Network Logic - Index of

Network logic
more likely to be large, composed of many internal businesses, and
hierarchical. It will make sense to integrate essential supplies and
services in one single organisation. And it will make sense to channel
relevant information up a pyramid and have a set of rules for which
decisions need to be taken at each level of the business. Conversely, if
information flows more easily, outsourcing, breaking up conglomerates
and flattening hierarchies will look more attractive.
And so it is been since the early 1990s, when the steep recession
triggered a substantial corporate reorganisation with exactly these
features. Although they might have looked like straightforward costcutting
or management fads, each had a fundamental technological
rationale.
The pattern throughout the past decade has been a hollowing-out
of medium-sized companies. A huge merger wave created more very
big companies, increasingly with an internal network rather than a
hierarchical structure, taking advantage of economies of scale and
global market opportunities. The possibilities of ICT have allowed
more small companies to thrive by exploiting better and faster
information on specialist consumer demands or specialised sources
of supply, and operating in an external network of other companies.
The relative advantages of being in between have diminished. Indeed,
being medium-sized can combine all the disadvantages of lacking
scale with all the disadvantages of lacking flexibility.
There are no consistent data across countries, but the OECD has
estimated from different national sources that the average size of
companies has been shrinking. The number employing more than
500 people has declined since 1990 – although the remaining big
companies are almost certainly much bigger than before. And in most
industrial countries (Japan being a significant exception) the number
of businesses employing up to 50 people has rocketed. 1
It is hard to be sure how far this size redistribution will go, for
there will certainly always be some big firms around. But it is a safe
bet that the organisational and social ramifications are still in their
infancy.
170 Demos