The governance of networks and economic power: the nature and impact of subcontracting relationships

Sacchetti, Silvia and Sugden, Roger (2003). The governance of networks and economic power: the nature and impact of subcontracting relationships. Journal of Economic Surveys, 17(5) pp. 669–692.

DOI: https://doi.org/10.1046/j.1467-6419.2003.00209.x

Abstract

Current debate on networking focuses on network structures and firm strategies. In this perspective, theoretical analysis has been concerned with allocative issues. This essay proposes a different interpretation. Starting from the existing theoretical framework, we emphasise the nature and the implications of different types of networks with respect to socio-economic development from a distributional point of view. Within this context, we develop the analysis of subcontracting starting from the concept of economic power. We then provide an analysis of governance in production by considering the attitudes and the nature of the actors involved. The externalisation of activities by large transnationals, which characterises current corporate restructuring, is often related to the search for greater flexibility, but also for greater power over governments, labour, and subcontractors. Differently, networks based on the mutual dependence of actors, which are not necessarily built around a large firm, could – under particular conditions – reach large production scales or more complex scopes without breaking the links with territorial systems, thus including local objectives in the strategic decision-making process. Our conclusion is that the impact of subcontracting networks varies enormously. This is crucial to an understanding of future trends and possibilities. Not least, firms and public policy agencies need to understand the implications of different forms of subcontracting network and how those forms actually differ in practice.

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About

  • Item ORO ID
  • 41560
  • Item Type
  • Journal Item
  • ISSN
  • 1467-6419
  • Project Funding Details
  • Funded Project NameProject IDFunding Body
    SIPRO Subcontracting Networks in the Manufacturing Sector, Ferrara Province (Italy)Not SetEU Objective II Regional Funds
    "Supply-side Strategy for Productivity, Competitiveness and Convergence Between the CEECs and (in) the EU"P97-8247-RACE Project - EU
  • Keywords
  • networks; subcontracting; network governance; economic power; transnational corporations; local development
  • Academic Unit or School
  • Faculty of Business and Law (FBL) > Business
    Faculty of Business and Law (FBL)
  • Copyright Holders
  • © 2003 Blackwell Publishing Ltd.
  • Depositing User
  • Silvia Sacchetti

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