Networks and Organizations

Introduction

Networks provide three broad categories of benefits: access, timeliness and referrals (Burt 1992). They are a ubiquitous and critical feature of organizational life. Organizations have never been isolated, self-sustaining operations; thus all organizations, as well as the individuals within them, are enmeshed in networks at varied, multiple levels. More recently, however, the decline of the vertically integrated firm in favour of outsourcing, the rapid growth of the global economy, the pressing need to access knowledge and resources outside the boundaries of an organization, and the increased co-ordination efforts resulting from spreading an organization's operations to multiple locations around the world, have amplified the salience and variety of networks. This growth has triggered increased scholarly attention both to internal networks within organizations and external linkages across organizations. Over the past two decades, a steady stream of research on networks has exploded into a rich and prolific line of inquiry. Special issues of social science and management journals devoted to the topic have appeared in droves, and the term ‘networking’ now even takes on an instrumental, rather sketchy, connotation in business speech.

We begin with a brief overview of the leading approaches to the study of networks.1 We suggest that much of the extensive literature can be classified in one of two ways: those that use networks as a tool to trace relationships; and those that view networks as a form of governance. We then look at the stages of an organization's life cycle and highlight periods during which networks of various forms play a crucial role. We group our discussion around key stages of organizational evolution, including founding, growth and maturity. This life cycle approach provides a fresh and complementary alternative to other recent reviews of the literature that have emphasized a division into levels of analysis. We not only highlight the current literature, but when appropriate suggest areas where additional work would be beneficial.

Networks as a Tool to Trace Relationships

A long line of work in sociology and social psychology employs networks as an analytical device for illuminating social relations, whether among individuals or groups inside an organization, in the inter-organizational ties that link organizations, or in the environments of organizations. We briefly review below some of the key studies that have shaped how social scientists view networks. The concepts are presented in a roughly chronological order, based on their first introduction. Examples of subsequent work relating to each concept are featured. Nearly all the core concepts originated at the individual level, but today they are used not only to describe relationships between people, but also between organizations, and in some cases nation-states.