Concluding remarks

Throughout the above discussion we have been addressing one broad issue: what contribution can be made to the conceptual frame of reference of the business strategy doctrine on a basis of the insights gained by adopting a network view of business organization. A few areas in which the business strategy doctrine could be developed in the case of organizations operating under "network conditions" have been identified and discussed.

We have touched upon the problems of defining the boundaries of an organization, of assessing organizational effectiveness and finally of managing organizational effectiveness. We have claimed that when a network view is adopted some not inconsiderable changes are required in all the three areas with respect to the basic assumptions of the business strategy model. All our arguments stem from a basic proposition about the situations described by the network model: continuous interaction with other parties constituting the context with which the organization interacts, endows the organization with meaning and a role. When this proposition applies, any attempt to manage the behavior of the organization will require a shift in focus away from the way the organization allocates and structures its internal resources and towards the way it relates its own activities and resources to those of the other parties that constitute its context. Such a shift in focus entails a somewhat different view of the meaning of organizational effectiveness: what does it depend on and how can it be managed?

By applying the network concept to the analysis of the behavior of the business organization, we open up another broader issue that we have not addressed here, concerning the assumptions that are made about the very scope of the concept of the business organization. We have been referring throughout to the concept of the business organization as it is used in the literature of strategy management, with its roots in the microeconomic theory of the firm. The firm or organization is viewed primarily as a production function, which is thus concerned mainly with the control and allocation of internal resources according to the criterion of efficiency. This view has also been institutionalized in the legal system, for example, in terms of laws regarding ownership (i.e. the legal boundary of the company), accounting, tax regulations, and so on. It has led to a fairly narrow perspective on the basic issues addressed by the strategy management doctrine. There have been other attempts to broaden and adjust this perspective apart from our own, but hardly any attempts to change it radically.

When we look back over the implications of the network model we get the impression that if the network view is adopted, it will constitute a challenge to the prevailing view of the business organization as a production function. The network model leads to quite a different view of the range and role of the business organization. The emphasis on the linking of activities and resources within a network as a primary task of the business organization seems to suggest that enterprise should be conceived as a transaction function rather than a production function. Such a concept of enterprise could lead naturally to a shift in focus, away from the control of resources towards the integration of resources, and away from the management of acting towards the management of reacting. Although we fee' that such a new concept of enterprise is called for, it still seems to be pretty far off.