Mixed Mode Network Structures: The Strategic Use of Electronic Communication by Organizations

The impact of interorganizational systems (IOSs) on the structure of market networks is analyzed from a management perspective. A research framework is applied to various organizational settings, yielding a range of mixed mode forms in which elements of both market and hierarchy are evident. These forms are more complex than the simple network or hybrid structures postulated in the management and information systems literature. The framework represents a departure from electronic markets theory, questioning its basic predictions that as companies trade electronically there will be proportionately more markets than hierarchies. Instead, IOSs make possible relationships that combine market and hierarchy elements simultaneously. Although economic forces are driving the changes in network structure, economic variables are tempered by individual firm strategies reflecting investment, network structure and IOS choices. The implications for theory are that traditional analyses of network structures and competition in business markets do not describe or explain adequately the structure and dynamics of competition in an electronic trading environment. The implications for managers are that they should consider the effects of mixed mode network structures on their processes for forming and managing business relationships supported by IOSs. The contribution of the paper is to provide a more accurate model of competition in business markets by demonstrating that multiple forms of mixed mode network structures exist. The mixed mode proposition is illustrated with case data from a range of mixed mode network structures.

[1]  J. Bakos,et al.  Why information technology hasn't increased the optimal number of suppliers , 1993, [1993] Proceedings of the Twenty-sixth Hawaii International Conference on System Sciences.

[2]  Kathryn Rudie Harrigan,et al.  BASES OF INTERORGANIZATION CO‐OPERATION: PROPENSITY, POWER, PERSISTENCE* , 1990 .

[3]  Max D. Hopper.  Rattling SABRE—new ways to compete on information , 1990 .

[4]  Paul J. Hart,et al.  Power and Trust: Critical Factors in the Adoption and Use of Electronic Data Interchange , 1997 .

[5]  J. Jarillo.  On strategic networks , 1988 .

[6]  F. McFarlan,et al.  Information partnerships--shared data, shared scale. , 1990, Harvard business review.

[7]  Blake Ives,et al.  The information system as a competitive weapon , 1984, CACM.

[8]  Christopher P. Holland,et al.  Strategic choice and inter-organisational information systems , 1994, 1994 Proceedings of the Twenty-Seventh Hawaii International Conference on System Sciences.

[9]  T. Malone,et al.  The logic of electronic markets. , 1989, Harvard business review.

[10]  John F. Rockart,et al.  Information technology and the new organization , 1992, Proceedings of the Twenty-Fifth Hawaii International Conference on System Sciences.

[11]  H. Thorelli.  Networks: Between Markets and Hierarchies , 1986 .

[12]  O. Williamson.  Comparative Economic Organization: The Analysis of Discrete Structural Alternatives , 1994 .

[13]  D. Channon.  The strategy and structure of British enterprise , 1973 .

[14]  L. Lynn,et al.  Failures of Intermediate Forms: A Study of the Suzuki Zaibatsu , 1995 .

[15]  Philip M. Marcus,et al.  The Visible Hand: The Managerial Revolution in American Business , 1979 .

[16]  R. Yin.  The Case Study Crisis: Some Answers , 1981 .

[17]  Deborah Estrin,et al.  Inter-organization networks, computer integration, and shifts in interdependence: the case of the semiconductor industry , 1991, TOIS.

[18]  J. Hennart,et al.  Explaining the swollen middle : Why most transactions are a mix of market and hierarchy , 1993 .

[19]  JoAnne Yates,et al.  Electronic markets and electronic hierarchies , 1987, CACM.

[20]  Howard E. Aldrich,et al.  Organization-Sets, Action-Sets, and Networks: Making the Most of Simplicity , 1981 .

[21]  Kathryn Rudie Harrigan,et al.  Matching vertical integration strategies to competitive conditions , 1986 .

[22]  Joseph T. Mahoney,et al.  The choice of organizational form: Vertical financial ownership versus other methods of vertical integration , 1992 .

[23]  A. Grandori,et al.  Inter-firm Networks: Antecedents, Mechanisms and Forms , 1995 .

[24]  N. Venkatraman,et al.  Beyond business process redesign: redefining Baxter's business network. , 1992, Sloan management review.

[25]  Christopher P. Holland,et al.  Planning for Electronic Data Interchange , 1992 .

[26]  A. Pettigrew.  Competitiveness and the management process , 1988 .

[27]  Eric K. Clemons,et al.  Information technology and industrial cooperation , 1992, Proceedings of the Twenty-Fifth Hawaii International Conference on System Sciences.

[28]  Michael R. Vitale,et al.  Creating Competitive Advantage with Interorganizational Information Systems , 1988, MIS Q..

[29]  C. P. Holland,et al.  Forms of Association in Business Markets: the impact of inter-organisational information systems , 1993 .

[30]  C. Holland,et al.  The evolution of a global cash management system , 1996 .

[31]  G. DeSanctis,et al.  Electronic Communication and Changing Organizational Forms , 1995 .

[32]  W. Powell.  Hybrid Organizational Arrangements: New Form or Transitional Development? , 1987 .

[33]  Eric K. Clemons,et al.  Rosenbluth International Alliance: information technology and the global virual corporation , 1992, Proceedings of the Twenty-Fifth Hawaii International Conference on System Sciences.