WHAT IS MARKET, INDUSTRY, NETWORK…

The setting, environment for management and marketing

Annukka Jyrämä and Katri Nykänen Aalto University School of Business 1

No organization is an island- stakeholders

Annukka Jyrämä Aalto University School of Business 2

Company

Customers

Funders/investors

Media

Legislators

Competitors

Partners

Suppliers

Employees

Performing arts

Industry – clusters of companies /actors

Annukka Jyrämä Aalto University School of Business

3

Theatre

OperaOrchestras,

concerts

Dance

Value Creating System = ”Markets”For example the theater scene in Finland

NetworkTrust-based contract of all different theaters in an area

HierarchyA theater

A MarketThe customers of a theater in a city

The mixed market

*

*

*

*

= A mix of different *

Markets, Networks, and Hierarchies

Katri Nykänen

Market: creating value – a process view

Annukka Jyrämä Aalto University School of Business 5

Industries, Markets and Networks(Möller et al. 2004)

Toimiala X

Toimiala Z

Toimiala Y

Klusteri C

Klusteri B

Klusteri A

Mutual relationship

Strategic network

T

T

T

A

A

A

AA

TX

A

T

T

T A

Yrityksen kohdeverkosto

Makroverkosto

Taso 2

Taso 1

Level 2

Level 1

Macro network

Organizations focal network

Cluster

Cluster

Cluster

Industry A

Industry B

Industry C

Markets as networks

Annukka Jyrämä Aalto University School of Business

7

Discussion

1. What is a network?

2. What isn’t a network?

3. How arts and networks belong

together

9

Network research 1/2 (Möller et al. 2004)

Industrial network studies (IMP)

Social network research

Social capital

Strategic network research

Resourse dependency

Interactions between organizations

Social exchange theories

Transaction cost theory (TCA)

The school of resources and cababilities

Macro networksClustersIndustries

Focal nets

Strategic networks

Relationships

organization

Network levels

10

Network research 2/2

Social network research "Interorganizational Theory" "Actor-Network Theory” Innovation networks Network organization research "Policy Networks, public-private networks" Business geographic based network research "Comparative Studies" Entrepreneurship research "Industrial Network Theory“ (IMP) Resource based networks, value networks Knowledge research

Easton & Araujo (1996)

Network research

A Network can be defined in many ways and in many levels1. The social relationships between people

In principal any group of social actors can be defined as such a network

For example hierarchical organization is a network of managers and employees

We in this course Friendships

2. Network is sharing resources between two or more actors Networks between artists Network between organizations

3. Network as a way of organizing, a way to lead/manage a group of actors A network is collaboration that is based on long-term and trust-based

relationship between two or more independent actors

Katri Nykänen

Different perspectives on networks

• Exchange- communication and social networks• Formal vs. informal co-operation, networking• Horizontal

– E.g. between different media and advertising agencies

• Vertical– Near value chain thinking: e.g. producer-,

distributor co-operation

Annukka Jyrämä ja Katri Nykänen

Different viewpoints…

1. Network as a governance mode (Jones et al.1998)2. Networks as structures (McEvily and Zaheer 1999;

Ahuja 2000; Reagans and McEvily 2003; Burt 2004)3. Networks are a group of actors, actions and

resources (Håkansson and Snehota 1995)4. Networks as relationships (Äyväri)5. Networks as an efficient way to produce services

and products (Möller et al. 2005; 2006; Möller and Rajala 2005; Parolini 1991)

Katri Nykänen

Håkansson and Snehota (1993,531): key points in network theory

Companies act in situations, where their actions are influenced by a limited amount of other actors. Each actor is unique and has their own goals to achieve

• A company is in continunous interaction with other companies. This interaction creates the frame for exchange processes,. Relationships enable the use of other companies (actors) resrouces and joining of operations

• Organizations characteristics, and key competencies , abilites adevelop in these relationships with other actors. Also, the identity of a company is build in relations to others

• Since other actors from relationships act in similar circumstances, the company activity is enabled and constraint by the whole of the network. Thus, also the third party relationships influence the company actions.

Annukka Jyrämä

Markets, Networks and Hierarchies

Relationships as a combination of the

three

MarketsPrices and

buying contracts

HierarchiesControl based on authority

NetworksSocial control

Annukka Jyrämä

Net

Focal net

Annukka Jyrämä

Network

IK

MA

SF

JV

SH

SaP

AS

RT

MK

LL

M-LR

RP

JL

KT

TH

LR o

One sided connectionMutual connection

RL

HH

LT

VA

LP

PS

LR äTT

JJ

Katri Nykänen

Annukka Jyrämä

GALLERY

MEDIA

MUSEUMS

ARTISTS

ARTSCHOOLS

STATE OFF.

CUSTOMERS

OTHERGALLERIES

CRITICS

Strong relationWeak relation

Why networks, different perspectives

Society Company Organization Management Personnel Customer

Katri Nykänen