De Man, Ard-Pieter. The Network Economy: Strategy, Structure, and Management.

Zhang, Fei

De Man, Ard-Pieter. The Network Economy: Strategy, Structure, and Management. Cheltenham, UK and Northampton, MA: Edward Elgar Publishing, 2004. Pp. xix, 190. ISBN 978-1-84376-494-6 (hb.) 49.95 [pounds sterling]. $76.50; 978-1-84542-837-2 (pb.) 15.96 [pounds sterling], $28.00. Professor De Man's The Network Economy: Strategy, Structure, and Management is a well-written treatise about alliance management, corporate strategy, and organization. Indeed, the network, rather than the individual firm, has become the most relevant and effective form of organization in the modern economy. This highlights the fact that companies now need to manage whole networks, not just individual alliances, and that the days when firms operated in isolation are over.

The book brings a helpful body of knowledge to bear on our current challenge in understanding network economy, drawing from numerous scattered sources. By studying the fundamentals of the networking and managerial process, De Man, a professor of Organization Science at Eindhoven University of Technology in the Netherlands, has developed a coherent framework for analysis beginning with network formation and partner selection, then on to such topics as competitive moves against rivals. He has taken a comprehensive view of the increasingly important subject with a chosen mechanism that accommodates both different elements of knowledge about the network economy and the diversity of networks in practice. The approach he argues would clarify the choices and dilemmas companies face in the network economy with the combination of translating theory into practice and identifying the theoretical background of empirical facts.

The mechanism basically consists of two parts. First, the practical process of networking is divided into seven steps to yield an overview of existing network knowledge about each phase: business strategy, network strategy, network structure, partner selection, implementation, management, and change (p. xvi). Second, the diverse networks in modern business are classified into five types, namely the quasi-integration network, the vertical supplier network, the solution network, the R&D network, and the standardization network (p. 20). Different types of networks are set against the network process chart according to their specific characteristics in the network economy. The combination of network type and network process, as he proposes, "makes it possible to systematically develop and classify management knowledge about the network economy in a matrix" (p. xvi).

The book covers critical issues such as strategy, network structure, partner selection, alliance and competition, and network management; it places each element within a logical framework that forms the structure of the book. The first chapter gives a reason for the long-term structural and organizational changes in the modern economy and emphasizes the importance of alliance strategy and network management thinking. By using the network process as the backbone, De Man provides in the next three chapters the seven steps for how to cope with the dynamics of network economy based on the combination of the latest theoretical thinking and developments in practice. From matching the goal and type of network to identifying the desired "position" (p. 39), from the "five building blocks" (p. 60) of a network to obtaining the right "fit" (p. 57), he has demonstrated how to decide network strategy and design a network structure in the initial phases of effective network management.

Chapter 5 is the core of the book and is highly supported with scholarly literature and cases studies. In this part, he moves step by step with practical and operational guidelines for partnering, implementation, management, and change. Undeniably, there is a substantive demand for companies to develop various tools and processes to manage each of these phases. While illustrating the dynamics and complexity of the network development, De Man suggests that understanding the basics would help companies to develop in-depth knowledge of these processes and to gain a competitive advantage by "smart network positioning" (p. 116).

In the next two chapters, he provides a unique and intriguing look at "network tactics," demonstrating the tricks and ploys firms use in a network scenario. Along the way, he has used many interesting cases to illustrate examples of effective network management and strategic alliance in the telecommunication, media, and airline industries. In a broader picture, networks affect competition in more complex ways: co-optation, group based competition, and competition between networks and other organizational forms (pp. 131-132). Mean-while, the situation begs our careful consideration of the antitrust issue which shall be adapted to the network economy.

The author rightly points out that a "network is no cure for all pains" (p. 155). Networks, like any other organizational form, have their drawbacks. Indeed, networks, as a form of organization, face a challenge in balancing integration and flexibility. Starting from Jacobs' "conservative" or "constructive" networks distinction (p. 143), De Man has described in detail the major limits to networks and has summarized the problems and their possible remedies. It is in managing these trade-offs that the challenges of the network economy lie.

The final chapter clarifies the common misconceptions about networks that emerge in practice and concludes that the accumulation of managerial knowledge is a major driving force for the network economy.

This is a readable book of serious scholarship, suitable for people with an interest in the network economy. Professor De Man has not only successfully produced a comprehensive overview and analysis of the diverse literature on networks, but has also contributed a wealth of original commentary. Readers may find less precise content than needed in coping with the ever growing complexity of network management. That is perhaps what subsequent studies can contribute to fill the remaining knowledge gap in the framework, with advances in research and practice regarding various issues in this context.

The book is profusely filled with apt examples and clear illustrations. It is highly recommended for managers and academics who strive to understand the intricate workings of the network economy. The book has a reference list and index.

--Fei Zhang Ph.D. Candidate

University of Westminster, UK