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Why Smart Business Networks Continue and Develop: A Structural and Processual Model of Value Flows

In: The Network Experience

Author

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  • Duncan R. Shaw

    (Nottingham University Business School)

Abstract

Business networks are multi-level value flow systems and in Smart Business Networks (SBNs) the value flows can be orchestrated by a central actor. This paper integrates recent thinking from the domains of ecological systems management, ecological economics and information dynamics to explain how smartness in network design is a direct enabler of network sustainability and cultivation. Shaw (2007) explains how Manchester United Football Club orchestrates the capabilities of its network of commercial partners to produce much more value than it could do by using its internal capabilities. However, Shaw (ibid) does not explain why this happens. Manchester United orchestrates its partners to promote the flow of financial and informational value from millions of fans. In return there is a complicated mix of services delivered to the fans. This type of inter-organisational network is a ‘value flow system’. Value flow systems are open systems that are sustained in far-from-equilibrium states (Checkland, 1999) by the constant flow of materials, energy and information (ibid). This paper explains why value ‘flows’ through such a network to sustain it in a far-from-equilibrium state, i.e. why it exists, persists and takes certain forms. This paper also develops the definition of the term orchestration as centralised smartness in an SBN in contrast with decentralised network smartness such as a distributed co-ordination of capability (Shaw, Snowdon, Holland, Kawalek, & Warboys, 2004).

Suggested Citation

  • Duncan R. Shaw, 2009. "Why Smart Business Networks Continue and Develop: A Structural and Processual Model of Value Flows," Springer Books, in: The Network Experience, chapter 19, pages 305-326, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-85582-8_19
    DOI: 10.1007/978-3-540-85582-8_19
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