The Effect of Formal Organizational Structures on Inter-organizational Networks : A study on OEMs in the forest technology industry of Northern Sweden

Abstract: Purpose The purpose of this research is to investigate the effects that Formal Organizational Structures have on the formation of Inter-organizational Networks Background/ Problem When organizations are formed, they tend to lack access to resources that they need for their growth and development. The owners are forced to form interactions with relatives and close friends so as to acquire the resources they need. This results in having strong network ties. However to develop they require access to resources which are only available through weak ties. Due to their newness these organizations may be limited to strong network ties. At the same time, when organizations are in their maturity stages, they tend to interact more with organizations they have worked with before and hence are familiar to. This also creates strong network ties. However, what these organizations need is to innovate so that they can remain competitive but strong network ties lack the information required for innovation. Weak network ties offer more opportunities for innovativeness and creativity as they have access to new information. Due to their interaction practices, these organizations may be limited to strong network ties. As organizations grow, they develop from being young and organic to mature and mechanistic but the other forms between organic and mechanistic are not documented. There is also limited documentation on how the network interactions formed by organizations are affected by dimensions of the Formal Organizational Structure acting together as organizations develop from organic to mechanistic. Method Our study focuses on the manufacturing industry, the forest technology sector particularly on organizations that deal in original equipment manufacturing in Västerbotten County in northern Sweden. We conducted a qualitative research using multiple case study on six organizations located in this region. We interviewed top managers with reference to the dimensions of the Formal Organization Structure and Inter-organizational Networks in order to come up with our results. Conclusion In conclusion, we found out that Formal Organizational Structure affects the formation of Inter-organizational Networks as organizations develop. We also found out that there are phases between the organic form and the mechanistic form that are a mixture of the two. Furthermore, our results show that it is not realistic for an organization to exist purely in an organic or mechanistic form. Key Words Formal Organizational Structure, Inter-organizational Network, Resource Based View, Lifecycle, Mechanistic, Organic, Network Interaction, Resources