2005/10 Negotiated Order and Network Form Organizations


Annaleena Parhankangas, David Ing, David L. Hawk, Gosia Dane, and Marianne Kosits


Throughout the 20th century, the industrial age roots of hierarchical top-down planning and command-and-control supervision have been the foundations for management thinking. At the beginning of the 21st century, many futurists and systems thinkers have widely declared that businesses must equip themselves to be more responsive to rapidly changing environments. Dynamic, knowledge-based businesses require that rigid forms of business governance give way to networked forms.

Since many successful businesses have shifted from autonomous independent enterprises to building alliances and inter-organizational relationships, we advocate a renewed examination of negotiated order and a focus on the fluidity enabled by it. The traditional advantages of legal order are being outweighed by its inherent rigidity. Under conditions of rapid change, maintaining an internally consistent set of rules, essential to legal order, is inefficient and relatively ineffective.

Systems of negotiated order are characterized by situational coordination of interests, flexible definitions of desired end states, and spontaneous initiatives by interested stakeholders. We examine the development of the Linux community and its negotiated system of self-governance, and offer three additional business examples that suggest how negotiated order may provide a platform for stakeholders to innovatively leverage the dynamics of the contemporary environment.


Annaleena Parhankangas, David Ing, David L. Hawk, Gosia Dane, and Marianne Kosits, "Negotiated Order and Network Form Organizations", in Systems Research and Behavioral Science, Volume 22, Number 5, (October 2005), pp. 431-452.