Introduction
Building organizational development strategies in entrepreneurship is aimed at implementing both narrow objectives, for instance, finding solutions to specific issues or reforming individual operational processes, and broad goals, including optimizing staff productivity and capital accumulation. For different firms, distinctive approaches to the performance of the set objectives are applied due to various structural types and resource bases.
Given that the business sphere is a dynamic and flexible environment, models for building workflow modes can be different. Recently, network organizations have gained wide popularity as models that utilize the work of small teams working independently but in the context of the same operational tasks. This structure of the workflow allows for getting away from the traditional organizational form and optimizing the distribution of assets because, in such a model, not the usual vertical control mechanisms are promoted but more flexible connections between the participants involved. This paper aims to evaluate the various types of network organizations and identify some of the environmental areas that these business structures affect, particularly ecological processes, technological changes, and resource concentration options.
Main Types of Network Organizations
As their name implies, network organizations function by pooling the activities of individual nodes, where each team works independently of the other, including resource bases and capital assets. Scott and Davis (2007) give several types of such organizations, which differ from each other by the period of interaction, the range of participants involved, size, and some other criteria. The choice of the optimal structure of a network organization is the key to productive work on solving various operational issues and contributes to a more successful realization of not only direct entrepreneurial objectives but also related factors that affect business sustainability, for instance, the degree of customer loyalty or coverage of target markets.
Stable Network Organizations
One type of network organization is a stable system in which long-term partnerships are established. As Scott and Davis (2007) note, these structures are based on the work of stakeholders providing the services of suppliers or manufacturers. In addition to operating within the same network, they can also do business outside of it, which makes them competitive and allows them to grow independently of their main line of business (Scott & Davis, 2007). As a rule, such organizations are large and mature, with significant outsourcing assets and market activities in different regions. As an example, Moore et al. (2018) cite highway construction activities in which a large number of competing participants are involved. The contractor has the right to coordinate the work of the partners and determines the basic requirements for the fulfillment of the tasks set, but the individual characteristics of partners’ activities remain inviolable. This, in turn, allows organizations on the network to compete and expand their business capabilities without being tied to a single project, and the whole system functions stably and freely.
Dynamic Network Organizations
Unlike stable network organizations, dynamic ones differ in the duration of their existence and the proximity of businesses. Scott and Davis (2007) state that in such structures, product cycles are short, and the interaction between the involved participants is carried out exactly to the extent necessary to achieve the set goals. Firms do not compete because they are not bound by long-term contracts and aggregate commitments. Scott and Davis (2007) cite the film industry as an exemplary area in which dynamic patterns emerge; involved participants, including creators, actors, technical staff, and other employees, work for a certain period and are not required to continue cooperation after the end of work on the project. In some cases, technology transfers are acceptable, which, according to Sobolewska (2020), is a form of temporary borrowing and does not imply adopting others’ workflow models. In most cases, dynamic network organizations are built in accordance with the algorithm of temporary unions in which members pursue both a common interest associated with the implementation of the objectives set and personal benefits.
Internal Network Organizations
Internal network organizations are separate entities with specific business principles. Scott and Davis (2007) define them as systems in which participants interact with each other to sell and buy goods. In these structures, certain boundaries are set, for instance, on the range of market coverage or on the share of sales, although general economic conditions, such as pricing policies or cost control, are respected (Scott & Davis, 2007). Moore et al. (2018) pay attention to such a factor as bonding social capital; this parameter represents the relationship between the involved firms in the internal chain. This aspect is critical to take into account since, being limited in interaction with the external market, this is essential for organizations of this type to be guided by specific frameworks, including financial constraints, to be successful and prevent the loss of competitive advantage. Rivalry is relevant to such structures; firms interact with a limited number of participants, which determines the special conditions for success. As a result, even in small internal networks, strict principles of market struggle can occur.
Alliance Networks
Alliances are special forms of network business structures because they may not fall under any of the aforementioned types. In their traditional definition, alliances are designed to achieve such goals as reducing business risks, sharing technology, overcoming legal barriers, and other goals that some organizations cannot achieve alone (Scott & Davis, 2007). These systems can be described as a form of partnership where contacts between two or more firms are formalized to conduct business on favorable terms for each of the parties. Sobolewska (2020) identifies strategic types of alliances, cluster partnerships, and co-op relations. Nevertheless, regardless of this or that type of structure, each of these forms is designed to address the main task –achieving specific business outcomes in conditions in which this is not rational to act alone.
Impacts of Network Organizations on Environmental Areas
From the perspective of impact on environmental areas, network organizations differ from traditional forms of business, where one firm exclusively utilizes its own assets. Collaboration under the proper conditions encourages active knowledge sharing, which, as Sobolewska (2020) remarks, is often one of the main reasons for forming this type of partnership. In addition, one can note the prospects for creating new organizational structures with greater market capabilities by expanding spheres of influence and strengthening targeted projects designed to capitalize on profits and increase client interest. Networks can also stimulate attention to general issues in social or other sectors, such as environmental protection (Cantino et al., 2017). As a result, the nature of the impacts may be distinctive and depend on the specifics of the businesses, the resources available to apply, the share of market coverage, and other characteristics.
Technological Changes
As a real outcome of the formation of network organizations, one can mention the technological changes resulting from such activities. Koch and Windsperger (2017) evaluate the effectiveness of these structures and highlight the role of partnerships from the standpoint of enhancing digitalization as a significant perspective. According to the authors, by entering into alliances with other firms, companies build digital capabilities by learning from partners and optimizing existing operational capabilities, and as an example, developments in the digital economy are given (Koch & Windsperger, 2017). By following this strategy, network organizations create new ways to control operations, establish distribution channels, expand marketing opportunities, and realize many other tasks that would be impossible to accomplish with limited technological capacities.
Since technological changes are directly related to innovation, the speed of business potential development also increases significantly in advanced network organizations. Scott and Davis (2007) note a positive relationship between alliance formation and the centralization of control, which, in turn, reflects favorably on financial opportunities. More investors pay attention to actively growing businesses with a rich technological background (Scott & Davis, 2007). When speaking of the size of the participating firms in the same network, a more advanced technical base is the key to faster recognition in the target market and increased trust of suppliers and consumers, which is due to the ongoing trend towards digitalization. If the network is relatively young but adheres to an innovative course of development, this indicates the efforts of its leaders aimed at creating a favorable image. Thus, network organizations are transforming the traditional business sector by having a significant impact on the technological environment and setting new digital trends.
Ecological Processes
From the standpoint of influencing environmental processes, network organizations can create important precedents for the entire global community by using available resources to study current issues and fill knowledge gaps. In their study, Cantino et al. (2017) give an example of the use of natural resources based on fishing as an activity that is practiced worldwide and is often one of the most important income sources in local economies. According to the findings of the research, network organizations can make a significant contribution to the study of the sustainable exploitation of fish resources by forming communities that include ordinary fishermen, scholars reviewing marine ecosystems, and special control boards (Cantino et al., 2017). Additionally, as a rationale for the analysis, Cantino et al. (2017) cite Lachmann’s vision of entrepreneurship, which implies that any business involves the ownership and control of appropriate resources. The formation of network organizations allows for active work on the study of target business areas, and both fishing and other activities related to the exploitation of natural resources can be optimized through a number of stakeholders’ effective activities.
The ability to address relevant ecological issues through extensive entrepreneurial activities is a valuable environmental implication of network organizations. Merida (2015) mentions Christian laws, according to which God rules over all the resources of nature, but human, being sinful creature, often destroys the blessings of nature for the sake of material values. Building large groups in which individual firms are involved in distinctive activities, including risk assessments and resource calculations, reduces environmental threats, largely due to sound analytical principles of separation of powers and responsibilities. Therefore, the activities of network organizations can have a beneficial effect in the context of addressing ecological issues.
Concentration of Resources
One of the significant effects that network organizations have is the concentration of resources, which is usually expressed from a geographical perspective. Manning (2017) assesses the role of such entrepreneurial structures in the distribution of funds and notes that in developed regions, partnership projects often have more opportunities for the allocation of investment capital than those from less financially developed areas. This is due to the traditional idea of the value of brands and their recognition in the target market. The more successful a network organization is, the more likely it is that its focus will be on those who can contribute the most to development, such as elite clients or world-famous investors. The business of network organizations in economically underdeveloped regions can be hampered by the lack of market interest and, consequently, the lack of funds for development. As a result, more resources are concentrated where market activities are intense.
When speaking of human resources, this is important to note the influence of network organizations on the distribution of roles in teams, and the geographical factor is also an essential aspect to consider. According to Manning (2017), when there is a high demand for goods or services, there is a need to increase the number of production and marketing facilities, which leads to the opening of new branches. In this regard, new leadership functions emerge, and local managers get more opportunities to regulate individual operational processes and participate in the work of the entire structure. Therefore, when evaluating the impact of network organizations on environmental areas, this is crucial to consider the concentration of resources, including both tangible and human, as one of the consequences, and in many respects, from a geographical perspective.
Biblical Integration
From a Christian perspective, networking is a practice that can be compared to partnerships that people have been building since ancient times. For instance, Merida (2015) mentions foreign alliances based on inter-ethnic marriages to profit from these unions. When taking not about the social but about the entrepreneurial context, the situation is similar; individual firms conduct joint activities, subject to the general order and, at the same time, pursue personal benefits. The following biblical principle may be relevant in this case: “For as in one body we have many members, and the members do not all have the same function, so we, though many, are one body in Christ, and individually members one of another” (Romans 12:4-6,” n.d.). Members of network organizations complement each other’s interests by participating in team activities. Following a single strategy reflects participants’ cohesion and emphasizes the importance of working together.
Conclusion
Network organizations are business structures that are based on the joint activities of a number of involved firms, and in the course of their operations, they have an impact on technological, ecological, resource, and other areas. Such organizations can be classified into different types depending on the size, interaction conditions, market coverage, and other criteria, as a result of which they distinguish internal, dynamic, and stable network organizations, making alliances a separate group. With respect to the impacts involved, geographic characteristics largely determine the concentration of resources and the success of the work. Innovative optimization and addressing environmental issues are the consequences of technological and ecological effects.
References
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