The Effect of Network Organisers on Relationship Commitment

Introduction A growing phenomena is that firms become interdependent in networks of relationships. This is especially true for some of the '.com new-economy' firms, whose business models focus on organising networks. The Internet augments the mediating, network organising, nature of many economic agents. A recent survey of E-management in the Economist (2000-10-11) reports how General Electric and ABB have organised a market for their suppliers. Swedbank, Nordea, Storebrand bank and many other financial institutions are all working on similar initiatives to develop, organise and manage networks of interdependent firms. These market makers are themselves firms and they represent a growing mode of business that mediate supply and demand between actors. Mediation is a form of value creation with long traditions. Thompson (1967) identified that organisations such as banks, telephone companies, insurance companies and employment agencies all appear to use a similar mediating technology. A number of the mediation industries have for the greater part of the 20 th century been extensively regulated, and in many cases the mediation functions have been performed by public monopolies. The mediating function is not a simple task. It requires the organising of networks of interacting firms, e.g. suppliers and buyers. Organising networks is difficult because it implies the structuring of many business relationships, which are difficult or even impossible to control. There is a shortage of studies of how networks can be organised. Numerous studies have identified networks as structures that govern firms' market behaviour (Granovetter, 1985; Uzzi, 1997). The network can govern firm behaviour by being a system for innovation (Powell, Koput & Smith-Doerr 1996) a source of new knowledge (Ahuja, 2000), safeguarding against opportunism (Jones, Hesterly & Borgatti 1997) and through coordination (Blankenburg-Holm, Eriksson, and Johanson 1999). However, there has been few studies of how networks can be managed, while at the same time govern firm behaviour. The vast majority of network-based research has focused on industrial firms (e. 3 The relationship between network organisers (i.e. banks, telecommunication firms) and the network being organised have been given little attention. Even studies focusing on bank-customer relationships (Eccles and Crane, 1988, Uzzi, 1999) take a dyadic view and lack of through analysis of the relationships between the network organiser and the organised firms. Some studies have focused on strategies for creating collective action (Astley 1984). But studies of collective action have not explicitly focused the firm effects of collective action. To our knowledge, there …