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Market – Hierarchy – Networking: Cooperation in Times of Globalization, Fragmentation, and Uncertainty


Gero Hocker

Due to globalization and increased competition, many international firms have been adopting outsourcing strategies in order to cut costs by decreasing their degree of vertical integration. However, this strategy causes new problems. For instance, fragmentation of the company’s value chain causes uncertainty with respect to the quality and availability of resources and the reliability of transaction partners. Further, the number of potential transaction partners has increased with the abolishment of trade barriers, which not only increases uncertainty, but also the complexity of the processes. International firms are managing these problems with different organizational structures and contractual arrangements with their transaction partners, while others have been evolutionary emerging.
Contents: The World of Rational Choice and Isolated Maximizing Individuals – The World of Direct Interdependencies and Complexity – Empirical Appearances of Networks Distinctive to ‘Market’ and ‘Hierarchy’ - Mercedes as a ‘Closed Shop’-Structure – Openness, Shared Information and the Willingness to Reciprocate: Different Institutions in the Internet Economy – Possible Learning Effects - is the Open Source Model a Chance for Traditional Industries to Deal with Uncertainty?