The need to shift the unit of analysis to whole networks of organizations and their outcomes has been identified in the literature. In the previous decade Provan et al. (2007) produced a comprehensive review on empirical work, which anticipated more research on network level outcomes and outlined directions for future research. However, so far, the literature on the performance of whole interorganizational networks still remains relatively limited. This holds for theoretical as well as empirical work. This is surprising given the proliferation of the network form of organization. This dearth, however, can be explained by the several methodological and theoretical reasons that make network performance research and network level research not impossible, but in general rather challenging compared to the other levels of analysis.
Methodological and Theoretical Challenges
First of all, research with the network as unit of analysis can be laborious and costly in terms of time and financial resources (Provan et al., 2007 p. 510). For the dependent variable, performance data on network level may not be readily available in the field. As for the independent variable, the joint production function of the network means that
performance (Sydow and Milward, 2003). Thus, for studying both sides of the relation in the field (performance and factors), this requires collecting data on a complete or representative set of organizations. For example, in the case study in this dissertation we conducted 25 interviews to research a single business network. This involved the commitment and cooperation of informants within the firms in this set. This requirement is intensified in the case of longitudinal studies and multiplied for comparative case studies. Second, multiple case studies present researchers with the risk of not having enough variation in the variables to compare the networks, something that would only show late in the research process (Raab and Kenis, 2009). Third, another cause for the scarcity is the lack of conceptual clarity on network performance. For firm performance we can choose accounting measures (e.g. market share, return on investment), financial market measures (e.g. market value, stock price) and mixed accounting/financial market measures (e.g. balanced scorecard) or survival (see Richard et al., 2009). A similar categorization with well-defined concepts does not exist yet for network performance. Also the matter why a network should be evaluated by using a specific concept is left largely untouched. The few network performance studies out there rarely motivate why they select a particular concept over others and why they choose to evaluate network performance from a particular perspective. Kenis and Provan (2009) call this one of the deficiencies of the network performance literature.
The supply chain management literature inherently has a view across multiple, coordinating firms. The concepts and measures used for evaluation of chains and networks in this stream can be helpful. However, networks are distinct from chains, chains are a subset of a business network (Vervest et al., 2004, p. 229). Business networks have a different operating logic than chains (Miles and Snow, 1992) in a chain firms collaborate, in networks firms can compete and collaborate depending on the order or time. Furthermore, the jump to theorizing on the performance of whole networks has only just begun in the supply chain management literature. In fact, theory building on network level performance has been carried out to a greater degree in the seminal works by organizational theorists in the public sector, mental health care in particular (e.g. Provan and Milward, 1995; Provan and Milward, 2001; Provan and Kenis, 2008). Overall, we will see, that development in the literature has been fragmented, with multiple definitions,
methods and measures for describing, explaining and capturing network performance. A comprehensive conceptualization is still lacking in the literature.
The following describes how we collected, analyzed and integrated the extant literature for the purpose of concept and framework building. To collect management literature that has conceptualized performance of interorganizational networks, the strategy detailed in Table 2.2 was adopted. The literature search procedure first started by retrieving full-text articles from academic peer reviewed journals on databases EBSCO Business Source Premier and ABI/INFORM Complete with respectively over 2,200 and 5,000 full-text publications on business and economics10.
Table 2.2 Literature search procedure
Keywords 1) In title “network performance”, “network outcome”, “network effectiveness” , “network efficiency “
AND In text firms, organizations
2) In title performance, outcome, effectiveness, efficiency
AND In text “network level”, “interorganizational networks”, “business networks”, “interfirm networks” “supply networks”
Databases ABI/INFORM Complete http://search.proquest.com/abicomplete EBSCO Business Source Premier http://web.ebscohost.com/ehost Search
criteria
• Full-text/Academic/Peer-reviewed (first search)
• Publications: Harvard Business Review, California Management Review and MIT Sloan Management Review (second search)
Results Period of queries: November 2013 No. of queries academic journals: 24 No. of queries periodicals: 24
No. of articles generated: academic journals (676) periodicals (148) No. of articles selected: 20
No. of empirical studies: 15
No. of normative/theoretical studies: 5 The design of the table is adapted from Turrini et al. (2010)
10 These databases have an overlap in titles but also unique titles e.g. European Management Journal and Journal
The keywords under 1) and 2) are used, at 2) we loosen the requirement for network to be in the title. Second, as research on network performance is relatively new a second search11
was conducted within the following periodicals that publish on new themes in management: Harvard Business Review, California Management Review and MIT Sloan
Management Review.
The literature selection procedure consisted of three steps. In the first step all query results were screened for title and keywords and at times the abstract to immediately discard numerous articles regarding teams and social and communications networks. Secondly, many studies that contributed to the knowledge on the performance of organizations or interorganizational relations (including those discussed in the previous paragraph) were also eliminated (e.g. respectively Goerzen, 2007; Duysters and Lokshin, 2011 and Beamish and Jung, 2005). This resulted in a list of 137 remaining articles. At the second step, the articles on this list were further analyzed on text and culled based on the following two criteria:
First, there should be a chosen conceptualization of performance on network level as
opposed to firm, dyad or chain level. The central topic in the study should be either describing or explaining performance of a business network. This excludes studies such as Moore (1993) where the form of organization here ecosystem and its stages are the central topic and network performance or underperformance is implicit to the article. Another example is a study where the focus is on capacity of networks to diffuse knowledge and information and how organizational learning shapes buyer-supplier networks in Japan and vice-versa (Lincoln et al., 1998) without any explicit link to the performance of these networks. Instead there were studies in similar contexts that did conceptualize network performance (Iansiti and Levien, 2004b12 and Dyer and Nobeoka, 2000). Here we also do
not include advances in network performance on the selection of concepts for evaluation that discuss how and which processes, issues and conditions, influence the choice (Sydow
11 Here all title search terms were all put in the text field since article titles of these periodicals do not always
contain the terminology of the topic under study, often these are catchy phrases. Keyword searches became e.g. “network performance” AND firms in text.
12 This study considers substantial parts of the business ecosystems of Microsoft and Wal-Mart that are
and Windeler, 1998; Morgan, 2004; Provan and Kenis, 2009; Whelan, 2011). Insights from such studies are used elsewhere in this dissertation. Second, the interorganizational networks in question have what is called a “joint production problem or function” i.e. networks must contend with the joint-production problem where multiple organizations produce one or more pieces of a single service or product (Provan and Milward, 2001). This excludes studies on the performance of alliance networks (Schilling and Phelps, 200713; Thorgren et al., 2010) and horizontal networks (e.g. Human and Provan, 2000) where firms collaborate that are at the same stage in the value chain.
At the third step an additional relevant article that covered network performance based on the author’s knowledge but did not contain the keywords above was added to the selection. The research objective is conceptualization and explanation therefore we included all types of studies: descriptive, explanatory, conceptual and empirical. These are the steps in the literature search procedure which generated a final list of 20 articles. While care was taken to run an extensive and thorough procedure, the list is not exhaustive per se. It could be the case that a few articles that qualified were not included, for instance if these involve other keywords and journals than covered above and are unknown to the author at this point. Next we carefully analyzed the selected literature, first in terms of performance concepts and measures for conceptualization and second in terms of categories of factors for building a theoretical framework for explaining network performance.