Bridging Disciplinary Frontiers
Chapter 9: The Governance of Networks in the Shannon Region of Ireland
1 Helena Lenihan and B. Andreosso-O’Callaghan 1 INTRODUCTION Networking is the essence of the ﬁrm. The plain Coasian observation that ﬁrms require inputs to produce and to perform, and that no single ﬁrm possesses every input it needs to undertake its activities, implies that ﬁrms are compelled to engage in exchange activities, and that they naturally and gradually develop their own networks. Even before the Coasian observation (1937), Marshall’s analysis (1895) recognized the advantages of ﬁrm cooperation. Richardson (1972) also refers to ‘the dense network of cooperation and aﬃliation by which ﬁrms are inter-related’ (p. 883). In fact Richardson criticized the traditional theory of the ﬁrm for failing to take into account the existence of inter-ﬁrm cooperation and aﬃliation. Richardson sums up the prime reason for the ‘existence of the complex networks of cooperation and association . . .’ saying that they exist due to ‘the need to co-ordinate closely complementary but dissimilar activities’ (p. 892). The subsequent network model developed by Håkansson and Johanson (1988) suggests that ﬁrms need resources to execute their activities. A single ﬁrm does not possess every resource needed for its activities (Duijnhouwer, 1994), implying that ﬁrms thus engage in resource exchange (Easton, 1992; Håkansson & Johanson, 1988). Diﬀerent types and levels of networking activities exist, and these have been well described and analysed by the abundant modern economic and management literature on the topic (Håkansson & Johanson, 1988; Belussi, 1992; Zaheer & Venkatraman, 1995; Belussi & Arcangeli, 1998; Gulati, 1998; Roper, 2005). This...
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