New Europe College Regional Program Yearbook 2001-2002

N.E.C. Yearbook 2001-2002
There are no clear-cut types and definitions of ‘networks’ in the
literature. As early as 1983, Haegg and Johanson edited a book called
Firms in Networks, in which they introduced the concept of networks as
a mode of organization, that is neither a company nor an “intermediate
form”; this concept was to serve as a tool for understanding the
relationships in the industrial market in order to understand the industrial
development. Though they restricted their description of the scope of
networks to buyer-seller relationships, they pointed out the importance
of long-term and stable relationships between buyers and sellers for the
exchange of information and also noted the differences between domestic
(more extensive, more intimate and informal contacts) and international
relationships.
In his book on strategic networks, Jarillo (1993) starts by making a
broad definition: “...a set of companies that work together towards a
common goal” and ends up with the definition of “an arrangement by
which companies set up a web of close relationships that form a veritable
system geared to providing product of services in a coordinated way.”
Gulati et al. (2000) very broadly defines strategic networks as a “…firm’s
set of relationships, both vertical 7 and horizontal, 8 with other organizations
– be they suppliers, customers, competitors, or other entities – including
relationships across industries and countries”. There are many approaches
to networks from different disciplinary backgrounds that define various
types and dimensions of networks that overlap to a great extent in the
real world, such as business networks, industrial or production networks,
innovation networks, knowledge networks, and so on.
In this paper, networks are defined as inter-organizational relationships
without (as much as possible) hierarchical control, i.e., formed by large
firms to develop non-market flows, which are often aimed at changing
quality rather than quantity. I differentiate here between two types of
relationships: equity (where the partners are linked by ownership –
shareholding, i.e., pecuniary relationships) and non-equity (i.e., not based
on ownership) relationships. This research does not totally exclude equity
relationships but includes third party relationships such as joint venture
and acquisitions (resulting from growth strategies as discussed above).
The non-equity type of relationships includes subcontracting, alliances
with suppliers and customers, licensing, research consortia, strategic
alliance, cooperation with potential competitors; the first two are vertical
relationships and the rest are horizontal.
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