Human Systems Management

Georgantzas, Nicholas C.

doi: 10.3233/hsm-2001-20301pmid: N/A

Although still flying low under the popular business media's collective radar, virtual enterprise networks (or nets) do receive increased attention in the strategic management literature. A virtual enterprise network (VEN) is a system of autonomous firms that collaborate to achieve common business objectives. VENs give participants a competitive edge in markets demanding agility and rapid response. Seen as an emerging transactional exchange governance (TEG) form within transaction cost economics (TCE), VENs and the relations among firms that form them posit challenges for researchers and managers. VENs differ substantially from markets and hierarchies, and from recurrent and relational contracts, utterly changing what it means to be a firm in today's business. This essay explores alternative TEG forms, their characteristics and the criteria that bear on the choice of corporate governance: flexible specialization, market uncertainty, product (good or service) complexity, reliance on trust, risk, self-organization, shared knowledge, and socio-territorial cohesiveness. The essay offers propositions on the relations among economic criteria and the choice of transactional exchange governance forms by exploring the dynamics of a generic TEG structure. This is a system dynamics simulation model that partially offsets the shortcomings of transaction cost economics (TCE) and points to the potentially rich contribution of system dynamics to exploring VENs beyond the ideal-type TEG forms of markets and hierarchies that dominate the TCE literature.

Nicholas C. Georgantzas

doi: N/Apmid: N/A

Although still flying low under the popular business media's collective radar, virtual enterprise networks (or nets) do receive increased attention in the strategic management literature. A virtual enterprise network (VEN) is a system of autonomous firms that collaborate to achieve common business objectives. VENs give participants a competitive edge in markets demanding agility and rapid response. Seen as an emerging transactional exchange governance (TEG) form within transaction cost economics (TCE), VENs and the relations among firms that form them posit challenges for researchers and managers. VENs differ substantially from markets and hierarchies, and from recurrent and relational contracts, utterly changing what it means to be a firm in today's business. This essay explores alternative TEG forms, their characteristics and the criteria that bear on the choice of corporate governance: flexible specialization, market uncertainty, product (good or service) complexity, reliance on trust, risk, self-organization, shared knowledge, and socio-territorial cohesiveness. The essay offers propositions on the relations among economic criteria and the choice of transactional exchange governance forms by exploring the dynamics of a generic TEG structure. This is a system dynamics simulation model that partially offsets the shortcomings of transaction cost economics (TCE) and points to the potentially rich contribution of system dynamics to exploring VENs beyond the ideal-type TEG forms of markets and hierarchies that dominate the TCE literature.

Giancarlo Corò ; Roberto Grandinetti

doi: N/Apmid: N/A

The major purpose of this paper is to discuss the impact of global networking on Italian industrial districts (IDs). Today, in many Italian IDs we can observe a trend towards opening up the local system of value and moving beyond the pre-existent links, which district firms had little control over and were basically limited to the purchase of raw materials and the sale of finished products. These IDs are becoming an integral part of a network economy. The opening up process is particularly evident in several areas of north-east Italy. Our analysis is based on four empirical cases and indicates the IDs have responded in different ways to the change in the competitive environment.

Corò, Giancarlo; Grandinetti, Roberto

doi: 10.3233/hsm-2001-20302pmid: N/A

The major purpose of this paper is to discuss the impact of global networking on Italian industrial districts (IDs). Today, in many Italian IDs we can observe a trend towards opening up the local system of value and moving beyond the pre-existent links, which district firms had little control over and were basically limited to the purchase of raw materials and the sale of finished products. These IDs are becoming an integral part of a network economy. The opening up process is particularly evident in several areas of north-east Italy. Our analysis is based on four empirical cases and indicates the IDs have responded in different ways to the change in the competitive environment.

Milan Zeleny

doi: N/Apmid: N/A

Small and medium enterprise networks (SME Networks) are becoming an integral part of the Network Economy. From the 'industrial districts' of the Terza Italia to the entrepreneurial clusters of the Silicon Valley, SME's are a significant driving force of economic growth, job creation, disinflation and productivity enhancement in most industrial countries. After decades of research, these local industrial systems are still poorly understood in terms of their sustained processes of innovation, network interaction and competitive adjustments. While there could be some external economies due to agglomeration, division of labor, specialization and lowered transaction costs, differential innovation, interaction and adjustment capabilities are not fully explained by these mechanisms. A theoretical construct of local industrial system is missing. However, no mechanical or graph theory model of network architecture can substitute for what actually makes people in the network interact in order to become technologically innovative and capable of ongoing adjustment to their competitors. Counting the nodes and edges of graphs would be a poor substitute for understanding SME networks as dynamic ('living') organic systems they are. In this paper we propose a theoretical construct of network production, renewal and adaptation based on autopoiesis (self-production) of living systems.

Zeleny, Milan

doi: 10.3233/hsm-2001-20303pmid: N/A

Small and medium enterprise networks (SME Networks) are becoming an integral part of the Network Economy. From the ‘industrial districts’ of the Terza Italia to the entrepreneurial clusters of the Silicon Valley, SME's are a significant driving force of economic growth, job creation, disinflation and productivity enhancement in most industrial countries. After decades of research, these local industrial systems are still poorly understood in terms of their sustained processes of innovation, network interaction and competitive adjustments. While there could be some external economies due to agglomeration, division of labor, specialization and lowered transaction costs, differential innovation, interaction and adjustment capabilities are not fully explained by these mechanisms. A theoretical construct of local industrial system is missing. However, no mechanical or graph theory model of network architecture can substitute for what actually makes people in the network interact in order to become technologically innovative and capable of ongoing adjustment to their competitors. Counting the nodes and edges of graphs would be a poor substitute for understanding SME networks as dynamic (‘living’) organic systems they are. In this paper we propose a theoretical construct of network production, renewal and adaptation based on autopoiesis (self-production) of living systems.

Lucio Biggiero

doi: N/Apmid: N/A

Self-organization is a property of social systems, and its recognition can give a remarkable contribution to the theory of entrepreneurship and to the analysis of inter-organizational networks. While literature on the classification of inter-firm networks and on their (dis)advantages is relatively abundant, there is much less on the processes of their formation and development. Since the convenience of building inter-firm networks is often uncertain and ambiguous, it involves social-psychological aspects and is based on personal relationships. This is particularly true in the case of small business networks, where the small firm size makes firm networks coincide with entrepreneurial networks. This characteristic can be extended to industrial districts, which are systems emerging from the interplay between small business networks. Industrial districts are weakly hierarchical organizations, which present the typical dual nature of social systems: the systemic nature, which is manifested more at the unity level, considering the district as a whole, and the subjective behavior of its members, which can play a crucial role either in triggering the district or in its evolutionary patterns. Such a double nature becomes a powerful engine of knowledge creation/transfer when organizations are recursive and self-organizing, and when the emerging values promote cooperation and trust. These co-evolutionary, recursive and self-organizing aspects have been synthesized in Nonaka's concept of 'ba'. The cases discussed here deal with recursive processes in the formation of entrepreneurial networks in the biomedical district and in the formation of the district itself, which are seen as partially self-organizing processes. In the perspective considering knowledge as embodied in human beings and created by their social interactions, this paper concerns self-organizing and knowledge-creating processes at district and network levels.

Biggiero, Lucio

doi: 10.3233/hsm-2001-20304pmid: N/A

Self-organization is a property of social systems, and its recognition can give a remarkable contribution to the theory of entrepreneurship and to the analysis of inter-organizational networks. While literature on the classification of inter-firm networks and on their (dis)advantages is relatively abundant, there is much less on the processes of their formation and development. Since the convenience of building inter-firm networks is often uncertain and ambiguous, it involves social-psychological aspects and is based on personal relationships. This is particularly true in the case of small business networks, where the small firm size makes firm networks coincide with entrepreneurial networks. This characteristic can be extended to industrial districts, which are systems emerging from the interplay between small business networks. Industrial districts are weakly hierarchical organizations, which present the typical dual nature of social systems: the systemic nature, which is manifested more at the unity level, considering the district as a whole, and the subjective behavior of its members, which can play a crucial role either in triggering the district or in its evolutionary patterns. Such a double nature becomes a powerful engine of knowledge creation/transfer when organizations are recursive and self-organizing, and when the emerging values promote cooperation and trust. These co-evolutionary, recursive and self-organizing aspects have been synthesized in Nonaka's concept of ‘ba’. The cases discussed here deal with recursive processes in the formation of entrepreneurial networks in the biomedical district and in the formation of the district itself, which are seen as partially self-organizing processes. In the perspective considering knowledge as embodied in human beings and created by their social interactions, this paper concerns self-organizing and knowledge-creating processes at district and network levels.

Maurizio Mistri ; Stefano Solari

doi: N/Apmid: N/A

This paper deals with the modeling of the system of social and economic relations characterizing the industrial district, in the sense of an organizational form based on a set of small enterprises linked together by co-operative and competitive relationships. The authors emphasize the concept of relationship which, in the industrial district, may be of both an industrial and a social nature. The industrial district is seen as a socio-economic entity, and that is why the concept of social networks and graph theory are used to represent the co-operative and competitive relationships between enterprises in the district. The idea of network is amply used in sociological analysis and enables an adequate representation of the relationships between enterprises. Particular importance is attributed to the concept of 'relational space', by which the authors mean an application of the space of economic relations on the physical space defined by the system of social relations. The paper goes on to discuss the organizational form of the district, evaluated on the basis of the concept of connectance and emphasizing the particular position of the industrial district form among the various market forms. The concept of information and knowledge acquires a specific significance in connectance, in relation to which a model proposed by Boisot is used.

Mistri, Maurizio; Solari, Stefano

doi: 10.3233/hsm-2001-20305pmid: N/A

This paper deals with the modeling of the system of social and economic relations characterizing the industrial district, in the sense of an organizational form based on a set of small enterprises linked together by co-operative and competitive relationships. The authors emphasize the concept of relationship which, in the industrial district, may be of both an industrial and a social nature. The industrial district is seen as a socio-economic entity, and that is why the concept of social networks and graph theory are used to represent the co-operative and competitive relationships between enterprises in the district. The idea of network is amply used in sociological analysis and enables an adequate representation of the relationships between enterprises. Particular importance is attributed to the concept of ‘relational space’, by which the authors mean an application of the space of economic relations on the physical space defined by the system of social relations.The paper goes on to discuss the organizational form of the district, evaluated on the basis of the concept of connectance and emphasizing the particular position of the industrial district form among the various market forms. The concept of information and knowledge acquires a specific significance in connectance, in relation to which a model proposed by Boisot is used.