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3.2.1 Background

Network analysis is a useful tool to study social structure in which actors engage in more or less permanent and institutionalized interactions (Wellman, 1983, 1988). According to Mol (1995) network analysis has the advantage of combining both the structural properties of institutions and the interactions between actors constructing a network. Network analysis identifies the patterns of ties linking interdependent network members (Faust & Wasserman, 1994; Wellman, 1983, 1988). Granovetter (1983) highlights the importance of weak and strong ties in shaping network structure. According to this author, ties act as bridges between network segments such as groups in which most members are directly linked with each other; or, in the words of Wellman (1983), between clustered networks, facilitating macro organizational integration. The amount of ties in the network conditions the degrees of density of networks. Thus, networks can range from loosely bounded low-density networks to tightly bounded densely knit networks (Granovetter, 1983; Wellman, 1983). Ties provide the structural bases for cross-linkages among actors and, therefore, for cooperation (Wellman, 1983).

Networks involve power. Power can be expressed in the networks as function of actors based on their ability to control resources. Actors assume functions in the network, for instance, designing or operating assignments based on their ability to control knowledge, funds and other kind of resources valuable for the network members. Actors with strong influence and skill to control resources often are key actors, or ‘nodes’ in the networks. Indeed, a major characteristic of social networks is the power position of actors and the ways in which the patterns of ties allocates resources. In the words of Faust and Wasserman (1994), the ties among actors are channels to transfer resources, but the flow of resource distribution through the ties is not equal. According to Wellman (1983) the differential possession of scarce resources at the ties causes dependency

46 NGOs and the sustainability of SMEs in Peru

relationships in the network. This author argues that unequal access to scarce resources may in turn increase the asymmetry of ties and it may lead to social structural change. Mol (1995) also highlights the importance of resources to structure the relations between different organizations in societal networks with respect to environmental reform. Therefore, networks are not only a space of cooperation among actors, but also of struggle for resources.

Network analysis seems to be an appropriate tool to study the complex influence that actors have on the environmental performance of SMEs and how actors and social structure limit, condition and enable the environmental reform of industries (Wattanapinyo, 2006). Similarly, network analysis is suitable to analyze the changing roles of NGOs, since NGOs structured in networks go across the nation-state, regions and continents to cooperate with SMEs. Most of the studies operationalizing ecological modernization theory (e.g. Chavalparit, 2006; Dieu, 2003; Frijns, Kirai, Malombe & Van Vliet, 1997; Hotta, 2004; Phoung, 2002; Wattanapinyo, 2006) have focused on the institutional context of business and their networks, but hardly any of them has primarily focused on NGOs and their networks. However, in the last years, social network analysis is increasingly being applied to study NGOs. A study that refers to networks and NGOs is that of Oosterveer (2005), who operationalized network society theory to study the dynamics of global food governance, and more specifically to identify new and innovative regulatory arrangements to deal with changing and new environmental and food safety concerns on a global scale. Besides official regulations and private certification schemes in governing food trade, Oosterveer highlighted the role of NGOs in introducing labeling arrangements, e.g. for organic farming and fair trade. Anheier and Katz (2003, 2004) showed the potential of network analysis for understanding global civil society by studying the connectedness of NGOs at global level, and Diani and McAdam (2003) used network analysis to study social movements.

3.2.2 Application of network analysis in this thesis

Network analysis is used in this thesis to systematically analyze the actual and potential roles of NGOs promoting sustainability of SMEs by studying the relationships of the actors involved in the networks. Especially, the analysis intends to capture the complexity of the relationships between NGOs and SMEs and between them and other actors in the network, identifying the main patterns and shifts. The analysis crosses the boundary of social and economic spheres since NGOs are usually considered part of social networks and SMEs are usually considered part of economic networks. By mapping the networks of NGOs promoting sustainability of SMEs it is possible to understand not only how network relationships constrain both the changes of roles of NGOs and the adoption of sustainable practices by SMEs, but also how network relationships enable those changes and adoptions.

Three key variables are identified to map the networks promoting sustainability of SMEs: (1) actors, (2) cooperation and (3) power. Actors involved in the networks of sustainability of SMEs are NGOs, SMEs, international cooperation agencies, larger companies and governmental agencies. Actors are organized in single networks or clustered networks with ties that go from local to global reach, beyond the national borders of Peru. Although analysis focuses on cooperation between NGOs and SMEs, cooperation of other actors with NGOs and SMEs is included. Cooperation of actors might be expressed in the networks by alliances, joint project implementations, coordinated

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actions, participation in common platforms and technical assistance oriented to environmental improvement of production of SMEs and to the position of SMEs in sustainable markets. Power relationships in the networks are identified in terms of the ability of certain actors to control resources. The analysis includes the identification of key actors, conflicts and other evidences of power struggle.