Annaleena Parhankangas, David Ing, David. L. Hawk, Gosia Dane and Marianne Kosits
Throughout the 20th Century, the industrial age roots of hierarchical top-down planning and command-and-control supervision have been the foundations for management thinking. At the beginning of the 21st Century, many futurists and systems thinkers have widely declared that businesses must be more responsive to a rapidly changing environment. These more dynamic knowledge-based businesses, operating in network forms, require that the static forms of business governance give way. The stories of these types of businesses over the past five years have generally been more speculative than descriptive. We hope to respond to this shortcoming in the literature and articulate some aspects of this transformation more clearly so other researchers in the systems field can document examples with which they are involved.
Since much business success has recently shifted from autonomous independent enterprises to inter-organizational relations negotiating in a field of influences, we believe a renewed examination of negotiated order is needed. We center on the distinction between negotiated order and legal order. Negotiated order emphasizes being fluid while legal emphasizes the firmness essential to bargaining. A critical difference between the two is that the "pie" during negotiation can change in size, whereas bargaining for a portion of the “pie” first requires a rule of law that predefines a fixed whole. Under conditions of rapid change, maintaining a coherent set of rules essential to legal order is both inefficient and relatively expensive.
Systems of negotiated order are characterized by situational coordination of interests, flexible definitions of desired end states, and spontaneous initiatives by the interested stakeholders. We examine the development of the Linux community and how they have achieved a negotiated system of self-governance. The Linux software has emerged from an amorphous group that continuously designs and operationalizes evolving principles.
Three additional business examples from other industries are presented to illustrate features of negotiated order. These examples suggest how negotiated order may offer a platform for stakeholders to innovatively deal with problems in their systems.
Keywords: Negotiated Order, Legal Order, Network Form, Systems Limits, Linux Community.
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Annaleena Parhankangas, David Ing, David. L. Hawk, Gosia Dane and Marianne Kosits, "Negotiated Order and Network Form Organizations", forthcoming in Systems Research and Behavioral Science , 2005.
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