In this study we investigate the design and control of public sector networks formed by
government mandate. Specifically, we analyse how a range of antecedent factors influence
the extent to which organisations within such networks effectively collaborate to
unify their efforts. We examine the role of both formal and informal controls in promoting
and co-ordinating activity and managing appropriation concerns among organisations of
the network. We address these issues in the context of health sector reforms in Victoria,
Australia, that resulted in the amalgamation of metropolitan hospitals into a number of
hospital networks. While the reforms determined the particular aggregation of hospitals,
management retained discretion as to the organisation and control of activity among hospitals
of the network. We draw on Oliver’s (1991) predictive model of strategic responses
to institutional mandates to analyse how efficiency and legitimacy concerns, the influence
of external constituents, and consistency between institutional and organisational
goals influence resultant structural and control choices in three of these hospital networks.
Specifically, we examine the extent to which structural and control attributes promote
the integration of activity within networks by analysing the delegation and partitioning
of decision rights, and the design and use of performance measurement systems, integrative
liaison devices, and standard operating procedures. We also consider the implications
of integration for network performance. In our empirical analysis of three hospital networks
we observe tension in network design relating to the achievement of efficiency and
legitimacy imperatives that underpin the mandate to form hospital networks. The networks
differ in their potential to generate efficiency and legitimacy gains from collaboration, their
commitment to the ideals underlying the institutional mandate, and their willingness to
pursue effective collaboration in light of the influence of other external constituents. In
turn they adopt structural and control system designs that reflect different levels of clinical
activity integration, and different degrees of substantive acquiescence to the institutional
mandate to collaborate.