An organizational assessment of interfirm coordination modes

Abstract

Inter-firm relationships are coordinated to a large extent by non-market mechanisms. The objective of this paper is to identify which of these mechanisms are the most relevant, and how they can be theoretically and empirically combined into discrete alternative modes of organizational coordination between firms. A framework is developed for evaluating the comparative effectiveness and efficiency of these combinations of coordination mechanisms in the regulation of different types of inter-firm interdependence, drawing on both organization theory and organization economics. By analyzing network forms as mixes of coordination mechanisms, the framework offers a typology of inter-firm organization forms that is much more fine-grained and conducive to network organization design than those previously available. The predictive power of the framework is demonstrated by using the vast empirical research available on various types of networks, showing its capacity to explain the main findings on the use of different network forms for governing different types of relations.