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Competition in the global market is pretty intense and firms are adopting the latest technology. They are looking to collaborate with other firms with complementary proficiency. This collaboration is useful to enhance a firm’s capacity and efficiency. These are known as network organizations. Networked organizations are heavily interdependent which means the complexity is higher. There are various levels of interdependence that one must know in order to manage a distributed network firm, that is briefly discussed in the article.
1. Pooled or generalized interdependence: In this type, activities are coordinated is via standardization of inputs where the partners contribute as a whole. For example, developing a body of information by a central body.
2. Sequential interdependence: In this type, the partners have distinct and sequential activities. The result gathered by one partner is transformed to the other. For example, in a construction project, items are outsourced to many firms who contribute interdependently or in a sequence.
3. Reciprocal interdependence: In this type, firms work jointly and exchange results simultaneously. For example, automobile manufacturing where teams discuss knowledge and plan about and during production. (Archer, 2004)
As the level of interdependence increases, resolution of problems become more difficult. It is thus important to understand the level of interdependence to manage a networked organization.
Managers today have a very complex role brought about by the constant change in products, processes, and markets. Some dimensions of change in a networked organization that leads to issues are explained in the article:
More skill requirements: Skill requirements are more in a networked organization which includes tools and technique required for analysis, experience and interpersonal skills to work as a team. Managing networks needs a high-level of decision making and coordination skills. These skills can be cognitively very complex in such an environment.
Multiple teams: Firms today have numerous teams that are problem-focused and task-oriented. New and defined managerial skills are required for tasks that are no longer managed in a hierarchical order but as peer-to-peer.
Altering accountability and authority roles: Managers had been trained to be completely accountable and have full control over the resources. With networked firms coming into the picture, managers are required to share the resources and distribute the responsibilities. There is no single person or team in control. (Rockart, 2009)
