Changing network pictures: Evidence from mergers and acquisitions

A merger or acquisition may cause dramatic changes in a business network, which in turn affect managerial cognition as well as managerial activities. We use the concepts of ‘network pictures’ and ‘networking’ to illustrate and analyse changes in managerial sense-making and networking activities following a merger or acquisition. The paper focuses on acquiring, acquired or merging parties and those companies with which they have direct customer relationships. Based on three case studies comprising seven acquisitions and one merger, we show that following a merger or acquisition managers may need to adapt their previous network pictures in a radical way; these adaptations are, however, not always realized as shifts in network pictures and adjustments in networking activities by all the managers involved. Whereas the merging parties' network pictures and networking activities are largely driven by their perception of customers' needs and developments, it is not certain that the merger or acquisition is enacted accordingly. The paper contributes to a clearer view on the conceptual interdependence of the constructs of network pictures and networking in multi-actor situations and thus it develops a network perspective on mergers and acquisitions.     

Networks of mind and networks of organizations: The map metaphor in business network research

This paper examines the definitions and uses of the network picture metaphor in industrial marketing research. Conceptually, the paper extends our understanding of networks and of representations of networks among researchers and practitioners as pictures or maps. A threefold interpretation is proposed of network pictures as representationalist, mentalist and situated. The representationalist use has dominated business-to-business network research while the mentalist use is prominent in strategic management and has recently made an entrance into industrial marketing research. The representationalist version of pictures, despite its apparent innocence, can either imply or leave unexamined the mentalist version, but mentalism stands in contradiction to much network thinking. This paper seeks to resolve the emerging contradiction of representationalist and mentalist versions of network pictures by advocating a situated version. Seeing network pictures as situated in use is helpful in grasping cognitions and actions in a manner consistent with networks. The paper concludes by developing the situated version of network pictures as ‘actants’ and sketches the benefits and implications for business researchers and practitioners.     

The construction of managerial knowledge in business networks: Managers' theories about communication

In this article we regard managers' knowledge as a nuanced construction of reality that produces particular ‘espoused theories’ about the self as a practitioner and the environment in which they practice. Everyday managerial practices take place within the context of these theories. We argue that a subtle analysis of managerial talk can enhance the study of inter-firm relationships by revealing the espoused theories on the basis of which boundary spanners act. To demonstrate the construction of managers' knowledge, we introduce and explore materials collected in interviews with marketing and purchasing managers in several industrial contexts. We restrict our focus to talk about instances of communication to explore in depth how this talk establishes perceived ‘facts’ about inter-firm communicative work. We identify key discursive repertoires that are deployed to establish the range of communicative work, the difficulty in managing the directionality of communication and the complexity of managing in sometimes ambiguous situations — managerial ‘facts’ that are absent in some communication research. At the same time, discursive repertoires are deployed to establish the self as an able practitioner and a capable participant in communication. Our study has implications for boundary spanners and their organizations. We consider how boundary spanners' understandings of communication may be better deployed by the organizations that employ them and also in management education and training.     

Network pictures as a research device: Developing a tool to capture actors' perceptions in organizational networks

In business networks, strategic actions are believed to be guided by actors' subjective views or perceptions of their surroundings. Researchers thus consider these perceptions as important for understanding network related phenomena. Despite their recognized importance, there has not been much research aimed at developing a way to systematically capture these perceptions. The purpose of this paper is to show how actors' subjective views of the business network can be analyzed using the research device of network pictures. This is accomplished by developing an empirically derived dimensional model for capturing different aspects of an actor's subjective view. We exemplify how the developed device can be applied, and illustrate how there seem to be ‘types’ of ways of perceiving the business network. This paper therefore represents a methodological contribution through the development of a tool that may change researchers' practices in understanding business networks.     

Picture this: Managed change and resistance in business network settings

This paper discusses change management in networks. The literature on business networks tends to downplay the role of managerial initiative in network change. The change management literature addresses such initiative, but with its single-firm perspective it overlooks the interdependence of network actors. In exploring the void between these two streams of literature, we deploy the concept of network pictures to discuss managed change in network settings. We analyze a change project from the furniture industry and address the consequences of attempting to manage change activities in a network context characterized by limited managerial authority over these activities. Our analysis suggests that change efforts unfold as a negotiated process during which the change project is re-negotiated to fit the multiple actor constituencies. The degree of overlap in the co-existing network pictures of the involved actors is found to be decisive for the possibility of successfully implementing network change.     

A framework for the analysis of global, regional and local business networks

In this article we are dealing with the global, regional and local questions of the business. We raise the following question: is there a relation between network management (networking) and the spatial type of the network. We make a cross analysis of networking and spatial types of the network. The paper builds on the model of networking (Ford et al., 2002; Ford et al., 2003; Håkansson et al., 2009), the network paradoxes (Håkansson and Ford, 2002) and the model of 6 Cs (Ritter & Ford, 2006). We emphasize the strategic importance of the interpretation of network pictures. In order to answer the research question we create a theoretical conceptual frame called the Spatial Networking Matrix. We use the method of explorative expert interview in order to introduce some experiences of company leaders and managers concerning networking and spatiality. We conclude that after further development, the Spatial Networking Matrix can help to analyze networking and spatial types of networks at once, deepen the understanding of the real business world and through all of these, be a useful tool for business practice.     

Self- and collective-interests: Using formal network activities for developing firms' business

Many inter-firm network initiatives supported by government funds are based upon the idea that benefits rise incrementally as more actors connect with each other. This paper takes the stand that self-interest and collective-interest are evident in how firms participate in network activities, and how these activities are related to the development of the network. A time-flow model is presented of firms' participation and activities in a network according to specific blends and understandings of self- and/or collective-interest. The way the network is formed also shapes managerial understanding of why firms participate in activities and how self- and collective-interests coincide. A qualitative study in the Danish food industry establishes that every firm views business network activities as important, but each engages differently in these activities. The results of this study reveal interesting patterns between self- and collective-interests for those participating in network activities and the resulting network development. A key finding of this study is the importance of a firm's ability to convert the collective-interest of joint network activities into self-interest gains for the firm. This ability is proposed as an additional network competence to those already present in the literature.     

A study of how mainland Chinese small and medium privately owned businesses engage in networking

Privately owned businesses in mainland China are a recently revived business form. Although small and medium business are the vast majority, and the main drivers of the Chinese economy, published research about how these businesses have engaged in networking to improve their performance is lacking. Drawing on relevant literature pertaining to business networks, this paper reports on the development and testing of a model that seeks to explain mainland Chinese small and medium privately owned businesses' (POBs) networking as a set of strategic actions. The purpose is to ascertain whether POBs engage in networking, to determine its main aspects, and to examine the extent to which these networking aspects impact on POB performance. The findings confirm five common networking aspects and that these aspects have a positive impact on POB performance. The development and confirmation of the model has practical implications for both POBs and any Western associates.     

Crossing East-West boundaries: Knowledge sharing in intercultural business networks

Strategic business nets are becoming increasingly important in the arena of global competition. This article examines the influence of ethnic culture on knowledge sharing in different types of intercultural business nets. Knowledge sharing is essential for the functioning of business networks as it influences the cooperation and outcomes that firms are able to achieve. Our basic assumption is that the nature of the cultures involved and the type of network both influence the knowledge-sharing barriers. This is investigated on the basis of two conceptual frameworks. The first is a framework identifying different types of strategic nets and the requirements they impose for knowledge sharing. Subsequently, a culture-classification scheme based on the individualism-collectivism and the vertical-horizontal dimensions is derived. The strategic net and cultural types are then combined in an intercultural business-net framework, and the opportunities for and barriers to knowledge sharing are analysed using examples representing Asian-European and Asian-North American joint ventures and networks.     

Network process analysis: An event-based approach to study business network dynamics

To develop business, managers need to understand the dynamic nature of the business networks in which their company operates. Qualitative process research offers a promising methodology to deliver that understanding but does not yet provide elaborate analysis methods applicable to business network research. We therefore introduce an event based analysis strategy developed to study processes in business networks. Employing a longitudinal case on a paper trader's internationalization process in a network context as an experimental arena, we propose three tools for process analysis. First, a research steering wheel that combines both retrospective and real time event analysis; second, an analytical scheme comprising influencing factors, critical events and consequent change; and third, an event trajectory that unfolds process patterns. The proposed strategy offers a viable alternative to social network analysis, network pictures and narrative analysis with which to study network change and dynamics. Elaborating events from a moderate constructivist perspective, it enables the researcher to trace and understand processes beyond mere structural change, and to capture their evolution in a multilayered network context. We evaluate the strengths and weaknesses of the methodology and discuss its relevance for research and practice.     

Sense-making and agenda construction in emerging business networks — How to direct radical innovation

This paper focuses on the role of sense-making and development agenda construction in emerging business fields characterized by radical innovation. First, the networked environment of emergent business fields is described. It is shown that both sense-making and agenda construction are key cognitive processes in managing in this environment. Then, a framework describing the dimensions of managerial sense-making and its antecedent factors is suggested and discussed. Finally, the phenomenon of agenda construction and communication and its role in influencing the direction of business field development is examined. Discussion of the theoretical and managerial implications concludes the paper. The paper provides significant new understanding on the roles of sense-making and agenda construction in the emergence of new business fields. It contributes both to network theory of emerging fields and management in radical innovation contexts.     

Making sense of network dynamics through network pictures: A longitudinal case study

There have been a number of attempts to describe and analyse networks and company positions in them and to help companies to manage or change their “network position” [ [H?kansson & Snehota, 1995] and [Ford et al., 2003]]. But most of these have confined their attention to a particular point in time or have looked at network evolution over a restricted time period, such as Lundgren (1995) [Lundgren, A. (1995) Technological Innovation and Network Evolution. Routledge, London and New York.] and Andersson (1996) [Andersson, Per (1996), The emergence and change of Pharmacia Biotech 1959-1995. The power of the slow flow and the drama of great events, doctoral thesis, Stockholm School of Economics, Stockholm.]. This paper is based on the idea that insights into the dynamics and evolution of networks and companies may be found by taking a longer term perspective. It uses historical documents and correspondence to examine the evolution of a network and of a single company within it over a period of close to a century. The paper highlights the fact that networks and networking are not modern inventions, but are intrinsic to the nature of business activity. The case study also provides illustration of a number of network phenomena, such as network position, networking and the paradoxes that are endemic in networks. Finally, the paper concludes with some lessons that may be drawn from the case for successful management in a network.     

Sense-making and management in business networks — some observations, considerations, and a research agenda

Business networks are complex webs of interdependent exchange relationships within which companies and individual managers operate. They consist of manifold actors, complex interactions, as well as organizational structures and resource transformation processes. Business managers cannot just capitulate vis-à-vis this complexity. Making sense of complex business networks helps managers to understand their own position, as well as their available options for change. Similarly, research in the area of sense-making and management in business networks may help us understand how managers cope with the contextual complexity in business networks, and how managers construct the forms in which this complexity appears. This paper identifies six major research themes that need to be taken up in the future with regard to sense-making and management in business networks, and discusses some methodological issues to advance our knowledge in this area.     

Risk assessment and profit sharing in business networks

Nowadays network is the preferred governance form to conduct economic transactions. Network solution allows to reach flexibility maintaining cost and quality level. Since network concept refers to a great variety of organizational hybrids it is possible to choose the one that fits better market requirements. The new trends in inter-organization relationships push towards network solutions: companies are interested in relationships with partners and customers to overcome resource dependence, to enter too risky market or simply differentiate their business portfolio. The proposed research focuses on the network concept aiming at highlighting threats and opportunities to investigate the double nature of the risk concept. Network structures offer flexibility and higher profit as a consequence and business risk sharing opportunity.These two aspects (profit and risk) are strictly related and have to be considered together to depict a complete scenario; this implies that risk assessment and management in network environment cannot neglect profit sharing or, in other words, that profit sharing mechanisms should use risk as driver. In this context our research proposes a methodology to measure risk taking into account network peculiarities; risk estimation is a basic step to evaluate the opportunity cost of capital needed to compute the network Net Present Value (NPV) that is assumed as base in the profit sharing process. The profit sharing process has been tackled using the Shapley value approach that is inspired to the fairness principle while the opportunity cost of capital is assessed using the Capital Asset Pricing Model (CAPM).     

Temporality of resource adjustments in business networks during severe economic recession

Business cycles are not a new phenomenon. Firms have in the past found ways to, more or less successfully, adjust their resources to such cyclical changes. However, the combination of a global crisis in financial markets and a severe down turn in demand on globally interdependent markets in the “real” economy is unprecedented which suggests that established business practices to handle cyclical variations are challenged. In this article we focus on temporal aspects of resource adjustments, taking into account also network interdependencies in contemporary markets. We develop a conceptual framework towards understanding how business actors construct temporality of resource adjustment activities. We relate temporal orientation of actors to temporal profiles of activities, seeing them as both influenced by actors' network orientation.     

The transition from product to service in business markets: An agenda for academic inquiry

In recent years, industrial manufacturers around the world have deployed growing efforts in developing services in addition to their traditional product business in order to secure long-term growth and to remain competitive in the marketplace. Against this background, the present article introduces the reader to this special issue. It first recalls key aspects of the emerging service-dominant logic of marketing and examines how it relates to the business marketing field. It then illustrates the challenges faced by top executives of industrial companies in the transition from a product-centric to a service-centric business perspective through an interview with the managing director of ThyssenKrupp Service AG. After discussing how the articles included in this special issue advance the extant literature on industrial services marketing, the article finally develops a number of directions for future research on services in business markets.     

Managing innovation networks: Exploratory evidence from ICT, biotechnology and nanotechnology networks

This study examines the management of innovation networks which has enjoyed increased recognition in the marketing literature due to its growing prominence and relevance. By testing a causal model relating network factors to outcomes, the study contributes to theory development on managing innovation at the net level of analysis. Consequently, it contributes to the respective marketing literatures on new product development, open innovation, industrial marketing and its emerging network management sub-stream. It also offers a methodological contribution as respondents include key players from businesses, government agencies, research organizations and universities rather than from only one focal organization as studies in extant literature have predominantly done. Findings are based on 219 responses from Australian high technology networks, namely, information and communications technology and biotechnology/nanotechnology. The study offers valuable implications for marketing managers involved in new product development and innovation concerning strategies for managing their inter-organizational innovation initiatives effectively.     

Relating in business networks: Innovation in practice

Few studies have looked at the innovation process in the early stages of new business ventures in the context of business networks. Reporting on eight years of development of a new venture, we examine how the development of initial business relationships in an ever-changing business network affects technological innovation. We conclude that technological innovation is contingent on the development of business relationships that are a critical mechanism permitting a new venture not only to access but also to produce knowledge essential for innovating. For management this implies the need to strike a judicious balance between internal focus and closure to produce novel solutions and external focus and openness to experiment in business relationships.