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Why Network Organisations are efficient

Network organisations are a blend of market and firm. They are halfway between vertical integration and market disaggregation. The conditions that favor network organisations are:

Frequent transactions. Infrequent exchanges are best negotiated on the market.

Demand Uncertainty. Not to be confused with supply uncertainty. Demand uncertainty refers to the inability to predict how well an organisation's products will sell. For example, the film industry suffers from the inability to predict which films will make it and which won't.

Customisation. Also known as asset specificity, exchanges that involve individually customized products or services.

Task Complexity. How complicated is the product being created.

Structural Embeddedness. The extent to which firms (and their members) are related to each other via a host of ties, so that information about each other is always flowing. This helps to coordinate and control the firms.

As you can see, most of these conditions are the same as those favoring firms rather than markets. Network organisations are more like firms than markets. But they occur in situations where demand uncertainty makes vertically integrated firms a bad idea. When technology and markets are changing fast enough, it doesn't make sense for a company to invest in a whole division because when things change they are stuck this whole infrastructure that is now obsolete. So they decouple -- taking the highly volatile sections out. Yet, because of all the other conditions, they need to maintain control, so they don't just hire it out on the market.

A network organisation is like an ordinary firm which does not have a system of direct supervision, nor standardized rules and procedures that apply throughout the firm. Consequently, they have to coordinate and control the units in some other way. Some of the ways they do this are:

Joint payoffs. Networks are organized around specific products or projects. Payments for work are arranged based on the final product, so that if the product doesn't make it, nobody gets any money. This provides incentives for everyone to do their best.

Restricted access. By definition, network organisations do not hire just anybody on the market. Instead, they restrict their exchanges to just a few longterm partners. This makes the organisations more dependent on each other, so that their is more cost in defaulting. In addition, but increasing the probability of future exchanges, this creates the conditions for avoiding a bad deal now so as to get future rewards. (If I take advantage of you on this deal, I'll make out like a bandit, but I'll never get work from you again, so I forgo all that future money.)

Reputation. In the film industry, everyone talks to everybody. If someone is difficult to work with, or doesn't pull their weight, everybody hears about it and it affects their ability to get future jobs.

Macroculture. The existence of a common industrial culture greases the wheels for coordination. Everybody speaks the same language, has similar expectations and understandings of the task, so more can be implicit rather than explicit.



This is the idea of making one's own hypotheses visible when knowledge is produced and used, of opening up alternative avenues, even if these are incongruous.


Two companies producing shoes, sent their marketing specialists to Africa. They receives 2 reports:

1) Here no one uses shoes, there is not any market for us.

2) Here no one uses shoes, there is a perfect market for us, we have a wonderful opportunity.

It is also about re-focussing on self and abandoning the illusion of coherence and uniqueness of the subject producing the knowledge, flushing away old conceptions of self and opening up to otherness and to the imagination. It is above all about calling into question the obvious facts and hypotheses that seem so natural.

Whereas the classic, modern and contemporary theories looked at the organisation as an object of study (through objective measurements and observations or through perceptions), post-modernism takes organisational theories themselves as the object of study along with the practices applied to building these theories.

The post-modernist posture undertakes a critical examination of the practices used to set up theories and promotes awareness of presuppositions (for example, using irony and paradox). It mobilises literary criticism methods and other approaches born of radical movements. It leads to greater reflexivity in the production of theories; it invites theoreticians to think about themselves and their own practices just as much as the practices of the managers they observe, and encourages them to show themselves as they really are in their science factories.


Lyotard argues that all aspects of modern societies, including science as the primary form of knowledge, depend on these grand narratives. Postmodernism then is the critique of grand narratives, the awareness that such narratives serve to mask the contradictions and instabilities that are inherent in any social organisation or practice. In other words, every attempt to create "order" always demands the creation of an equal amount of "disorder," but a "grand narrative" masks the constructedness of these categories by explaining that "disorder" REALLY IS chaotic and bad, and that "order" REALLY IS rational and good.

Postmodernism, in rejecting grand narratives, favors "mini-narratives," stories that explain small practices, local events, rather than large-scale universal or global concepts. Postmodern "mini-narratives" are always situational, provisional, contingent, and temporary, making no claim to universality, truth, reason, or stability.

The great narrative of educational process at University is to give knowledge, to transfer the experience of past generations to the futue ones. The “story” is the rating evaluation of attractivity of courses and teachers as marketing product which should be sold to students and to labour market.

According to Jean Baudrillard, in postmodern society there are no originals, only copies – or what he calls "simulacra." Another version of Baudrillard's "simulacrum" would be the concept of virtual reality, a reality created by simulation, for which there is no original. This is particularly evident in computer games/simulations.

Finally, postmodernism is concerned with questions of the organisation of knowledge. In modern societies, knowledge was equated with science, and was contrasted to narrative; science was good knowledge, and narrative was bad, primitive, irrational (and thus associated with women, children, primitives, and insane people). Knowledge, however, was good for its own sake; one gained knowledge, via education, in order to be knowledgeable in general, to become an educated person. This is the ideal of the liberal arts education. In a postmodern society, however, knowledge becomes functional--you learn things, not to know them, but to use that knowledge. Educational policy today puts emphasis on skills and training, rather than on a vague humanist ideal of education in general. This is particularly acute for English majors. "What will you DO with your degree?"

Not only is knowledge in postmodern societies characterized by its utility, but knowledge is also distributed, stored, and arranged differently in postmodern societies than in modern ones. Specifically, the advent of electronic computer technologies has revolutionized the modes of knowledge production, distribution, and consumption in our society (indeed, some might argue that postmodernism is best described by, and correlated with, the emergence of computer technology, starting in the 1960s, as the dominant force in all aspects of social life). In postmodern societies, anything which is not able to be translated into a form recognizable and storable by a computer--e.g. anything that's not digitizable – will cease to be knowledge. In this paradigm, the opposite of "knowledge" is not "ignorance," as it is the modern/humanist paradigm, but rather "noise." Anything that doesn't qualify as a kind of knowledge is "noise," is something that is not recognizable as anything within this system.

Lyotard says (and this is what Sarup spends a lot of time explaining) that the important question for postmodern societies is who decides what knowledge is (and what "noise" is), and who knows what needs to be decided. Such decisions about knowledge don't involve the old modern/humanist qualifications: for example, to assess knowledge as truth (its technical quality), or as goodness or justice (its ethical quality) or as beauty (its aesthetic quality). Rather, Lyotard argues, knowledge follows the paradigm of a language game, as laid out by L. Wittgenstein. I won't go into the details of Wittgenstein's ideas of language games; Sarup gives a pretty good explanation of this concept in his article, for those who are interested.

There are lots of questions to be asked about postmodernism, and one of the most important is about the politics involved--or, more simply, is this movement toward fragmentation, provisionality, performance, and instability something good or something bad? There are various answers to that; in our contemporary society, however, the desire to return to the pre-postmodern era (modern/humanist/Enlightenment thinking) tends to get associated with conservative political, religious, and philosophical groups. In fact, one of the consequences of postmodernism seems to be the rise of religious fundamentalism, as a form of resistance to the questioning of the "grand narratives" of religious truth. This is perhaps most obvious (to us in the US, anyway) in muslim fundamentalism in the Middle East, which ban postmodern books - like Salman Rushdie's The Satanic Verses – because they deconstruct such grand narratives.

This association between the rejection of postmodernism and conservatism or fundamentalism may explain in part why the postmodern avowal of fragmentation and multiplicity tends to attract liberals and radicals. This is why, in part, feminist theorists have found postmodernism so attractive, as Sarup, Flax, and Butler all point out.

On another level, however, postmodernism seems to offer some alternatives to joining the global culture of consumption, where commodities and forms of knowledge are offered by forces far beyond any individual's control. These alternatives focus on thinking of any and all action (or social struggle) as necessarily local, limited, and partial--but nonetheless effective. By discarding "grand narratives" (like the liberation of the entire working class) and focusing on specific local goals (such as improved day care centers for working mothers in your own community), postmodernist politics offers a way to theorize local situations as fluid and unpredictable, though influenced by global trends. Hence the motto for postmodern politics might well be "think globally, act locally" - and don't worry about any grand scheme or master plan.

Date: 2016-03-03; view: 1152

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