Markets as Networks

Actual firm relationships must be seen on a spectrum between outright competition at one end and collusion at the other. At the very least, such a self-evident observation raises the issue of the firm (or business unit) as the basic, and often only, unit of analysis: in certain circumstances we might more appropriately consider an information coalition of such firms as the key unit.

Earlier, the border of the company was seen as the dividing line between co-operation and conflict – cooperation within the company and conflict in relation to all external units. The corresponding means for coordination are heirarchy and the market mechanism. The existence of relationships makes this picture more diffuse. There are great opportunities for cooperation with a lot of external units forming, for example, coalitions. Thus, it is often more fruitful to see the company as a part of a network instead of a free and independent actor in an atomistic martket.

However, the recognition that there is a network of relationships is merely the first step. Approaches need to be developed for the analysis of the network.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: