Key paper 4 Powell 1990 Neither market nor hierarchy: Network forms of organization

Question 1

Hierarchical organized firms

Answer 1

• transactions that involve uncertainty about their outcome
• that recur frequently and
• require substantial ‘transaction-specific investments’

Question 2

Market

Answer 2

• exchanges that are straightforward,
• non-repetitive and
• require no transaction-specific investments

Question 3

Asset specificity –> market to hierarchy, because

Answer 3

1) bounded rationality
2) opportunism

Question 4

moral economy

Answer 4

to characterize the intricate pattern of symbolic and statutory expectations that surrounded the 18th century marketplace

Question 5

perfect market

Answer 5

• info is freely available
• alternative buyers and sellers are easy to come by
• no carry-over effects from one transaction to another

Question 6

2 assumptions of a network

Answer 6

1) one party is dependent on the resources controlled by another, and there are gains to be had by pooling of resources
2) each point of contact can be a source of conflict as well as harmony

Question 7

cooperatoin emerges when:

Answer 7

• mutual interest
• behavior is based on standards that no one individual can determine alone
• trust is thereby generated

Question 8

succes of extended trading networks

Answer 8

• blur boundaries of the firm
• new constellation of forces (bundelen van krachten) is crucial to eco succes
• spread of techno advanced, smaller units of enterprise

Question 9

push (away) and pull factors for global alliances

Answer 9

• push: technological constrains (techno knowledge is tacit)
• pull: financial concerns (both partners may enjoy options that otherwise would not be available) and advantages of risk reduction/ sharing

Question 10

risks cooptation

Answer 10

• management problems
• raise questions about effective industrial policy
• agree on the purpose can be difficult
• consistency of effect van be undermined by subunit goals
• middle managers and technical specialist may not share top management’s vision for cooperation
• parties may bring a hidden agenda

Question 11

3 failures of vertically-integrated firms

Answer 11

1) an inablity to respond quickly to competitive changes in international markets
2) resistance to process innovations that alter the relationship between different stages of the production process
3) systematic resistance to the introduction of new products

Question 12

Rationale for network forms

Answer 12

• know-how (networks are well-suited for highly skilled labor)
• demand for speed (key strength of network, access, flexibility and responsiveness to change)
• trust (quality, reputation, more homogeneous the greater the trust)