RANO Summary
Lecture 1
Why are IORs and IONs important?
- Access to financial resources
- Entering new markets
Social capital: Why does it matter?
- Social: resources are available in and through personal and business networks.
- Capital: it is productive, it creates value
- e.g., information, business opportunities, financial resources, power, emotional
- support, trust, cooperation, and so on,
- Social capital is not a feature of an entity (attribute variable),
but it is a feature of a relationship (relational variable)
- Relational variables often have an equal/higher explanatory power than attribute variables.
- “The friction is that society consists of a set of independent individuals, each of whom acts to
achieve goals that are independently arrived at, and that the functioning of the social system
consists of the combination of these actions of independent individuals.” (James Coleman)
IORs and IONs: A relational view of organizations
Social capital and IORs and IONs (Baker, 2000)
- Interorganizational networks are “relatively enduring transactions, flows, and linkages that
occur among and between an organization and one or more organizations in its
environment” (Oliver 1990: 241)
- Relationships and networks of organizations -> the exchange and flow of resources between
organizations.
- For an individual organization -> relations and networks mean access to and dependency on
resources
- ‘social capital’ -> the resources available through relationships and networks
Social capital and individual’s quality of life
- Well-being: sensemaking work and social relations are important predictors of well-being
- Health: networkers are often healthier
- Life expectancy: networkers live longer
Social capital in the economy
- Payment and career development: people who are strongly embedded tend to earn
higher salaries and experience faster career
development (“structural holes”, Ronald Burt)
- Raising financial capital: informal financial capital market.
- Learning in organizations: informal relations and learning.
- Marketing: verbal advertising, importance of social networks for
diffusion of new products
- Strategic alliances: importance of relationships between organizations
learning and reputation effects)
,Lecture 2
Definitions, types and characteristics of relationships between organizations and networks of
organizations
Organization & Environment - A manager’s perspective
Closed vs. Open systems
- Network will be the social structure which will make the connection between system and the
environment
Input and output
- Open system approach
,Pestel analysis (example)
- Used to investigate before starting
- Identify aspects of environment, opportunities and threats
Social Networks: A researcher’s perspective
The interorganizational problem
IORs are “relatively enduring transactions, flows, and linkages that occur
among and between an organization and one or more organizations in its
environment” (Oliver 1990: 241)
When studying IORs and IONs, keep in mind the following:
• There are important differences between (social) networks within (intra) and between (inter)
organizations
- intra: networks between business units inside one firm
- inter: networks between different firms
• IORs display absence of ‘true’ hierarchy
- Absence of ‘boss’ >>> Implications for coordination, ownership, profit-sharing etc
It is not always clear who is the manager for instance. Which can create issues of communication and
task division. This happens sometimes in IOR’s compared to simple organizations.
Why are IORs & IONs common?
IORs are important for running organizations and achieving their goals. Why?
• Organizations lack all the necessary resources to attain their goals –resource deficit
- Organizations exchange resources (form IORs) with each other to achieve mutual benefit
- Voluntary interactions based on reciprocity
• These are the main elements of the exchange theory of IORs
What factors affect interorganizational exchange relations?
• Organizational goals/functions (‘need’)
• Access to resources from outside the system (‘access’)
• If there is domain consensus: to what extent is there agreement on their claims to pursue particular
goals?
Read: Levine & White (1961)
Exchange is going on (equilibrium)
Reciprocity is important: when I do something, I expect something in return
, IORs as ways of reducing environmental uncertainty
- Internal: designing organizational structures to produce a closed and stable system in the
core technology component
- External: organizations can make relations with other organizations more reliable and
predictable via boundary-spanning
= > interdependence
Two strategies to deal with environmental uncertainty:
• Cooperative strategy
- to obtain reliable commitments from other actors (this requires making a commitment in return).
- while such commitments reduce uncertainty, they also place constraints on future action
• Competitive strategy
-Maintaining alternative resources (prevents concentration of power over the organization)
-Seeking more power or prestige (gaining power without increased commitment)
Based on Thompson (1967)
Resource dependence theory
Organizations are not self-sufficient and need to manage resource dependencies to reduce
uncertainties in their environment
- Actors in the environment hold resources that an organization needs
- The greater the organization’s dependence on the resources of other actors, and the lesser
the availability of alternative sources, the greater the power of these actors over the
organization
- The actors use the political power to impose their interests & demands on the organization.
IORs & IONs aim (buffering and bridging):
• To access resources
• To stabilize outcomes / market rents
• To prevent environmental control
• To coordinate the respective interests of actors
Buffering: creating extra capacity
Bridging: find new suppliers
Minimize interdependence, you want others to be dependent on you
Read: Pfeffer & Salancik (1978)
Lecture 1
Why are IORs and IONs important?
- Access to financial resources
- Entering new markets
Social capital: Why does it matter?
- Social: resources are available in and through personal and business networks.
- Capital: it is productive, it creates value
- e.g., information, business opportunities, financial resources, power, emotional
- support, trust, cooperation, and so on,
- Social capital is not a feature of an entity (attribute variable),
but it is a feature of a relationship (relational variable)
- Relational variables often have an equal/higher explanatory power than attribute variables.
- “The friction is that society consists of a set of independent individuals, each of whom acts to
achieve goals that are independently arrived at, and that the functioning of the social system
consists of the combination of these actions of independent individuals.” (James Coleman)
IORs and IONs: A relational view of organizations
Social capital and IORs and IONs (Baker, 2000)
- Interorganizational networks are “relatively enduring transactions, flows, and linkages that
occur among and between an organization and one or more organizations in its
environment” (Oliver 1990: 241)
- Relationships and networks of organizations -> the exchange and flow of resources between
organizations.
- For an individual organization -> relations and networks mean access to and dependency on
resources
- ‘social capital’ -> the resources available through relationships and networks
Social capital and individual’s quality of life
- Well-being: sensemaking work and social relations are important predictors of well-being
- Health: networkers are often healthier
- Life expectancy: networkers live longer
Social capital in the economy
- Payment and career development: people who are strongly embedded tend to earn
higher salaries and experience faster career
development (“structural holes”, Ronald Burt)
- Raising financial capital: informal financial capital market.
- Learning in organizations: informal relations and learning.
- Marketing: verbal advertising, importance of social networks for
diffusion of new products
- Strategic alliances: importance of relationships between organizations
learning and reputation effects)
,Lecture 2
Definitions, types and characteristics of relationships between organizations and networks of
organizations
Organization & Environment - A manager’s perspective
Closed vs. Open systems
- Network will be the social structure which will make the connection between system and the
environment
Input and output
- Open system approach
,Pestel analysis (example)
- Used to investigate before starting
- Identify aspects of environment, opportunities and threats
Social Networks: A researcher’s perspective
The interorganizational problem
IORs are “relatively enduring transactions, flows, and linkages that occur
among and between an organization and one or more organizations in its
environment” (Oliver 1990: 241)
When studying IORs and IONs, keep in mind the following:
• There are important differences between (social) networks within (intra) and between (inter)
organizations
- intra: networks between business units inside one firm
- inter: networks between different firms
• IORs display absence of ‘true’ hierarchy
- Absence of ‘boss’ >>> Implications for coordination, ownership, profit-sharing etc
It is not always clear who is the manager for instance. Which can create issues of communication and
task division. This happens sometimes in IOR’s compared to simple organizations.
Why are IORs & IONs common?
IORs are important for running organizations and achieving their goals. Why?
• Organizations lack all the necessary resources to attain their goals –resource deficit
- Organizations exchange resources (form IORs) with each other to achieve mutual benefit
- Voluntary interactions based on reciprocity
• These are the main elements of the exchange theory of IORs
What factors affect interorganizational exchange relations?
• Organizational goals/functions (‘need’)
• Access to resources from outside the system (‘access’)
• If there is domain consensus: to what extent is there agreement on their claims to pursue particular
goals?
Read: Levine & White (1961)
Exchange is going on (equilibrium)
Reciprocity is important: when I do something, I expect something in return
, IORs as ways of reducing environmental uncertainty
- Internal: designing organizational structures to produce a closed and stable system in the
core technology component
- External: organizations can make relations with other organizations more reliable and
predictable via boundary-spanning
= > interdependence
Two strategies to deal with environmental uncertainty:
• Cooperative strategy
- to obtain reliable commitments from other actors (this requires making a commitment in return).
- while such commitments reduce uncertainty, they also place constraints on future action
• Competitive strategy
-Maintaining alternative resources (prevents concentration of power over the organization)
-Seeking more power or prestige (gaining power without increased commitment)
Based on Thompson (1967)
Resource dependence theory
Organizations are not self-sufficient and need to manage resource dependencies to reduce
uncertainties in their environment
- Actors in the environment hold resources that an organization needs
- The greater the organization’s dependence on the resources of other actors, and the lesser
the availability of alternative sources, the greater the power of these actors over the
organization
- The actors use the political power to impose their interests & demands on the organization.
IORs & IONs aim (buffering and bridging):
• To access resources
• To stabilize outcomes / market rents
• To prevent environmental control
• To coordinate the respective interests of actors
Buffering: creating extra capacity
Bridging: find new suppliers
Minimize interdependence, you want others to be dependent on you
Read: Pfeffer & Salancik (1978)
