Legitimacy Building in a Whole Supply Network during its Formation Phase

Abstract

Legitimacy is essential for an inter-organizational network’s willingness to supply resources. This study focuses on the legitimacy-building process in a whole supply network in its early formation phase. The main objective of this study is to increase understanding on how the network actors, i.e. the organizations participating in the network, build legitimacy during the formation of a whole supply network. Whole networks, i.e. consciously created, goal-directed networks with a separate identity and collective actions, are considered to be the future of organizing in a society of networks. Whole supply networks are whole networks that operate in the manufacturing of products. Legitimacy building in a whole network is researched via the manifestations of dimensions, three in the pre-network and four in the network formation phases. In addition, the contingencies that exist in legitimacy building during the formation of a whole supply network are identified.<br/><br/>The legitimacy-building process was researched in the case of one whole supply network of 20– 26 Finnish maritime organizations in a three-year networking project using pragmatic research philosophy. The mainly qualitative empirical research material was collected by means of interviewing the network actors and observing the network’s events and their respective documentation. The manifestations of the legitimacy-building dimensions as well as the contingencies were analysed at the inter-organizational network level.<br/><br/>The research results show that especially the network’s strategic intents and communicating them to the network organizations are an essential dimension in the legitimacy building of a whole network during its formation. It is particularly noticeable that the strategic intents of a whole network can be multiple, may even overlap and are achieved asynchronously and, if unclear, they may cause issues in network legitimacy building.<br/><br/>This dissertation research makes several theoretical and practical contributions. From the viewpoint of the emerging network theory of whole networks, the results clarify the dimensions of legitimacy building in the formation phase, specifically in whole supply networks. Additionally, it gives new information on legitimacy building in whole networks in completely unexplored prenetwork circumstances. Furthermore, the results add to the discussion of supply network archetypes and various contingencies, which affect the legitimacy building of a whole network during its formation. Moreover, there are practical implications for both organization leaders contemplating network collaboration and also those managing it. First of all, the pre-conditions of legitimacy building shed a lot of light on the readiness of the network for collaboration, and thus the network’s legitimacy building. Secondly, the four dimensions of legitimacy building can be used as a general level roadmap for network legitimacy building. By investing in clarifying the strategic goals of the network, specifying a network structure that is suitable for achievement of the network’s goals, supporting the network’s interaction, and as a result, enabling the creation of the network’s own identity, the ability of a network to build both internal and external legitimacy is enhanced.