A Preliminary Theory of Interorganizational Network Effectiveness: A Comparative Study of Four Community Mental Health Systems

By Provan, Keith G.; Milward, H. Brinton | Administrative Science Quarterly, March 1995 | Go to article overview
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A Preliminary Theory of Interorganizational Network Effectiveness: A Comparative Study of Four Community Mental Health Systems


Provan, Keith G., Milward, H. Brinton, Administrative Science Quarterly


The study of relations between organizations has been a major concern of organization theorists for at least the past 25 years. While most of the work in this area has focused on the determinants or predictors of interorganizational relations (see Oliver, 1990, for a review), as an understanding of the phenomenon has grown, the unit of analysis has gradually shifted from the dyad to the organization set, to the network. Especially in recent years, the study of organizational networks has proliferated. Much of this interest has been generated by an emerging recognition by academics that businesses, as well as organizations in the not-for-profit and public sectors, are increasingly turning to various forms of cooperative alliances as a way of enhancing competitiveness and effectiveness that would not be possible through the traditional governance mechanisms of market or hierarchy (Powell, 1990).

While a good deal of what has been written about networks has been atheoretical, discussing the advantages of networks or examining issues of measurement and analysis, considerable theory-based research has also emerged (e.g., Cook, 1977; Burt, 1980; Granovetter, 1985; Jarillo, 1988; Williamson, 1991; Cook and Whitmeyer, 1992; Larson, 1992; Provan, 1993). In the organization theory literature, work on networks has been guided primarily by two theoretical perspectives: resource dependence, and related exchange perspectives, and transaction cost economics, with most recent work focusing on the latter approach. Each of these perspectives offers both complementary and contrasting views about the network form. For the most part, however, each perspective focuses essentially on the organizational antecedents and outcomes of network involvement, with little attention paid to the network as a whole, except for its governance and structure.

This organizational view is understandable, since it is organizations that make up a network and organizations that stand either to lose or benefit by network involvement. In both the transaction cost and resource dependence literatures, for instance, the motivation and rationale for cooperative, interorganizational integration of activities and services is at the organizational level, either for reasons of efficiency related to reduced transaction costs (Williamson, 1985) or to gain resources and power (Pfeffer and Salancik, 1978). Individual organizations make strategic choices to form or become part of a cooperative network of other organizations when it appears that the advantages to such an arrangement, especially enhanced survival capacity (Uzzi, 1994), outweigh the costs of maintaining the relationship, including any potential loss of operating and decision autonomy. Thus, much of what is known about the rationale for network involvement is based on an extension of the literature on interorganizational relations.

Absent from these views, however, is a focus on nonstructural outcomes of the network as a whole. Even in the general network literature, which places a heavy emphasis on network-level properties and structures (Aldrich and Whetten, 1981; Knoke and Kuklinski, 1982; Marsden, 1990; Scott, 1991), issues of network outcomes and effectiveness are mostly ignored. While focus on organizational effectiveness is clearly appropriate when outcomes can readily be attributed to the activities of individual organizations, not all problems can be solved by the actions of individual organizations. Particularly in the area of community-based health care and social services for such groups as the homeless, people with severe mental illness, drug and alcohol abusers, and the elderly, a focus on organizational outcomes is insufficient, because such outcomes reflect only how well individual providers are performing their particular component of the many services needed by their clients. If the overall well-being of clients is a goal, then effectiveness must be assessed at the network level, since client well-being depends on the integrated and coordinated actions of many different agencies separately providing shelter, transportation, food, and health, mental health, legal, vocational, recreational, family, and income support services.

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A Preliminary Theory of Interorganizational Network Effectiveness: A Comparative Study of Four Community Mental Health Systems
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