Differences and inter-relations between the concepts of governance and management of horizontal business networks: contributions to this field of study

Abstract

This paper discusses the differences and interrelations between the concepts of governance and management of horizontal company networks. An argument is made as to the need for a deeper conceptual study characterizing them as two essential dimensions for the establishment and development of networks. Governance consists of setting rules, criteria for decision-making, responsibilities and the boundaries of the autonomy and action of the participants. It is created by the organizations involved but it also affects them, since it implies defining rules that they must comply with themselves. The role of governance is not to manage, but to set boundaries for management. Within these governance-determined limits, managers are free to employ their knowledge and skills in order o achieve collective goals. While management is characterized by flexibility and adjustment of the practices in response to the requirements of collective strategies, governance has a less transitory nature. Even though governance sets the boundaries of management, the efficiency level of the latter can create the need to review the governance system. Thus, there are interrelations and mutual influences between the two. The study ends with suggestions for future studies to verify empirically how the two dimensions are employed in horizontal networks under different conditions.