Managing an interorganizational network: A framework of the institutional mechanism for network control

The interorganizational network is viewed as a strategic mechanism to improve a firm's competitive advantage through cost minimization while maintaining Management, flexibility. The change in orientation from competition to cooperation in University of interfirm relationships is rationalized according to the transaction-cost economics perspective. We address the selection of a control mode as a critical issue in managing an interorganizational network, considering the risk and cost involved in working with others. Various forms of network structure are illustrated as the proper control modes according to the interaction of the type of interdependence and the nature of network governance.