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In the literature on firms and organizations, in economics, sociology, and business studies, there has been an increasing awareness that firms need others, outside the firm, in order to function, and particularly in order to innovate. This has led to the proliferation of studies on subjects such as outsourcing, inter-firm alliances, and networks of firms. Still, though, most of these studies focus on dyads of firms (i.e., strategic interaction of firms). Even in network studies, networks were seen mostly as aggregates of dyads. In contrast, in network analysis in sociology there has been, for some time, attention to roles and effects of third parties and of triads. In particular, the work of Ronald Burt (e.g. Burt, 1992) noted the importance, especially in the context of the acquisition of new information, of being a third party in 'bridging structural holes' between unconnected nodes or networks, and the opportunities for advantage as a tertius gaudens (laughing third) in playing agents off against each other. While in network analysis this attention to triads is relatively new, it has, in fact, a long history, going back, in particular, to the work of the sociologist Georg Simmel. A recent publication that acknowledges this is Krackhardt (1999).

This article shows how institutions enable and constrain forms of co-ordination for inter-organizational relations, and how these affect innovative performance. The analysis is based on a theory of learning and on a theory of relations that combines a social exchange perspective with elements from transaction cost economics. Performance is analysed in terms of production costs, transaction costs, product differentiation, diffusion of innovations, incremental innovation, and radical innovation. The method is illustrated with a comparison between the US and Germany. The first is more flexible and market oriented; the second is more oriented towards inter-organizational networks. Policy recommendations focus on how flexibility and durability of relations might be reconciled.

In this paper a process and control model is developed for the analysis and design of inter-firm relations, in which both opportunism and trust play a role. Its aim is to develop a tool for the analysis, diagnosis and design of inter-firm partnerships. It takes into account the value of the partner, relative to alternat ives, and the risk of the relation. Risk depends on the incentives that the partner may have towards opportunism, his opportunities for opportunism and his 'pro pensity' towards opportunism. The latter is related to trust. A partner's incent ives towards opportunism depend on the uniqueness of the value that he offers, on one's own switching costs and on the partner's dependence on the relation. The underlying theory employs both transaction cost economics and social exchange theory. On the basis of the model, values and risks can be balanced in different ways: there are adversarial strategies that jeopardize value, and cooperative strategies that build value. The model can be used to explore viable sequences of strategies of governance, depending on different conditions. As an illustration, it is used for an analysis of ways to initiate a relation.

The transaction specificity of assets yields dependence, and hence transaction costs in case of opportunism and bounded rationality. However, this dependence need not be symmetric between buyer and supplier, and there may be dependence without transaction specific assets. There are many forms of speci ficity, yielding different patterns of more or less symmetric dependence. These different forms of specificity are analyzed in terms of a formal, generalized rela tion of specificity. The implications for dependence are discussed.

Abstract. According to a line of European social philosophers from Marx to Habermas, the development of society is characterized by a process of rationalization, accompanied by alienation and objectification of labor and human relations, and more generally a degradation of what Jürgen Habermashas called the person's "life world." But the facts about small and medium sized business, as disclosed by empirical investigation, offer a different picture, one of small and medium size enterprises (SME) with a number of attributes associated with social organization on a small scale, of e.g., personality and independence. These can provide a counterweight to its disadvantages and limitations and therefore can be seen as values from a social philosophical point of view. Economically the same attributes make SME vulnerable to the market power and competition of big business. The new technology offers threats to SME, but also opportunities.

Today, industrial organization can hardly be imagined without long-term supply relationships. Firms use this specific type of alliance to acquire or develop (complementary) competencies. These are necessary to be able to survive and be successful in an increasingly dynamic environment. Rather than studying particular features in isolation, this book analyzes the overall, underlying causal structure of long-term supply relationships. De Jong and Nooteboom develop an encompassing theoretical model that brings together important firm- and relation-specific characteristics such as trust, commitment, dependence, uncertainty, dedicated investments, and the exchange of information. The relationships between these main characteristics build the overall, underlying causal structure and determine the nature of long-term supply relationships. The model is based on an extended theory of transactions that includes trust next to opportunism and the development of competencies. The model is tested in the automobile industries of the United States, Japan and Europe. The empirical evidence indicates that there are strong similarities between the three regions in the underlying causal structure. There are differences but these differences seem small, particularly relative to the expectations one may have on the basis of perceived views of systemic differences between `Japanese' and `Western' contracting. Thus, if indeed there were large differences between the Triad's regions, there now appears to be considerable convergence towards a common underlying `logic' of long-term supply relationships. The Causal Structure of Long-Term Supply Relationships is a primary source for scholars and students who want to learn about industrial organizations in an international perspective. It reviews the main theories, defines many concepts, offers an overview of literature on alliances, and provides insights into the statistical techniques of LISREL. Little background knowledge is required, since concepts are developed as the book progresses

This article attempts to unpack the notion of 'communities of practice', in more detail than has been done before, and looks more generally at intra-organizational groups for learning. First, it gives a theoretical analysis of the relevant characteristics of learning groups which affect the possibilities and conditions for the sharing and joint development of knowledge. These characteristics include opportunities for learning (on the 'competence' side of relations), relational risk (on the 'governance' side of relations), and the effects on both from the 'structural features' of groups. On the competence side, it analyses the implications of different types of knowledge and learning, and the trade-off between stability of relations (for the sake of mutual understanding and trust) and flexibility of relations (for the sake of variety as a source of learning). On the structural side, it considers the effects on competence and governance of network density, the strength of ties, structural holes, and stability of group membership. On the governance side, it considers psychological risk, in loss of reputation or legitimation, career risk and risk of competition, and risk of lock-in into the group. Trust yields one basis for dealing with such risks, and the article discusses what that means and how trust develops. Next, the analysis is used in an exploratory empirical study of a consultancy company, to see if the theoretical framework can explain the occurrence, structure, functioning, and performance of learning groups found in practice.