Business network dynamics: the interplay between firms and their contexts

Abstract

Purpose Business dynamics are caused by the interplay between organizations and their contexts. The purpose of this paper is to complement mainstream framings by investigation of the content of this interplay. Design/methodology/approach The framework is based on concepts and models from the Industrial Network Approach (Håkansson et al., 2009), which has been shown useful for analysis of both the connections between organizations and contexts, and the evolution of this relationship. The conceptual framing is illustrated by examples from a major transformation of the business reality and by observations in previous research. Findings The main finding is the significant role for business dynamics of a firm’s action base – the activities, resources and actors to which a firm is connected through its business relationships. The action base is the platform for a firm’s innovative activity because major changes require collaboration. Moreover, the action base imposes restrictions for change because it is featured by interdependencies. Change initiatives of firms must therefore balance interdependencies and dynamic action. This paper investigates this balancing through the analysis of network vectors. These vectors enable examination of the features and consequences of interdependencies and the impact on business dynamics. Originality/value Mainstream perspectives tend to take the starting point in the change agent. Based on action base and network vectors, this paper contributes with a complementary approach rooted in the network context. Furthermore, this paper challenges the prevailing perceptions of the dynamic effects of determinism and voluntarism in established frameworks.