globally, networks affect their economies. Ecologically, networks impact their environments through entrepreneurship and ecological processes based on niche width and density dependence. Finally, theorists from the institutional perspective suggest that networks impact the environment through their effects on institutions, their creation of and subjection to strategic responses, and through their interactions with various agents and fields.


Economies

Scott and Davis highlighted the simultaneous emergence of an industrial core connected by interlocks between the railroad, coal, and telegraph industries, and the transition of the United States from an entrepreneurial economy to a corporate one (p. 303). This exemplifies the connectedness between networks and the economy. They also emphasized the role of banking interlocks. Banks “remained at the center of the [interlock] network for seven decades.”


This relationship between networks and the economy is not unique to the United States. Scott and Davis identified the keiretsu networks of Japan, the centralized network of shared directors who followed the traditional path to economic elitism in France, bank ownership in Germany, and business groups which had a significant impact on performance and more of an effect than cost on contracting in China. Most interestingly, Scott and Davis described the post-socialist “East European capitalism” which Stark stated was built “not on the ruins but with the ruins of communism.”


Ecological Perspectives

Aldrich explained that there are two types of entrepreneurs – reproducers and innovators – and that each type affects its respective environment differently. Reproducers draw resources from the existing environment while innovators often add to the environment by creating new sources for their in-puts. Ultimately, successful innovators reproduce themselves, because according to the ecological theorists, “the bottom line is survival… [and ] …the ability to perpetuate one’s form is the hallmark of successful adaptation.


Scott and Davis stated that organizations employ two strategies to survive and explain these strategies using niche-width. Specialists have narrow niches and limited tolerance to environmental variation, but generalists have wider niches and greater tolerance to environmental variation. A final ecological consideration is density dependence, which refers to the growth of populations in a particular field, as expressed through foundings and failures.


Institutional Perspectives

Scott and Davis defined institutionalization as how “social reality is constructed.” These social realities, or institutions, are an environmental construct from which organizations and networks can draw resources. These institutions also affect networks’ strategic responses to their environments. Scott and Davis identified the following situations as examples of institutions affecting network strategic responses: “A growing number of cities adopted civil service reforms in response to increasing normative pressures…, …the spread of systematic bureaucratic administrative forms in U.S. public schools during the middle decades of the twentieth century…, [and] …large forms [were more likely] to adopt the M-form structure the more other firms in the same industry had previously adopted it.” Finally, networks impact the actors generating institutions and the fields which those institutions affect.


Conclusion

In conclusion, there are several types of network organizations. Analysts from various schools of thought examine them, how their environment impacts them, and how they impact their environment. Their efforts contribute to a better understanding of the interactions between networks and their environments.


References

Cano-Kollmann, M., Hannigan, T. J., & Mudambi, R. (2018). Global innovation networks – Organizations and people. Journal of International Management, 24(2), 87-92. https://doi.org/10.1016/j.intman.2017.09.008


Eacott, S. (2019). High-impact school leadership in context. Leading & Managing, 25(2), 66-79.


Ihm, J. (2019). Communicating without nonprofit organizations on nonprofits’ social media: Stakeholders’ autonomous networks and three types of organizational ties. New Media & Society, 21(11-12), 2648-2670. https://doi.org/10.1177/1461444819854806


Merida, T. (2015). Christ-centered exposition commentary: Exalting Jesus in 1 & 2 Kings. B & H Publishing Group.


Muhammad, A. (2009). Transforming school culture: How to overcome staff division. Solution Tree Press.


Scott, W. R. & Davis, G. F. (2016). Organizations and organizing: Rational, natural, and open system perspectives (6th ed.). Routledge.


The Holy Bible, New King James Version (1982). Thomas Nelson, Inc.


Wang, Y. & Guan, L. (2020). Mapping the structures of international communication organizations’ networks and cross-sector relationships on social media and exploring their antecedents. Public Relations Review, 46(4). https://doi.org/10.1016/j.pubrev.2020.101951


Yang, A. (2020). The issue niche theory of nongovernmental and nonprofit organizations’ interorganizational network ecology. Communication Theory, 30(1), 41-63. https://doi.org/10.1093/ct/qtz014


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