A publication in the Policies Studies Journal by Lee and Fejock (2012) helps to explain how collaboration networks cluster together to enhance product and service development. These networks move to enhance inter-organizational collaboration and can create economic improvement. Their work suggests that the micro aspects of such collaboration have not been fully analyzed but that the system appears to be based on trust.
Three mechanisms for collaborative alternative governance include centralized authority, mutually binding contracts, and network embeddedness (Feiock, 2009). Each comes with their own advantages and disadvantages. The greatest amount of flexibility lay in the embeddedness model as it relies on a more social, economic and relationship oriented model without the rigidity of formal oversight (Foiock, 2007).
Each of the actors within this approach maintains a level of autonomous effort but is still part of a general network that lends support. These collaborative networks are based on purposeful activities that forge relationships in an effort to solve problems through the creation of solutions by putting forward the best use of knowledge, time resources and competition (Agranoff & McGuire, 2003).
Organizations with limited resources are more likely to work together. Under the concept of Dependency Theory, the more limited the resources the more they would want to work together to survive (Pfeffer & Salancik, 2003). The report does not make the statement that all organizations have limited resources and when that perspective is widened to international competition those limitations become more acute.
In order to hedge their risks and improve upon their information such organizations will attempt to develop relationships based on trust and information with those partners likely to complement each other (Gulati & Gargiulo, 1999). In this effort, they find those with intrinsic and operational similarities. They use the information and collaboration to improve upon their product and service offerings while having access to talent.
As an essential element trust followed by financial arrangements bind the system into a coherent whole. If that trust is broken individual businesses may find them punished through a lack of collaborative effort, disappearance of personal connections, lost contracts, and a more hostile environment. Those that are willing to work with others and be equitable about these relationships will gain from the system.
The authors found that organizations seek to find a place within the network where they can forge collaborative efforts by finding holes in the information networks to increase potential revenue and reduce costs. As organizations interrelate, they create stable and preferential relationships based upon trust, commitment, and shared goals. They do this through engaging in densely clustered networks that are capable of maintaining commitments to collective solutions (Putnam, 1995).
It is beneficial to think of these information holes, as places were new products and services have not recognized or developed. By wedging themselves into these holes, they have the support of other players within the market and can use their knowledge to enhance their own. The surrounding companies use their new products and services to enhance their own. Likewise, participation in such networks helps to reduce uncertainty in the market, increase development, gain access to information, and find useful connections for economic development. Economic hubs are often seen as the development of these networks across multiple corporate, governmental, and non-profit sectors.
Agranoff, Robert, and Michael McGuire. 2003. Collaborative Public Management. Washington, DC:Georgetown University Press.
Foiock , R. (2007). “Rational Choice and Regionalism.” Journal of Urban Affairs 29 (1): 47–63.
Foiock, R. (2009). “Metropolitan Governance and Institutional Collective Action.” Urban Affairs Review 44 (3):356–77.
Gulati, R. and Gargiulo, M. (1999). Where Do Interorganizationl Networks Come From?
American Journal of.” Sociology 104 (5): 1439–93.
Lee, Y. & Fejock, W. (2012) Interorganizational Collaboration Networks in Economic Development Policy: An Exponential Random Graph Model Analysis. Policy Studies Journal, 40 (3).
Pfeffer, J. and Salancik, G. (2003). The External Control of Organizations: A Resource Dependence Perspective. Stanford: Stanford Business Books.
Putnam, R. (1995). Bowling Alone. Journal of Democracy, 6 (1): 65–78.