This chapter considers the dynamics of inter-organizational relationships (IORs) and networks. This was neglected in much earlier research, of both inter-ﬁrm alliances and networks. IORs are not simply designed and implemented once and for all. They arise with some design, but also as a function of circumstances, then they adapt, and at some point they end. The dynamics of IORs and networks raise an important challenge, for both managers and scholars. Comparisons of business systems have tended to focus on two extremes. On one
side the literature pictures a system, often associated with the English-speaking world, which is characterized by high ﬂexibility, in easy buy-and-sell of (parts of ) ﬁrms and easy hire-and-ﬁre of personnel. This is supposed to be good for radical innovation (exploration). This is reﬂected also in the thesis of the ‘strength of weak ties’. On the other side there is supposed to be a system that is associated with the European ‘Rhineland’ countries (Albert 1993), and, in a similar but also different way with Japan, which is characterized by more stable inter-and intra-ﬁrm relations. This is supposed to be good for quality production but to obstruct radical innovation. However, the real challenge lies in ﬁnding a balance of stability and ﬂexibility. Some stability is needed to recoup the speciﬁc investments needed for quality, but also, as argued in this book, for exploration. However, this should not yield undue rigidities in relations that last too long and become too exclusive (Nooteboom 2000b). This is reﬂected in the criticism and modiﬁcation of the thesis of the strength of weak ties, set out in this book.