Network structure is used in modern organizations. It breaks with traditional organizational solutions and bring new ways of managing. Today there has been a move away from the organizational solution characteristic in the industrial era in the direction of the network structure.
The reason for the formation of the network structure is changes in Information technology, new perception of the environment organization and blurring the boundaries between the enterprise and the environment. Immediate environment is seen as one which is made up of stakeholders from both inside and outside the organization, they in turn, are a source of additional benefits.
Development of network organizational structure
The network structure is formed by combining the resources of cooperating independent companies, working on a joint venture for achieving greater benefits than working in a traditional way. The basis for development of an efficient network structure is computerization and efficient flow of information. It is an alternative to the basic structures, which are increasingly unable to meet the demands faced by a company in a highly competitive and dynamic environment. It can function as a joint management venture, strategic alliance, distribution services, merging smaller units in the new corporation.
The emergence of this type of structure is not a revolution, but an evolutionary step towards creating new intellectual values, better information exchange, smooth communication. Increased level of cooperation with external partners from other countries or areas allows to build direct contacts between stakeholders, which allows to achieve various synergies. The network consist of self-managed, cooperating units concentrated on various steps in value creating processes.
Types of network organizational structure
Immediate environment consists of stakeholders associated not only with the organization but also the inter-connected network of relations. There are four types of the network between organizations:
- integrated network, which consist of the identified units (branches, subsidiaries) legally belonging to one group or economic organism,
- correlated network, meaning a group of different units or operators who are aware of the common needs and desire to create their own ways to meet them,
- contract network for independent partners based on concession, contracts or franchise,
- direct relations network, most commonly occurring in the fields of social life (politics or religion).
Management of network structure requires a change of policy, new activities and methods, change in the staff, Managers face new tasks that are determined by four factors:
- specificity of the requirements for skilled workers
- untraditional incentive system,
- leadership as a management style
- increased requirements for new organizational culture.
- Reagans, R., & McEvily, B. (2003). Network structure and knowledge transfer: The effects of cohesion and range. Administrative science quarterly, 48(2), 240-267.