What is Network Governance?
Blogs are sometimes good for making arguments that might not be published. Of course a good blog doesn’t just invent nonsense. Rather, it focuses on expert-based opinions. In the next couple of months, I’m going to write some expert-based opinions about theories of environmental governance that I use in my research. I begin with a long-standing criticism I have of the term “network governance”, in particular when it is used to describe a form of governance that is different from markets and hierarchies.
The best example comes from Cross, Hesterly, and Borgatti’s (1997) seminal paper where network governance refers to “interfirm coordination that is characterized by organic or informal social systems, in contrast to bureaucratic structures within firms and formal contractual relationships between them(p.913).” The common assumption throughout the literature is that network governance is expected to be more effective than markets or hierarchies for solving complex cooperation problems that span organizational boundaries.
The classic example in environmental policy is the difference between command-and-control regulations for addressing point sources of air and water pollution, versus more collaborative approaches for addressing urban and agricultural non-point source pollution at the watershed level. Hierarchically structured permitting systems have performed fairly well at dealing with point sources, but quite poorly at managing non-point sources. Non-point sources are frequently addressed by collaborative partnerships that seek to build boundary-spanning networks—that is, network governance.
The problem with this type of analysis is that it implies hierarchies do not have networks. Nothing could be further from the truth. When I think about the most hierarchical organization I can imagine, I think about the military. But of course the military has formal networks like the chain-of-command, and informal networks like the supply black market. Command-and-control regulations also shape formal and informal networks. Markets also have networks connecting buyers and sellers (e.g.; the famous diamond market example), actors in value chains, etc. Hence the question is not hierarchy or market or network as different forms of governance, but rather how the architecture of networks is shaped by different types of institutional rules. All forms of governance have institutional rules and social relationships embodied by networks. The problem of institutional fit is all about trying to understand which institutions and affiliated network structures are effective at solving different types of problems.
Not all of the literature on network governance is handicapped by this conceptual problem. Provan and Kenis (2008) provide a better approach by discussing how governance structures networks: “Although all networks comprise a range of interactions among participants, a focus on governance involves the use of institutions and structures of authority and collaboration to allocate resources and to coordinate and control joint action across the network as a whole (p.231).” The difference is subtle but crucial—network governance is a process of building and shaping networks rather than being a distinct form of governance. Provan and Kenis carry forward with an analysis of how different types of network structures are more effective depending on contextual factors like trust and number of participants. I am convinced this is the right directing for theoretical development, but Provan and Kenis do not take the argument to its fullest possible extent. They still see their ideas as being relevant to “addressing complex issues that demand multilateral coordination….requires more than just achieving goals of individual organizations(p.232).”
Moving forward the literature on institutions, networks and collective action requires fully committing to the idea that institutions and networks are co-evolving and interdependent. This is the case regardless if you’re talking about markets, hierarchies, collaborative policy, or complex institutional systems. Think about environmental policy, for example when deciding if we should manage a fishery with gear restrictions and catch quotas, market-based individual transferable quotas or catch shares, or community-based fisheries management. Each of these forms of governance involves institutional rules and networks. We need a general theory of the conditions under which different forms of governance and their associated networks are better at facilitating cooperation and social exchange. This is essentially the problem of “institutional fit”. Oliver Williamson’s approach to transaction costs and comparative institutional analysis is a good approach to answering this type of question and I will leave it to the reader to explore that branch of economics.
Okay, geeky rant off!