Key network constructs

There is a large range and diversity of current network constructs from different perspectives (Hoang & Antoncic, 2003; Johnsen et al., 2000). Thus clear definitions of

network constructs are needed in order to understand the nature and purpose of the network. What is required for this investigation, therefore, is a review of constructs in order to arrive at a consensus or commonality of themes that are the most useful or valid for this particular research question and context.

Within the present study the term actor is conceptualised to mean the organisation and this is an important distinction to note. The distinction is possible because the network literature describes a network as comprising of many nodes, with each node representing an actor. The network literature does not specify what a node consists of, and so a node may be individuals, work-units or organisations; this peculiarity is noted by a number of researchers (Brass et al., 2004; Emirbayer & Goodwin, 1994; Lane & Lubatkin, 1998; Wasserman & Faust, 1995). Geser (1992) argues that “Organizations can be conceptualized as social actors capable of interacting with each other …” (p. 429). Geser’s (1992) argument is based on the reasoning that individuals cannot remove their basic actions from the influencing processes of belonging to various organisational levels which are dependent on the external environment for economic survival (Geser, 1992).2

The focal actor is the specified actor in the network that is the main focus of the network activity (Mitchell, 1969; Van den Bulte & Wuyts, 2007; Wasserman & Faust, 1995). The term central broker is used to describe an actor that coordinates the tasks of the network, connects actors to other actors, mediates between actors, acts as a gatekeeper for information and chooses to whom this information is passed (Borgatti et al., 2002; Hanneman, 2001). An ego is a term describing the focal actor viewed from the perspective of its own network, i.e. those actors that it has a connection with. Each actor may be examined from this perspective (Van den Bulte & Wuyts, 2007). The number of connections with others is the number of ties or direct contacts that an actor has in a network (Mitchell, 1969; Van den Bulte & Wuyts, 2007).

2 _{Organisational levels within actors are examined within the present study and this is discussed in Chapter}

The connections or links that exist between the nodes represent relationships (Emirbayer & Goodwin, 1994; Johannisson, 1987a; Mitchell, 1969) and shared resources and dependencies (Håkansson & Johanson, 1993). These relationships are based on social exchange between individuals within the organisations, and the organisations that form the network (Blankenburg Holm, Eriksson, & Johanson, 1996; Emirbayer & Goodwin, 1994; Mattsson, 1997; Powell, 1987; Uzzi, 1997). This social exchange occurs in a flexible environment with voluntariness and openness (Emirbayer & Goodwin, 1994; Johannisson, 1987a) in which the actor is informally connected to others in an identifiable structure (Emirbayer & Goodwin, 1994; Grieco & Hosking, 1987; Wasserman & Faust, 1995).

Actors may be connected by strong or weak links, reflecting the frequency with which the links facilitate social and/or business purposes (Emirbayer & Goodwin, 1994; Goyal, 1999; Granovetter, 1973; O'Driscoll, Carson, & Gilmore, 2000; Thorelli, 1986). These links between actors facilitate the flow of information or exchange of resources (Blankenburg Holm et al., 1996; Brass et al., 2004; Hellgren & Stjernberg, 1987; Mattsson, 1997).

The focus of a network approach is on understanding relational aspects between actors and the way in which actors are linked to define their role within their group. It is used to explain business relationships designed to give organisations market advantage (Håkansson, 2006). The key terms used to describe the way actors are linked are embeddedness, interconnectedness and multiplicity, and these terms are defined next.

The first of the key descriptors is embeddedness and this refers to the larger social or network structure that an actor is a part of (Granovetter, 1973, 1985; Håkansson, 2006). Embeddedness is a consequence of the development of social and economic opportunities underpinned by trust that cannot be copied or replicated by contracts, vertical integration, or by markets (Anderson et al., 1994; Brass et al., 2004; Granovetter, 1985; Grieco & Hosking, 1987; Johannisson, 1987b; Mattsson, 1997; McLoughlin & Horan, 2002; Thorelli, 1986; Uzzi, 1997). Interconnectedness is the extent to which an exchange is likely to occur between actors and is dependent on exchanges between others (Anderson et al., 1994; Granovetter, 1985; Grieco & Hosking, 1987; Johannisson, 1987b; Uzzi, 1997). There is

also a complex layering of exchange between actors within the same relationship; this is referred to in the literature as multiplicity.

Multiplicity is framed within the current study as the varied and multiple connections that exist between actors. This means that multiplicity is concerned with actors being connected by multiple ties with the same actor, and also the strength of those ties (Hoang & Antoncic, 2003; Mitchell, 1969; Van den Bulte & Wuyts, 2007). As a consequence, multiplicity may result in multiple perspectives of multiple realities within an actor of other actors and of markets (Holmen & Pedersen, 2003; Kjellberg & Helgesson, 2006). This is because each actor comprises of individuals who are involved in many different activities upon which many influences act. As a result, actors may appear to be inconsistent in their actions due to the tensions and conflicts that exist within them because they may not have a single market perspective. Understanding multiplicity is important in order to gain an understanding of actor motivations; multiplicity means that different levels and perspectives within that actor should be sought. As a consequence, seeking such an understanding will have methodological implications in terms of (1) the ontological approach and (2) single versus multiple use of research informants (Kjellberg & Helgesson, 2006). These methodological concerns are identified at the end of Chapter Two in a summary of research issues (see Table 2.1), and in Chapter Four in terms of the choice of research method for the current study.

The way that actors link to one another is also moderated by other factors that impact on their relationships. These concepts are important in this regard and these are trust, commitment and cooperation. Trust is an important concept within network studies because it underpins relationships between actors and leads to the long-term duration of these relationships (Achrol, 1991; Ariño et al., 2001; Håkansson, 2006; Ireland, Hitt, & Vaidyanath, 2002; Morgan & Hunt, 1994). A search of the literature shows that no single universal definition of trust exists. The difficulty in defining trust and the reason why so many network studies fail to provide a definition is because it has been clearly tied to outcomes, especially in context-specific situations (Blomqvist, 1997). While these difficulties are acknowledged, for the purposes of the current study trust is defined as an

actor’s expectation of how another actor will perform at some point in the future; it is a subjective assessment, is based on experience of the other and develops gradually over time (Blomqvist, 1997). Closely related to trust are commitment and cooperation and these terms are discussed next.

Commitment between actors is defined as a long-term perspective for developing continuing business cooperation, and cooperation is defined as leading to mutuality based on common interests or goals (Bengtsson & Kock, 1999; Blankenburg Holm, Eriksson, & Johanson, 1999; Young & Wilkinson, 1997). These cooperative business arrangements rely on the mutual commitment of pledges as well as resources to the relationship, to the degree that each other actor responds in a like manner (Blankenburg Holm et al., 1999). Exchanges may evolve over a period of time, demonstrating commitment to the relationship and resulting in benefits and resources being accrued to the actors which, in turn, creates competitive advantage and value for the customers (Blankenburg Holm et al., 1999; Dyer & Nobeoka, 2000; Wilkinson & Young, 2002).

Within a network the actors perform purposeful related activities. These activities are the result of actors combining with others either to transfer resources from one to another or to transform resources by changing them in some way. Actors that transform resources usually retain power over them. Activities link actors in various degrees to other actors, either tightly or loosely, and these activities tend to be made more efficient over time (Håkansson & Johanson, 1992). Activities are designed to create economic gain in which actors give and receive from one another; this concept is referred to as mutuality. Mutuality may involve complex knowledge and value exchange (Blankenburg Holm et al., 1996; Easton & Araujo, 1992; Håkansson & Johanson, 1993).

Mutuality leads to reciprocity which relates to norms of behaviour in which individual actors feel they must reciprocate another’s actions. Norms of behaviour is defined within the present study as the guiding values and routines that direct the pattern of activities between actors. These values are based on learning experiences built over time with other actors so that a mutual orientation between actors exists which lead to network capabilities

(Håkansson & Snehota, 2006; Kogut, 2000). An example of norms of behaviour is cited by Dyer and Nobeoka (2000) who examined the Toyota Production System network and found that established norms are used to motivate suppliers to openly share knowledge with other actors. The norms are taken seriously due to the threat of economic sanctions that may be imposed by Toyota in the case of transgressors. The norms also help actors identify strongly with the network.

The act of reciprocity may not be to the originator of this action but instead may be used to reward another actor in the future. This system relies on trust and on the belief that the giver will be reciprocated (Grieco & Hosking, 1987; Powell, 1987; Whestphal & Zajac, 1997). Håkansson and Johanson (1993) comment:

Every single activity within a network is dependent on other activities in the sense that the outcome of an activity is dependent on

how other activities are performed. (p. 213)

Informal coordination takes place on a number of social levels within the organisations and is modified by the people within each level. These activities and resources will change over time due to learning and the intention of the actors themselves (Blankenburg Holm et al., 1996; Håkansson & Johanson, 1993). Johannisson (1987b) comments, “Reality is objectified by social interaction, culture is being built and diffused through social networks” (pp. 9-10).

The mutual orientation between the actors in the network enables knowledge of each other to be exchanged and trust to be developed based upon a framework of rules that are observed by those actors (Blankenburg Holm et al., 1996; Håkansson & Johanson, 1993; Johanson & Mattsson, 1987). There is an expectation that actors will interact with one another in a manner that respects the interests of the other (Johanson & Mattsson, 1987).

Power within this study is defined as influence over others for the performance of network tasks, and is based on centrality (Krackhardt, 1990). This is because actors are dependent on the resources of others in order to complete their task. The availability of resources for these tasks, gathered from a number of different sources, increases the power of an actor by

decreasing their dependence on others (Cook, 1977). In this way power accrues to actors who are better connected and hold a central position in the network. By holding a central position actors are also able to control information flows, which gives them power over others (Krackhardt, 1990). Power then is the result of structural position (Burkhardt & Brass, 1990). However, the concept of power is complicated by the resources that an actor controls. For example, Burt (1977) also includes in his definition of power the resources that an actor controls, and how they use these resources and the resources of others. The benefit being the more power an actor has, the more bargaining power it has in the relationship exchange with others (Cook, 1977).

In summary, for the purpose of the present study the network definition used is one in which organisations are referred to as actors and they may or may not have a strategic intent. The approach adopted by this definition is particularly useful given the interest in examining intentionally formed networks and the ties between actors that facilitate the flow of information, knowledge and business development. A network consists of all the actors, the social and economic exchange between them, and the structures that these form. Also relevant is the level of the actor, which is defined along with an explanation of how the level is operationalised within Chapter Four. The following quote provides a useful working summary for the purpose of the present study:

We define a network as a set of nodes and the set of ties representing some relationship, or lack of relationship, between the nodes. We refer to the nodes as actors (individuals, work units, or

organizations). The particular content of the relationships represented by the ties is limited only by a researcher’s imagination. Typically studied are strategic alliances and collaborations, flows of

information (communication), affect (friendship), goods and services (work flow), and influence (advice), and overlapping group

memberships such as boards of directors. We consider ties that are maintained over time, thus establishing a relatively stable pattern of network interrelationship (Brass et al., 2004, p. 795).

Of particular interest to this research study are intentionally formed networks; this term is explained in the following section.