Organisational Cultures: Networks, Clusters, Alliances

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Chapter 4.2, Reasons for Organisation Networks:

4.2.1, External Reasons:

In the post-industrial society a lot of fundamental changes of the corporate environment happen, which lead to the development of the complex but flexible corporate structures of organisation networks. Alter and Hage identify five general effects, which are especially responsible for the increasing constitutions of networks (Alter, Hage 1993, p. 38 ff):

General Effects:

1. The progress of information technology and the distribution of the Internet and their diffusion into daily life have a major effect on the development of organisational networks.
By these means people become informed about nearly any information or news all over the world. This knowledge offer people new opportunities of creating new social fields and positioning inside. They want to exchange and discuss the new information of their fields of interest with new communication partners, who are interested in these fields, too. The meeting of partners with a common field of interest by the new means of communication constitutes social networks, which are the basis for organisation networks.
In these social networks people exchange information about personal or professional content. Consequently any field of interest is enlarged and intensified by any new participant.
Examples of social networks are the Internet communities of Facebook.de, Stayfriends.de for the personal type or Xing.de for the professional type.
2. Nevertheless the rapid technological development, which leads to the growth of knowledge and know-how, causes a high increase of technological complexity, too, which is the second major effect for the increasing number of organisation networks. Thus the technological complexity in the production processes as well as the economic risk for the single company has to be distributed on additional partners.
3. The third effect for the development of organisation networks is the changing customers demand, especially for non-standardised products. This implies the necessity to change the corporate alignment from the efficiency output of large standardised quantities to more flexible and specialised productions.
Consequently the maintenance of large-scale effects on the one hand in combination with a flexible production which quickly reacts on the market demand on the other hand, is a very high challenge. This challenge could only be met by organisation networks.
4. The understanding of the needs and the advantages to work together promotes the mutual trust of companies, which establish the basis for qualified organisational relationships. This is the fourth effect for the development of organisation networks.
In general the relationship between companies is determined by competition and distrust. But due to the development of this new culture of trust, the number of cooperations and organisation networks is increasing. Especially in Japan this organisational culture of trust has been cultivated for years, which is the reason for Japanese cooperation competency in form of the well-known Keiretsus.
5. The fourth factor leads to the fifth one, which has its origin in Japan, too. Especially in this country the government took influence in the economic activities of the companies. This took place in the seventies, when the Japanese government directly controlled the product line of the companies. Consequently economical goals are subordinate to political goals, which prevented a free market economy.
Economic Effects:

These external effects lead to changes on the economical field. In detail Alter, Hage (Alter, Hage 1993, p. 13 ff), Wildemann (Wildemann 1998, p. 47 ff) and Sydow (Sydow 1995, p. 13 ff) pointed out the following economic changes, which in turn cause an increase of organisation networks:

the growing internationalisation of the market- and trade relations; the increasing dynamic of innovation of products; the fast change of the market's- and the customer's demand; the fast change of technique, values of society etc.; the market entry of new industrial nations, like China and India; the shortage of resources; the growing demand towards producers and suppliers; the need to concentrate on core competences.
All of these aspects require a fast adjustment of the company and advance the development of organisation networks. They offer flexible structures and the possibility to combine different business activities to cope with the changing circumstances.