Video: Tuesday, 2 September 2014
Many products and services such as cars, computers, insurance and health care are not produced by a single organisation, but by a co-ordinated network of organisations. New research by Sarita Koendjbiharie of Rotterdam School of Management, Erasmus University (RSM) indicates that for the evaluation of this network’s performance, managers should assess along firm, customer and systems dimensions of performance. Ignoring a dimension could present managers with a misleading view on how well the network is doing.
Since these organisations are interdependent yet legally separate, their managers cannot afford to focus exclusively on their own operations and performance. They have to take into account the decision-making and actions of network partners and the performance of the whole network. While there is sufficient knowledge on what constitutes and drives organisational performance, Sarita Koendjbiharie’s dissertation The information-based view on business network peformance is the first to shine a light on network performance in particular.
Sarita Koendjbiharie provides answers by presenting three dimensions of business network performance. All three dimensions – firm, customer and systems – are important for performance evaluation and the findings suggest that ignoring a dimension can present managers with a misleading view on how well their network is doing. In addition to offering comprehensive evaluation, her thesis also focuses on what factors impact network performance. Laboratory experiments and a field study show how the information available in the network and guiding principles of partners play important roles in the level of performance reached.
Lead organisations such as Apple, Dell, Ryanair, Nike and Toyota should therefore pay attention to the goals and values their partners pursue and monitor how transparent or opaque their networks are. With these drivers in mind, network leaders could chose to invest in interorganisational systems, structure incentives differently or invest in meeting the information needs of network partners that are brokered by other organisations.
In the last thirty years, global developments including advancements in ICT and process and product modularisation have made the network form of organisation more widespread than ever before. In many industries large vertically integrated organisations have been supplanted by flexible networks of independent organisations. In other industries and sectors, individual organisations continue to operate through the traditional organisational form of a business network. The proliferation of business networks presses the need to move theoretical development on processes and outcomes forward, beyond actor and dyadic level to the whole network level of analysis. Network performance studies however, have been scattered across both time and management disciplines, and offer diverse concepts, measures and drivers, which slow down the theoretical build-up. A related problem is that the conceptual issue of what constitutes performance on network level, has been left unaddressed. The main purpose of this dissertation is therefore to conceptualise and explain the performance of interorganisational networks. This was achieved by executing three studies: conceptualisation research laboratory experiments and a field case study. Step by step, an integrated framework is built in this dissertation that represents the information-based view on network performance and its theoretical mechanisms. It pushes the boundaries of knowledge on network performance, increases the understanding and ability of practitioners to manage their networks and sets the agenda for future network performance research.
Rotterdam School of Management, Erasmus University
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