Source: Achrol, R. S. (1997), ‘Changes in the theory of interorganizational relations in marketing: toward a network paradigm’, Journal of the Academy of Marketing Science, 25, 1, 56–71.
Abstract: The marketing environment in the 21st century promises to be knowledge rich and very turbulent. The classic, vertically integrated, multidivisional organization, so successful in the 20th century, is unlikely to survive in such an environment. The evidence indicates it will be replaced by new forms of network organization consisting of large numbers of functionally specialized firms tied together in cooperative exchange relationships. This article explores the characteristics of four types of network organization that may represent prototypes of the dominant organizations of the next century. These include the internal market network, the vertical market network, the intermarket network, and the opportunity network. The economic rationale and the types of coordination and control mechanisms driving network organizations are very distinct from those studied under the current exchange or dyadic paradigm. This article analyses the kinds of changes involved in key variables and their meanings in moving from a dyadic view of exchange to a network view.
Insight: Achrol sets out how the then established vertically integrated, multidivisional type of organization started to be replaced by new forms of network organization consisting of large numbers of functionally specialized firms tied together in cooperative exchange relationships. He considers four main types, the variables involved, the economic rationale, and the types of coordination and control mechanisms necessary for organizations to adapt to the new environment.