Network transparency and the performance of dynamic business networks

Business networks have proliferated over the past three decades as many firms enabled by ICT have embraced the digital ecosystem form of organization. This implies that in addition to thinking of performance at the level of the individual firm, it becomes necessary to think in terms of performance at the level of the ecosystem, i.e. the business network as a whole, yet is not clear how to best conceptualize and measure business network performance. In this article, we show that business network performance can be conceptualized in three complementary perspectives: the firm perspective, the complex systems perspective and the customer perspective. We employ the customer perspective and develop two specific business network performance metrics, namely network effectiveness and network efficiency. Based on the information integration and visibility benefits that interorganizational systems (IOS) provide, we then develop a construct called network transparency. Using a series of network experiments with students, we find that an increase in network transparency increases business network performance in terms of network effectiveness and network efficiency. We thus show that the value of network transparency is measurable through clear metrics at the level of the business network as a whole.

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