Network governance

Network governance is "interfirm coordination that is characterized by organic or informal social system, in contrast to bureaucratic structures within firms and formal contractual relationships between them. The concepts of privatization, public private partnership, and contracting are defined in this context." Network governance constitutes a "distinct form of coordinating economic activity" (Powell, 1990:301) which contrasts and competes with markets and hierarchies.

Network governance involves a select, persistent, and structured set of autonomous firms (as well as nonprofit agencies) engaged in creating products or services based on implicit and open-ended contracts adapt to environmental contingencies and to coordinate and safeguard ex-changes. These contracts are socially—not legally—binding. As such, governance networks distinguish themselves from the hierarchical control of the state and the competitive regulation of the market in at least three ways:

As a concept, Network Governance explains increased efficiency and reduced agency problems for organizations existing in highly turbulent environments. On the one hand, the efficiency is enhanced through distributed knowledge acquisition and decentralised problem solving; on the other, the effectiveness is improved through the emergence of collective solutions to global problems in different self-regulated sectors of activity. Due to the rapid pace of modern society and competitive pressures from globalization, transnational network governance has gained prominence.

Network governance first depends on the comprehension of the short and long term global business risks. It’s based on the definition of the IT key objectives and their influence on the network. It includes the negotiation of the satisfaction criteria for the business lines and integrates processes for the measurement and improvement of the global efficiency and end user satisfaction. Beyond that, it allows the constitution and piloting of internal teams and external partners as well as the setting up of a control system enabling to validate the performance of the whole. Finally, it ensures permanent communication at all the various management levels.

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