Page 62 - The Handbook - Legal and Accounting Networks 81
P. 62
Law and Accounting Networks and Associations
Sociologists argue that social patterns of human interaction transcend reductionist (simple)
economic agendas: “The pursuit of economic goals is typically accompanied by [such]
non-economic [goals] as sociability, approval, status, and power... Economic action is
socially situated and cannot be explained by reference to individual motives alone.”267
Organizations are and always will be run by people. They are infused with purpose and
meaning only through the imagination and will of people...268 As teams of self-interested
agents, networks broadly suffer from incentive problems with respect to surplus or “public
goods” jointly created but individually consumed. Teams confront an organizational
version of the “tragedy of the commons.” Members have an incentive to overstate their
private preferences when a good is provided from common resources but to understate their
private preferences when asked to ante up their share of costs. Networks are particularly
susceptible to this problem as network members have an incentive to minimize their own
efforts while free riding on the efforts of others.269
A prime hazard of team organization is that individual team members tend to overvalue
their own contribution relative to other members.270 Many refuse to subordinate their
interests to the interests of the community and the distribution of authority in networks
affords them the ability to act on their own behalf. At times of resource scarcity, individuals
will also tend to hoard resources making them unavailable for more desirable purposes.271
Consensus management has been cited as a prime cause of failure to conduct organizational
change.272
In effect, no one party wishes to have their own “ox gored” to improve the whole
organization. Particularly in times of crisis, participatory management can misallocate
resources since it often leads to proportional burden sharing rather than complete
restructuring. Continuous and strong senior management support is necessary to effect
radical change.
Consensus management and empowerment can change organizational behavior, as
individuals, once given authority, grapple to extend it. Networks, more than hierarchies,
tend to fall victim to corporate politics and local turf battles.273 Increased political influence
costs balance, to a limited extent, the benefits of an option to replace non-performing
network members. When titular authority yields to expertise, task delegation which was
formerly a matter of fiat becomes a matter of persuasion and negotiation.274
In short, shifting between networks and hierarchies has social ramifications with respect to
modes of influence. Interpersonal skills come to the fore and persons are free to challenge
267 Van Alstyne, supra note 9, citing M. Granovetter, Problems of Explanation in Economic Sociology, in NETWORKS AND ORGS. 471-491 (N. Nohria
& R. G. Eccles, Eds. 1993).
268 Id., citing P. R. LAWRENCE & J.W. LORSCH, ORGANIZATION AND ENVIRONMENT (1967).
269 Id., citing E. Roberts, New Ventures for Corporate Growth. 58 HARV. BUS. REV. 124-132 (1980).
270 Id., citing Symposium, Adaptation Processes in Team Decision Making and Coordination, IEEE SYMPOSIUM ON SYSTEMS, MAN, AND CYBERNETICS
(1990).
271 DUPONT LEGAL NETWORK, supra note 241: “But all other things are seldom equal. A number of significant barriers exist to building teams that
consist of members from different firms. Inter-firm competition can lead to sharp elbows among team members and can detract from team performance.
Lack of communication about client goals or group objectives can lead to a lack of focus and can reduce team effectiveness. Team members may resist
sharing intellectual capital gathered in other cases, such as research and forms, with other team members whom they view as competitors. Incompatible
technology, such as different word processing and database management software, can also pose a barrier to the sharing of work product.”
272 Van Alstyne, supra note 9, citing B. J. Bashein et. al, Preconditions for BPR Success, 11 INFO. SYS. MGMT. 7, 7-13 (1994).
273 Id., citing C. C. Snow et. al, Managing 21st Century Network Organizations, 20 ORG. DYNAMICS, 5, 5-20 (1992).
274 Id., citing R. M. Kanter, The Future of Bureaucracy and Hierarchy in Organizational Theory: A Report from the Field, HARV. BUS. SCHOOL (April
1989).
50
Sociologists argue that social patterns of human interaction transcend reductionist (simple)
economic agendas: “The pursuit of economic goals is typically accompanied by [such]
non-economic [goals] as sociability, approval, status, and power... Economic action is
socially situated and cannot be explained by reference to individual motives alone.”267
Organizations are and always will be run by people. They are infused with purpose and
meaning only through the imagination and will of people...268 As teams of self-interested
agents, networks broadly suffer from incentive problems with respect to surplus or “public
goods” jointly created but individually consumed. Teams confront an organizational
version of the “tragedy of the commons.” Members have an incentive to overstate their
private preferences when a good is provided from common resources but to understate their
private preferences when asked to ante up their share of costs. Networks are particularly
susceptible to this problem as network members have an incentive to minimize their own
efforts while free riding on the efforts of others.269
A prime hazard of team organization is that individual team members tend to overvalue
their own contribution relative to other members.270 Many refuse to subordinate their
interests to the interests of the community and the distribution of authority in networks
affords them the ability to act on their own behalf. At times of resource scarcity, individuals
will also tend to hoard resources making them unavailable for more desirable purposes.271
Consensus management has been cited as a prime cause of failure to conduct organizational
change.272
In effect, no one party wishes to have their own “ox gored” to improve the whole
organization. Particularly in times of crisis, participatory management can misallocate
resources since it often leads to proportional burden sharing rather than complete
restructuring. Continuous and strong senior management support is necessary to effect
radical change.
Consensus management and empowerment can change organizational behavior, as
individuals, once given authority, grapple to extend it. Networks, more than hierarchies,
tend to fall victim to corporate politics and local turf battles.273 Increased political influence
costs balance, to a limited extent, the benefits of an option to replace non-performing
network members. When titular authority yields to expertise, task delegation which was
formerly a matter of fiat becomes a matter of persuasion and negotiation.274
In short, shifting between networks and hierarchies has social ramifications with respect to
modes of influence. Interpersonal skills come to the fore and persons are free to challenge
267 Van Alstyne, supra note 9, citing M. Granovetter, Problems of Explanation in Economic Sociology, in NETWORKS AND ORGS. 471-491 (N. Nohria
& R. G. Eccles, Eds. 1993).
268 Id., citing P. R. LAWRENCE & J.W. LORSCH, ORGANIZATION AND ENVIRONMENT (1967).
269 Id., citing E. Roberts, New Ventures for Corporate Growth. 58 HARV. BUS. REV. 124-132 (1980).
270 Id., citing Symposium, Adaptation Processes in Team Decision Making and Coordination, IEEE SYMPOSIUM ON SYSTEMS, MAN, AND CYBERNETICS
(1990).
271 DUPONT LEGAL NETWORK, supra note 241: “But all other things are seldom equal. A number of significant barriers exist to building teams that
consist of members from different firms. Inter-firm competition can lead to sharp elbows among team members and can detract from team performance.
Lack of communication about client goals or group objectives can lead to a lack of focus and can reduce team effectiveness. Team members may resist
sharing intellectual capital gathered in other cases, such as research and forms, with other team members whom they view as competitors. Incompatible
technology, such as different word processing and database management software, can also pose a barrier to the sharing of work product.”
272 Van Alstyne, supra note 9, citing B. J. Bashein et. al, Preconditions for BPR Success, 11 INFO. SYS. MGMT. 7, 7-13 (1994).
273 Id., citing C. C. Snow et. al, Managing 21st Century Network Organizations, 20 ORG. DYNAMICS, 5, 5-20 (1992).
274 Id., citing R. M. Kanter, The Future of Bureaucracy and Hierarchy in Organizational Theory: A Report from the Field, HARV. BUS. SCHOOL (April
1989).
50
