Modeling network organizations: A basis for exploring computer support coordination possibilities

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Abstract
In recent years, network organizations have gained much attention as more and more of them have emerged in various industries. The problem of coordination within network organizations is an important one that differs in major ways from coordination within hierarchies or markets. We contend that computer technology has a potential for usefully supporting coordination efforts in networks. As a basis for studying such potential in a systematic way, a formal model of network organizations would be helpful, particularly to the extent that it represents coordination possibilities. From a long‐term perspective, the success of a network organization depends on more than efficient transaction processing. It also depends on factors such as participant reliability, motivation, mutual trust, cooperation, creativity, and prudent evolution. All of these are related to the issue of a participant's value (past, current, ongoing, changing) to the network. We introduce a model that formalizes some key aspects of network organizations. At the heart of our formulation is a construct called “reputation,”; which encapsulates the many attributes that can characterize participants’ past behaviors in a network. This model characterizes essential informational aspects of a network organization in a quantifiable form that lays a foundation for analyzing, designing, and implementing computer‐based systems to facilitate network operation and growth. We use the model to discuss possibilities for computer‐based support of network organizations at managerial and strategic levels, as complements to transaction‐level Electronic Data Interchange‐like systems.