The Formation Mechanisms Study On Networks Governance

The thriving of network organizations in world economy has wined much attention in academic field. Consequently, Network governance theory took its shape with the development of industrial network in the middle and late 1980s, and then began to grow as a new field of microeconomics.Network governance includes dynamic and static attributes. Static governance, as a means of governance between firms and markets, equals to firm network and network organizations; dynamic meanings of network governance refers to the mechanisms and dynamic process of adopting network. The purpose of this dissertation is to explore the formation mechanisms and functions of network governance exist between firms and markets, without making a detailed analysis of industrial networks in various forms. In other words, this dissertation aims to explore the formation mechanisms of network governance on a more microscopic and elementary basis, namely the point of interplays of transaction costs and the firm's capabilities.The Transaction Cost Economics (TCEs) and the Resource-based Theory study network governance from different approaches. Transaction costs theory stresses external exchange and holds that the forming mechanisms of network governance lies in the cost-effectiveness of exchanges within a network. The firm's capability theory, with internal resources and capabilities as its basis, holds that the appearance of network governance results in the firm's efforts to seek external resources or certain potentials that lie beyond its power. However, either TECs or the firm's capabilities theory of cannot convincingly explain the appearance of such complicated economic organizations as inter-firm networks or strategic alliances. Transaction costs theory and the firm's capabilities theory are not mutually exclusive, but mutually complementary. Only an organic combination of these two theories can provide an eloquent explanation for such a complicated organization as the firm networks.Current statistics show that, both transaction characteristics and the attributes of firm's capabilities influence the formation of network. Therefore, it is possible to constitute an analytical framework of network governance on the basis of a mutual...