Enterprise Network Management Mechanism

As the inter-firm network becomes increasingly important way of access to resource among firms, network governance has also become a hot research issue. After reading all of the foreign and domestic relevant literature, in his paper, I will explain why the inter-firms emerge and how to govern the inter-firms from both objective and subjective perspective. With the market conditions and consumer demand's rapid change, firms are facing increasing uncertainty .Through adopting inter-firms, every single firm can get higher efficiency than adopting mark and integration of firm. And this is the objective reason why inter-firms exist. With the increasing in uncertainty, time pressure and complex tasks under intense time pressure and frequent exchanges among parties, inter-firms can improve the ability to create rents and increase every firm's profit through sharing information and learning knowledge from each others. About the subjective reasons, as person's limited rationality and information asymmetry, and asset specificity may create dependency between parties, it is prone to emerge the problem of opportunism during the exchange and cooperation. There is no exception of network governance. In this paper, about the research of network governance mechanism is based on transaction cost economy. Under the tree-dimensional framework of uncertainty, asset specificity and transaction frequency, we use repeated game and hostage and guarantee to explain how the trust emerge and maintain between firms which are the numbers of inter-firms. Repeated game involves the accounting between the present value of future earnings and the profit by violating contract. If the former is bigger than the latter ,then the cooperation firm will comply with the contract and trust is emerged . Hostage and guarantee will make the firms clearly aware of the cost of cheating. If the firm cheated them it will lost the hostage. So hostage and guarantee is an effective way to emerging trust. By introducing the concept of structural embeddedness, social mechanism will be added into the framework of the transaction cost analysis. Through the social mechanism of restricted access to exchange, macroculture, collective sanction and reputation, we can specify how social mechanism to promote the development of the overall inter-firm network in during the business cooperation. Finally, we use the case of the Japanese auto companies to support our point. In Japan's supplier and buyer chains, trust and institutional mechanism play important roles.