Network Governance

Network governance is "interfirm coordination that is characterized by organic or informal social system, in contrast to bureaucratic structures within firms and formal relationships between them. https://en.wikipedia.org/wiki/Network_governance

Network governance constitutes a "distinct form of coordinating economic activity" (Powell, 1990:301) which contrasts and competes with markets and hierarchies.

implicit and open-ended contracts adapt to environmental contingencies and to coordinate and safeguard ex-changes. These contracts are socially—not legally—binding. As such, governance networks distinguish themselves from the hierarchical control of the state and the competitive regulation of the market in at least three ways

pluricentric system (polycentric governance)

governance networks are based on negotiation rationality as opposed to the substantial rationality that governs state rule and the procedural rationality that governs market competition

Compliance is ensured through trust and political obligation

As a concept, Network Governance explains increased efficiency and reduced agency problems for organizations existing in highly turbulent environments. On the one hand, the efficiency is enhanced through distributed knowledge acquisition and decentralised problem solving; on the other, the effectiveness is improved through the emergence of collective solutions (collective action) to global problems in different self-regulated sectors of activity.

Examining managed networks in health care, Ferlie and colleagues suggest that networks may be the 'least bad' form of governance addressing wicked problems, such as providing health care for the increasing number of older people.

Provan and Kenis categorize network governance forms along two different dimensions:

Network governance may or may not be brokered.

Network may be participant governed or externally governed.

Historical and modern examples of network governance

In the 10th -13th Centuries, merchants in Cairo

By the 12th Century, Venice provides its merchants with an improved flow of information regarding the market conditions they face

The formation of the English and Dutch East India Companys forms a cooperation between merchants and companies to better regulate and inform others on the reputations of trading actors

in the eras of increased trade and cooperation between merchants and nations ranging from the 10th Century to the 17th Century

Importance of governmental relations

While federal, state, and local governments differ in their policies, they all work in coherence in order for the foundations to work efficiently. "Checks and balances" is a prime synonym when referring to intergovernmental relations.

Role in environmental governance

Network governance is the mode most commonly associated with the concept of governance, in which autonomous stakeholders work together to achieve common goals. (coalition)

take into account the increasing importance of NGOs, the private sector, scientific networks and international institutions in the performance of various functions of governance

Prominent examples of such networks that have been instrumental in forming successful working arrangements are the World Commission on Dams, the Global Environmental Facility and the flexible mechanism of the Kyoto Protocol.

in the realm of global chemical safety, transnational networks have formed around initiatives by international organisations and successfully developed rules for addressing global chemical issues many of which have been implemented by national legislations. Most notably, these transnational networks made it possible to avoid the institutional apathy that is typically found in political settings with many actors of conflicting interests, especially on a global level.

provide an innovative environment of learning, laying the way for adaptive and effective governance

One particular form of networks important to governance problems is ‘epistemic communitys’ in which actors share the same basic casual beliefs and normative values. (p. 3) Although participation in these epistemic communities requires an interest in the problem at stake, the actors involved do not necessarily share the same interest

The main argument in the literature for the advantage of network governance over traditional command and control regulation or, alternatively, recourse to market regulation, is its capacity to deal with situations of intrinsic uncertainty and decision making under bounded rationality.

Enhancement of Corporate Social Responsibility

Network governance, in the form of NGOs, is effectively bringing to light "bad practices" by corporations, as well as highlighting those actively working to reduce their carbon footprints.

One of the ways they are accomplishing this is by directing their activities to focus on improving Corporate Social Responsibility (CSR).