chapter  3
21 Pages

The governance of networks

In governance theory, networks are of high signifi cance because they represent one of the types in the tripartite typology of governance forms: markets, hierarchy and networks. In his classic texts Williamson (1975, 1985) posited markets and hierarchies as alternative ways of handling transactions. They are alternative governance mechanisms. Markets rely on prices, competition and contracts to help allocate resources. Hierarchies, on the other hand, bring actors involved in an economic exchange under the control of a governing authority. This authority establishes rules and roles and reserves the right to resolve confl ict by declaration. This transaction cost theory was added to with the idea of hybrid forms that are neither markets nor hierarchies.