Cafaggi, Fabrizio --- "Introduction" [2011] ELECD 277; in Cafaggi, Fabrizio (ed), "Contractual Networks, Inter-Firm Cooperation and Economic Growth" (Edward Elgar Publishing, 2011)

Book Title: Contractual Networks, Inter-Firm Cooperation and Economic Growth

Editor(s): Cafaggi, Fabrizio

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848448896

Section: Chapter 1

Section Title: Introduction

Author(s): Cafaggi, Fabrizio

Number of pages: 18

Extract:

1. Introduction
Fabrizio Cafaggi

CONTRACTUAL NETWORKS, VERTICAL DIS-
INTEGRATION AND INTER-FIRM COOPERATION

Historically, networks of firms have preceded the vertically integrated
firm and, to a certain extent, markets, at least within the contempo-
rary meaning, attached to this particular form of organization.1 In this
book, the focus is on networks for the production of goods and services.
However, it should be underlined that contractual networks have largely
been deployed to create and regulate markets. In the area of the elec-
tronic trading platform, contractual networks define the common rules
that preside over the individual transactions of the members who have
subscribed to the platform.2 Contractual networks have also flourished in
the area of regulated markets where technological factors may `impose'
sharing common platforms for production or more often distribution.
Examples range from electricity to telecommunications, from banking to
insurance.
Networks of firms have different forms, including contractual, organi-
zational and combined. Often enterprises start with a contractual network
that is perceived as a lighter form of commitment, but which subsequently
evolves into an organizational network. Notice that even in the case of
contractual networks, enterprises create a new company but preserve their
own legal and economic independence. At other times the organizational
network `integrates' the contractual one. This combination can take dif-
ferent forms: in its softest version, firms make a governance agreement for
a mutual interlocking directorate. Each firm, even without owning shares,
has the right to appoint a member of the other firm's board. ...