Network Governance

Network governance (also called "network organization", "networks forms of organization", "interfirm networks", "organization networks"," flexible specialization", "network-centric organisation" and "quasi-firms") is "interfirm coordination that is characterized by organic or informal social system, in contrast to bureaucratic structures within firms and formal contractual relationships between them. The concepts of privatization, public private partnership, and contracting are defined in this context.

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

1. In terms of the relationship between the actors, governance networks can be described as a "pluricentric governance system" as opposed to the "unicentric system of state rule and the multicentric system of market competition"(p. 151). In contrast to state rule and competitive market regulation, governance networks involve a large number of interdependent actors who interact in order to produce public purpose.
2. In terms of decision making, 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 (p. 46)
3. Compliance is ensured through trust and political obligation which, over time, becomes sustained by self-constituted rules and norms.

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 to global problems in different self-regulated sectors of activity. Due to the rapid pace of modern society and competitive pressures from globalization, network governance has gained prominence and development among sociological theorists.

Network governance first depends on the comprehension of the short and long term global business risks. It’s based on the definition of the IT key objectives and their influence on the network. It includes the negotiation of the satisfaction criteria for the business lines and integrates processes for the measurement and improvement of the global efficiency and end user satisfaction. Beyond that, it allows the constitution and piloting of internal teams and external partners as well as the setting up of a control system enabling to validate the performance of the whole. Finally, it ensures permanent communication at all the various management levels.

In the public sector, network governance is not universally accepted as a positive development by all public administration scholars. Some doubt its ability to adequately perform as a democratic governance structure while others view it as phenomenon that promotes efficient and effective delivery of public goods and services. 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.