Behavioral Decision-Making and Network Dynamics: A Political Perspective

The blurring of organizational boundaries and the adoption of networks as a prominent form of governance have largely contributed to reinforcing interdependence between internal and external organizational networks as well as between formal and informal ties. This chapter tries to broaden existing theoretical models in order to explain the behavioral decision-making process of the firm and how it is shaped by the complex and interactive dynamics of these networks. The theoretical perspective employed in the chapter suggests that a firm’s behavior is influenced by organizational politics. Although this actually does not constitute a fresh perspective within organizational and management studies, in this chapter it is revamped and widened in light of the mentioned changes within and across firms’ organizational boundaries. The starting point of our discussion is March’s seminal work (March in Journal of Politics 24(4):662–678, 1962) and his model of ‘‘the business firm as a political coalition’’. Subsequently, drawing also on later organizational politics literature we show the limits and opportunities of adopting such an imagery not only for the traditional business firm but also for the contemporary network organization: through it we can improve our understanding of how organizational boundaries are defined today, why company leaders choose the F. Zirpoli (&) Department of Management, University Ca’ Foscari of Venice, San Giobbe, Cannaregio 873 30121 Venezia, Italy e-mail: [email protected] L. Errichiello Institute for Service Industry Research (IRAT), The National Research Council of Italy (CNR), Via Michelangelo Schipa, 91 80122 Naples, Italy e-mail: [email protected] J. Whitford Department of Sociology, Columbia University, 606 West 122nd Street, MC 9649, New York, NY 10027, USA e-mail: [email protected] I. Giannoccaro (ed.), Behavioral Issues in Operations Management, DOI: 10.1007/978-1-4471-4878-4_10, Springer-Verlag London 2013 199 strategies they choose, and how and why those strategies are (or are not) implemented. In order to explain patterns of organizational behavior in a world of blurred-but existent firm boundaries we finally draw on a more recent sociological literature on social movements that also highlights for ‘‘patterns of mobilization distinct from both lines of formal authority and the personal ties of informal organization’’ (Clemens, Where Do We Stand? Common Mechanisms in Organizations and Social Movements Research, in Davis G, McAdam D, Scott WR, Zald M (eds) Social movements and organization theory. Cambridge University Press, Cambridge, p. 356, 2005). Indeed, such a literature recognized the central role of networks, their evolutionary dynamics, and interactions between the internal and the external and between the formal and the informal. 1 Firm Boundaries, Networks, and Politics Over the past few decades firm boundaries have rapidly and significantly changed, actually becoming more and more blurred. Indeed, identifying their exact contours has increasingly revealed itself as a challenging task for firms in a number of industries, such as automotive (Dyer 1996; Helper et al. 2000), pharmaceutical (Powell 1998), biotechnology (Powell 1996, 1998), electronics, (Sturgeon 2002), mechanical (Herringel 2004; Whitford 2005), and software (Lerner and Tirole 2002). Within the realm of economic globalization, we assisted toward a number of paradigmatic shifts: the emergence of new Japanese-based models of industrial organization, the growing importance attached to services and knowledge (Gadrey and Gallouj 2002), high efficient markets of technology (Arora et al. 2001), a marked trend toward specialized technological knowledge (Langlois 2003). There is no question that all these changes have deeply affected firm strategies and the overall architecture of industrial organization: vertical disintegration, outsourcing, and collaboration-based modes of organizing emerged as the dominant strategic options to compete and survive in turbulent environments and uncertain markets. In most cases, the choice made by firms to externalize production or peripheral activities has its roots in their will to maintain a competitive position through lower prices and shorter lead-time, greater strategic and operational flexibility, higher quality of products and services, as well as the access to new sources of knowledge and specialized competencies. As a consequence, firms deliberately started to build vertical networks of production and innovation. At the same time, new and complex relationships with external actors, especially suppliers, gradually developed from those initially established as purely formal structures. Outsourcing has not limited its effect to a change to the internal organization of the firm. In fact, by choosing to outsource some of their activities, firms have also contributed—often unconsciously—to modify the organizational structure of external organizations, which have gradually achieved a prominent role in 200 F. Zirpoli et al.