NETWORKED ORGANIZATIONS

INTRODUCTION
There is a lot of pressure on small and medium sized companies to become virtual organizations
in contemporary business environment because it is changing at rapid rate. The unstable, dynamic
environment in present situation causes recurrent changes of organizational structures and results
in companies continually seeking the optimal model of the organizational arrangement.
Consequently, it is essential for the companies to develop appropriate organizational structure and
information network, which focuses on all information and resources critical for strategic and
operational decisions. Companies are moving away from hierarchies to networks and from
centralized to decentralized structures.

This essay will focus on the evolution and need of networked organizations from
global perspective and the advantages, challenges associated with it.

CHARACTERISTICS OF NETWORKED ORGANIZATIONS

David Rogers describes networked organizations as:

Borderless: Networked organizations tend to have relatively porous boundaries separating their
own departments from their outside partners, customers, press and other key constituencies.

Collaborative: Rather than settling for simple market research "reconnaissance," these
organizations actively seek out ideas from customers and partners.

Pervasively-Networked: All divisions and functions of the organization are engaging with
customer networks, and digital technologies are used to connect across disciplines and departments
within the organization as well.
 TYPES OF NETWORKS
Operational Networks

Personal Networks

Strategic Networks

NEED FOR NETWORKED ORGANIZATIONS

 Technology-driven networking: At a social level, the rapid adoption of social media, mobile
personal devices and ubiquitous, fast fiber wireless create conditions for increased personal
demand for information and engagement. While businesses increasingly appreciate that client,
satisfaction must inform their ongoing success strategies, so schools and learning centres
understand that modern education practices require professionals who can adapt to their
communities’ and learners’ evolving needs.

 Silos themselves aren’t the issue. Network is just any system of nodes connected by links. So, in
that sense, any organizational structure is a network, even a formal organization chart.

 Transaction Cost Analysis

ADVANTAGES

(i) Motivated functioning in the hub organization:

Because of the absence of vertical and horizontal boundaries within the hub organization, there
are minimum status and rank differentials. Hence people work with a sense of enthusiasm; being
motivated by the organizational structural environment.

(ii) Utilization of best capabilities:

A networking organization allows different organization engaged in performing different tasks
for the hub organization to bring their best capabilities together. Hence, at least in theory, the
performance of a networking organization is at its peak.
(iii) Less environmental uncertainty:

Management of the hub organization faces less environmental uncertainty; because it has sub-
contracted many responsibilities to partners, in the networking structure.

LIMITATIONS

(i)Co-ordination – The biggest problem: Co-ordination among the functioning of business partners
is perhaps, the biggest problem for the management of the hub organization, in the networking
structure.

(ii) Problem of reliability: A networking structure is successful only to the extent that its business
partners are reliable. How to ensure reliability of business partners? For this, there is no formula
devised so far.
(iii) Lack of close control: In a networking organization, there is usually lack of close control over
manufacturing and marketing operations etc. by the management of hub organization. Hence, there
may be poor operational performance in the networking organizations.

EXAMPLES
CISCO

SONY announced new organizational networked structure for new companies.

John Taylor company

CONCLUSIONS

Network organizations tend to perform well under conditions which require both efficiency and
flexibility. Much of the literature also emphasizes that information and know-how represent
important network organization assets. Rising competition and change cause organizations to
respond more swiftly as cooperative problem solvers to their increasingly complex environments
network as an organization presupposes a unifying purpose and thus the need for a sense of identity
useful in bounding and marshaling the resources, agents, and actions necessary for concluding the
strategy and goals of purpose. Thus, the essay concludes by saying that with the evolving
organizations and technological advancements, networked organizations are one of the emerging
and best alternative that could help organizations and individuals.

REFERENCES

Alstyne, Marshall, “The state of Networked Organizations: A Survey in three Frameworks”,

Journal of Organizational Computing (1997), 7(3).
Raksha Talathi “Networking Organization: Features, Advantages and Limitations”
Satell, Gregg “What Makes an Organization Networked”, Harvard Business Review, June
8,2015.
http://core-ed.org/legacy/thought-leadership/ten-trends/ten-trends-2014/networked-organisations