An effective response to the predictive contingencies for co-ordination
Networks are more likely than the main alternatives – markets and hierarchies – to
address the key factors that bring potential partners together. Oliver (1990), for
example, proposes six reasons why inter-organizational partnerships might be
established:
(1) necessity, when organizations are mandated through law or regulation by higher
authorities to establish relationships;
(2) asymmetry, that allows one party to exercise power or control over another one;(3) reciprocity, when through co-operation, organizations can pursue common or
mutually beneficial goals or interests;
(4) efficiency, when through co-operation, organizations can achieve higher input/
output ratios;
(5) stability, when through co-operation organizations can better forestall, forecast or
absorb uncertainty affecting their activities;
(6) legitimacy, when through co-operation organizations can establish or enhance
their reputation, image, prestige or congruence with prevailing norms.
The first two factors involve attempts at compulsory linkage, and while the
respective exercise of authority and power can bring about a lot of movement in
the structure and shape of organizations, it does not necessarily change the way
individuals and groups in these new structures think and behave. The remaining
four imperatives are likely to be rooted in voluntary partnership, and it is here that
network modes can deliver advantages over market and hierarchy. Many of the
predictive contingencies for partnership working are therefore more likely to coexist
with a network mode of governance.