Governance and Management of Horizontal Business Networks: An Analysis of Retail Networks in Germany

Abstract

The paper examines two important elements in the development and effectiveness of horizontal business networks: governance and management. Case studies were conducted in three horizontal retailer networks in Germany with the aim of understanding how these networks are structured and which internal governance mechanisms support their development. Through secondary data and in-depth interviews, the study shows that the retail networks developed and implemented their own governance mechanisms and management structures to retain and attract a large number of members, facilitate strategic decision making and increase their effectiveness. The results highlight that governance structures are transitional and adapted according to specific contingencies. In the cases studied, the growth and effectiveness of the business networks have demanded changes in the governance structure, with greater autonomy for professional network managers. Although the retail network keeps its cooperative character, there is a trade-off, in which member-firms agree to delegate greater decision making power to managers in exchange for greater network efficiency and competitiveness.