A Dynamic Theory of Network Failure

Abstract

Organizational and sociological research dealing with network governance has mainly focused on network advantages rather than on their problems or dysfunctionalities. This left partially unexplored the field of network failure. Even if some early attempts at explicitly theorizing network failures have been made, we argue that explanations based mainly on social conditions (ignorance and opportunism) offered by this emerging theory (e.g. Schrank and Whitford, 2011), are not exhaustive. In this article we report the results of our empirical investigation on the underperforming network between the worldwide famous Venice Film Festival and its local hospitality system (in Venice, Italy). In the case study we are presenting, we will show how institutions have not been able to inhibit opportunism and sustain trust among network members because of mobilizing practices developed across formal lines of communication. With this work we propose a dynamic theory of network failure, answering to the more general call for network theories to focus the attention on agency and micro-processes.

Keywords: Network failure, micro-processes, individual agency

JEL Classification: L22, L23, L1