Networking as a process of private ordering

Rindt, Jekaterina and Mouzas, Stefanos (2014) Networking as a process of private ordering. In: 30th IMP Conference, 2014-09-022014-09-05, KEDGE Business School.

Abstract

This paper examines companies’ networking as a process of private ordering. We use the term networking to describe the interactive, self-serving process of integrating business activities and resources. We also use the term private ordering to describe companies’ processes of setting up rules and procedures to regulate inter-organizational networking activities. Private ordering allows companies to enhance the efficiency, predictability and reliability of networking activities and to protect companies’ resources. In practice, private ordering manifests in companies’ setting up quasi-legal processes that replicate aspects of the public legal order established by the State. As a result, private ordering enables companies to capitalize on the flexible, yet reliable nature of quasi-legal processes, which regulate networking across several state-bound public orders and local business customs. Based on empirical research in the German food retail business conducted between 2011 and 2013, we identify a pattern of networking processes that rely heavily on the use of standardized, legal artefacts. These artefacts function as inter-organizational interfaces that facilitate recurrent interaction and enforcement of rules in networking through (1) law-like network constitutions, (2) out-of-court dispute resolution procedures, and (3) non-legal sanctions. Our findings demonstrate that networking as a process of private ordering enhances companies’ efficiency in compliance with constantly changing regulations by reducing complexity and uncertainty. Equally, companies rely on private ordering to enhance the reliability and predictability of networking activities even beyond the confines of direct inter-organizational relationships. In this way, the study adds to the existing body of IMP research highlighting the relevance of private ordering and the use of organizational artefacts.