AN EVOLUTIONARY TYPOLOGY OF INTERORGANIZATIONAL RELATIONSHIPS AND NETWORKS

Interorganizational networks have been one method of coordinating prices, wages, and purchases for some time. The most common examples were agricultural cooperatives, cottage industries, and cartels – types of coordination commonly found in Europe and Asia. These associations of organizations, frequently called obligational linkages (Williamson, 1985), were found even in the industrial age, which saw the emergence of large corporations and the vertically integrated firm in the United States (Aldrich, 1979; Chandler, 1962, 1977; Williams, 1975). Large companies were created in a number of countries through mergers as managers attempted to drive down costs, eliminate competition, and achieve large economies of scale by means of stable and large production runs. The dominant concern of vertically integrated hierarchies was to increase productivity by reducing transaction costs vis-à-vis their suppliers or customers (Williamson, 1975), thus earning a competitive advantage in the marketplace. Now many small firms can survive in specialized niches, but they frequently join in joint ventures with large companies that produce and/or market their products (Powell and Brantley, 1992). Even more complex alliances involving large numbers of organizations are being formed to accomplish tasks and objectives that no single firm could achieve on its own, such as establishing industrial standards, developing complex products such as automobiles, semiconductors, and aircraft, and expanding the pool of industrial knowledge (Alter and Hage, 1993; Wikstrom and Normann, 1994).