Networks, Governance and Economic Development
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Networks, Governance and Economic Development

Bridging Disciplinary Frontiers

Edited by Mari Jose Aranguren Querejeta, Cristina Iturrioz Landart and James R. Wilson

This compact and authoritative book brings together the topical themes of networks and governance to advance understanding of the determinants of local economic development in the context of increasingly global relationships.
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Chapter 9: The Governance of Networks in the Shannon Region of Ireland

Helena Lenihan and B. Andreosso-O’Callaghan

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9. The governance of networks in the Shannon Region of Ireland1 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...

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