Why Do Networks Exist?

Abstract

Organizational change modifies the relationship between the organization and its environment. Using a methodology based on literature revision and analysis, we point out that the growing social importance of networks is related to the shrinking of hierarchy and to organizational knowledge creation. The network response to present challenges has certain virtues: flexibility, smaller costs, and its capacity to diminish the probability of error in decision making. Knowledge use could be characterized as a chain starting with the social capital that shapes the available resources for organizational knowledge. These resources are the networks and the know-how. Networks and know-how are the dynamic delimiters of knowledge creation. The chain closes at this point: knowledge usage is the seed of social capital. Networks are simultaneously social performance instruments and depots of social accumulated knowledge.

Keywords: networks, organizational knowledge, organizational change, knowledge creation

JEL Classification: M10, P11, Z13