Exchange and Power in Networks of Interorganizational Relations

Author(s): Karen S. Cook

Source: The Sociological Quarterly, Vol. 18, No. 1, Special Issue: Organization Analysis: Critique
and Innovation (Winter, 1977), pp. 62-82
Published by: Wiley on behalf of the Midwest Sociological Society
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 The Sociological Quarterly 18 (Winter 1977): 62-82

Exchange and Power in Networks

of Interorganizational Relations*
KARENS. COOK,University of Washington

relationsis developed,
An extensionof the exchangemodelfor the analysisof interorganizational
incorporatinginto the model recent developmentsin exchange theory. Organizationalinterac-
tions are viewed as networks of exchange relations, and various forms of interorganizational
activity such as mergerand coalitionor allianceformationare analyzedin relationto powerand
position in the network. Linkages between various types of exchange networks and what
economists referto as marketstructuresare examined. Finally, previouscriticismsof exchange
formulationsare reviewed, and directionsfor futuretheoreticaland empiricalwork concerning
networksof interorganizationalrelationshipsare discussed.

The organic world viewed in its generality is a multitude of partnerships and corporations
that overlie and interpenetrate one another, thus constituting an intricate network of vital
relationships (Hawley, 1950).

DURINGTHE PASTDECADEthere has been growing interest among organizational

theorists in organization-environmentrelations (cf. Dill, 1958; Emery and Trist,
1965; Lawrence and Lorsch, 1967a,b; Manihaand Perrow, 1965; Pfeffer, 1972a;
Simpson and Gulley, 1962; Terreberry, 1968; Thompson and McEwen, 1969;
Duncan, 1972; Aldrich, 1974b)and interorganizationalrelations (cf. Reid, 1964;
Aiken and Hage, 1968; Braito et al., 1972; Clark, 1965; Evan, 1967; Guetzkow,
1966; Levine and White, 1969; Litwak and Hylton, 1966; Pfeffer, 1972b;
Thompson, 1967; Turk, 1970, 1973; Warren, 1967, 1974; Aldrich, 1972, 1974a;
Marrett,1971;Allen, 1974;Benson, 1975;Lehman, 1975).Several factors account
for this trend. First, organizationaltheorists have recently begun to conceptualize
organizations as "open," adaptive systems rather than "closed" systems (cf.
Thompson, 1967;Katz and Kahn, 1966). Accordingto Buckley, "that a system is
open means, not simply, that it engages in interchangewith the environment,but
that the interchange is an essential factor underlying the system's viability"
(1967:50). Thus, the environment has been defined as an importantelement for
those who adopt the open systems model, not only as the social context in which
organizationsexist, but also as a primarydeterminantof organizationalstructure
and process.-
A second contributingfactor to this development in organizationaltheory has
been the growing awareness on the part of organizationaltheorists that previous
researchon organizations(primarilycase studies of single organizations)does not
adequately provide an understandingof the complex social structureof rapidly
changingurbancommunities (cf. Etzioni, 1960; Turk, 1970, 1973;Warren, 1967,
Reprintsof this article may be obtained by writing Karen S. Cook, Departmentof Sociology,
University of Washington,Seattle, WA 98195.
*Commentson an earlier draft of this paper by RichardEmerson, Jean Warren,Hans Pennings,
HowardAldrichandtwo anonymousreviewersaregratefullyacknowledged.Inaddition,the comments
I received from graduatestudents, PatriciaMoris, Sue Nelson, Rich Wyckoff, Lou Lechner, Roger
Faris and Jon Sundquist,in my seminaron interorganizationalrelationshave been useful.
'"The social context is not merely an aspect of the external environment,but actuallypenetrates
organizationallife" (Blau and Scott, 1962:221).

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 Exchange and Power in Interorganizational Networks 63

1974). Not only is the environment becoming more complex and turbulent
(Terreberry, 1968),but the web of organizationswithin communitiesis becoming
increasinglycomplex, interrelatedand extensive (Turk, 1973).Previoustheoretical
perspectives have providedfew guidelinesfor analyzingthe effects of these factors
upon organizationallife. These realitieshave promptedincreasedconcern over the
duplication of organizational efforts, overlapping domains of organizational
activity, coordinationof diverse elements withina community, and the integration
of and control over various organizationalfunctions, especially with reference to
organizationsin the social service sector (cf. Reid, 1964;Warren,1967, 1974;Zald,
1969b; Baker and O'Brien, 1971; Lehman, 1975). Theorists have begun to
conceptualize cities and communitiesas networks of organizationsor "aggregates
of organizationswhich appear, disappear,change, merge, and form relations with
one another" (Turk, 1970:1),and researchefforts have been mountedto assess the
utility of this approach for the investigation of macro-sociological phenomena.
Turk (1970:16)has suggested that the evidence concerning the fruitfulnessof this
approachis sufficient to promptthe question, "Is the organizationnot the proper
unit in the analysis of modern, large scale social systems?"
The dominanttheoretical perspective which has emerged in the discussion of
interorganizationalrelationshas been the exchange theoretic approachintroduced
by Levine and White (1961)and extended by Thompson (1967)and Jacobs (1974)
among others.2 Aldrich (1974a) labeled a similar theoretical perspective the
"resource-dependencymodel," and recently Benson (1975) proposed a political
economy model of interorganizationalrelations based to some extent upon an
exchange formulation. These theorists have utilized exchange notions simply to
provide a loose conceptual frameworkfor their analyses. Few attemptshave been
made to presenta systematic applicationof exchange theory to interorganizational
interactions. Recent developments in exchange theory (Emerson, 1972a,b)make
this task easier. Emerson explicitly acknowledges the social structuralcontext of
exchange processes and, in fact, treats structureas a majordependent variablein
his theory. In addition,the term "actor" in the theory refersnot only to individuals,
but also to collective actors or corporate groups. Thus, this version of exchange
theory is uniquelyappropriatewhen organizationsor sub-unitsof organizationsare
used as the primaryunit of analysis. The purpose of this article is to present an
extension of the exchange model for the analysis of interorganizationalrelations,
incorporatinginto the model recent developments in exchange theory. In so doing,
it may be possible to achieve a partialsynthesis of previouswork in this areaas well
as to provide guidelines for future theoretical development.

Interorganizational Exchange Relations

In Levine and White's analysis of interorganizationalrelations among health care
organizationsin two communities,exchange is defined as "any voluntaryactivity
between two organizationswhich has consequences, actual or anticipated,for the
realizationof their respective goals or objectives" (1961:120).3The problemwith
this definitionof exchange is that it includesany formof voluntaryactivity between
2Theexchangeapproachhas also been utilizedby Reid, 1964:Aiken and Hage, 1968:and Warren,
1967.
3 For Homans(1961),exchangeis definedin termsof a transactionbetween two individualsinvolving

rewardingand costly actions. Each man in the exchange is concerned with receiving profitsfrom the
exchange which are proportionalto his investmentsor inputs to the exchange.

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64 THE SOCIOLOGICALQUARTERLY
organizations, rendering the term exchange synonymous with interaction.4Ex-
change theorists (Homans, 1961, 1974; Thibaut and Kelley, 1959; Blau, 1964;
Emerson, 1972a,b) do not cast as broada net in definingexchange. Blaulimitsthe
applicationof the concept to "actions that are contingenton rewardingreactions
from others" (1964:6). Emerson (1972a) specifies more clearly the natureof this
mutual contingency and defines exchange relations as "interactive relations
between two parties based upon reciprocal reinforcement" (1971:3). From this
perspective, an exchange relation is fundamentallya series of transactions.5The
element of mutualreinforcementor rewardis missing from the Levine and White
(1961)definitionof interorganizationalexchange. For our purposes, exchangewill
be defined as follows:
involvingthe
D i-An exchangerelation(e.g., Ax;B,) consistsof voluntarytransactions
transfer of resources (x,y, . . . ) between two or more actors (A,B, . . .. ) for
mutualbenefit.
The term "actor" in this definition applies not only to individuals, but also to
corporategroupsor organizationsas collective actors. The term "resource" refers
to any valued activity, service or commodity.
It shouldbe clear fromthis discussion that not all interorganizationalactivity is
includedwithinthe scope of this theory. Rather,we are limitedto the explanationof
those interactionswhich fit the definitionof exchange offered above. Clearly,this
places certain interesting interorganizationalphenomena outside the purview of
this theoreticalendeavor. For this we makeno apology;however, in the concluding
section of this article we will discuss this limitationof the theory, along with other
criticisms of the exchange perspective.
The Formation of Exchange Relations. The formation of exchange relations
occurs among organizationsprimarilyfor two interrelatedreasons: specialization
and scarcity. Most organizationsperformspecializedfunctionsand thereforemust
exchange with other organizationsto obtain necessary resources and to market
their output. Accordingto Levine and White (1961:120),the scarcity of resources
"impels organizations to restrict activity to limited specific functions. The
fulfillment of these limited functions in turn requires access to certain kinds of
elements which an organizationseeks to obtain by entering into exchanges with
other organizations." Thus, the limitations on the availability of resources
necessitate organizationalinterdependence (or creates resource dependencies,
Aldrich, 1974), and foster specialization.
The findingspresentedby Levine andWhite(1961)demonstratethatthe amount
of organizationalinteractionand the kinds of elements exchanged (e.g., resources,
referrals,or labor services) depend upon thefunction of the organization.Thatis,
some organizationalfunctions necessitate more exchanges than others. In their
own words, "the primaryfunctiondeterminesan organization'sneed for exchange
elements" (1961:125).They find, for example, that organizationswhose functions
are to educate the public about a specific disease and not to treat disease receive a

4Theassumptionof exchangetheory "that social interactionis governedby the concernof both(or

all) partnerswith rewardsdispensedby other (or others)becomes tautologicalif any andall behaviorin
interpersonalrelationsis conceptualizedas an exchange" (Blau, 1964:6).
5Social exchange theory emphasizes the social relationbetween the actors engagedin a series of
transactionswhereaseconomictheorytends to divorcethe transactionsfromthe actors, treatingactors
as interchangeable(Emerson, 1972a:46).

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 Exchange and Power in InterorganizationalNetworks 65
low rate of referrals,whereas treatment-orientedorganizationsreceive a high rate
of referrals and a large amount of resources. Furthermore,they find that other
variables such as organizationalprestige seem to affect the interactionwithin the
limits established by the function variable.
While Levine and White (1961)state that organizationsexchange because they
need elements to fulfill their specific functions, Thompson elaborates upon this
explanation by asserting more generally that organizations seek to reduce
uncertainty, thus they enter into exchange relations to achieve negotiated and
relatively predictable environments. Organizationswill make a commitment to
exchange, given that the exchange provides for each actor a reduction in its
organizationaluncertainty, a form of mutualbenefit. The scarcity of resources is
one factor which precipitates organizationaluncertainty. Other causes of uncer-
tainty for the organizationinclude the lack of perfect knowledge of environmental
fluctuations,of the availabilityof exchange partners,and of the available rates of
exchange in the interorganizationalfield. To reducethis uncertainty,organizations
develop environmental monitoring units (cf. Thompson, 1967; Lawrence and
Lorsch, 1967b)and engage in exchange relations which make the availability of
resources and the marketingof output more predictable.6 According to Benson
(1975:233),"Organizationsare orientedto see that the supportnetworkoperates in
a predictable,dependableway that permits the agency to anticipatean adequate
and certain flow of resources."
This discussion concerning the formation of exchange relations can be
summarizedin the following proposition:
P1-Given functionalspecialization amongorganizations anda scarcityof resources,
organizationsseek to reduceenvironmental by creating"negotiated"
uncertainty
environments.
The creation of negotiated environmentsfrequentlynecessitates the formationof
exchange relationshipswith other organizationsin the interorganizationalfield.
Power and Dependence in Exchange Relations. An exchange analysis of
interorganizationalrelations is fruitfulprimarilybecause it focuses attentionupon
power processes, which are fundamentalto an understandingof interorganizational
fields. Power is linked to dependence in exchange formulations. According to
Thompson:
Anorganization is dependentuponsomeelementof itstaskenvironment to
(1)in proportion
theorganization's needfor resourcesor performances whichthatelementcanprovide,and
(2) in inverseproportion to the abilityof otherelementsto providethe sameresourceor
performance (1967:29-30).
Thompson argues that organizations seek to maintain alternative sources if the
needed capacity is dispersed throughthe task environmentto minimizethe power
of any single task environment element. The availability of alternative sources
increases an organization's power and autonomy by decreasing its dependence
upon other organizations.
Similarly, Levine and White (1961) identify the availability of alternative
sources as a primarydeterminantof interorganizationalexchange. They arguethat

6Non-market orientedorganizationshave no "marketoutput," neverthelessthey typicallyengagein

exchangerelationsto assure the availabilityof resources and institutionalor social support,especially
importantfor social service organizations.

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66 THE SOCIOLOGICAL QUARTERLY

an organizationis less dependentupon exchange relationswith other organizations

in its local environmentto the extent that it has accessibility to elements it needs
from "outside" sources, althoughit in fact must negotiate some formof exchange
with these sources. A healthorganizationis relatively autonomousif it can obtain
elements from outside the largerhealth system (e.g., from a parentorganization).
However, to the extent that the organizationcannot rely on outside sources for
elements necessary for its operation, the organization loses some measure of
autonomy, in the sense that it is more dependent upon other organizations.
Accordingto Jacobs (1974)these other organizationscan exercise controlover the
focal organizationin this situation.
Within the context of exchange theory, the concepts, power and dependence,
are given the following definitions:
D2-In any exchange relationAx; By,*thepower of A over B (PAB) is the abilityof A to
decrease the ratio x/y (Emerson and Cook, 1974:25).
*(Where A and B represent the actors, and x and y the resources involved in the exchange and x/y the
exchange ratio.)
The power advantage of one actor over another is equivalent to the power
differentialbetween A and B (or PAB - PBA; Emerson, 1972b:64).

D3-The dependence of A upon Bj (DABj) is ajoint function, (1) varying directly with the
value to A of resources received from Bj, and (2) varying inversely with the
comparisonlevel for alternativeexchange relations(Emersonand Cook, 1974:26).
In Emerson's formulation(1962) PAB = DBAis the theoremwhich links power and
dependence. Power derives from resource dependencies. To the extent that
alternative sources are available to an organization in an exchange network,
dependence is less and the organizationhas more bargainingpower in terms of
influencingthe exchange ratio.Whereno alternativesexist, an organizationmaybe
dependentupon a single organizationalsource for obtainingnecessary resourcesto
the extent that the resources are essential to organizational functioning and
survival.Jacobs (1975)refersto the "essentiality"7of resourcesas one determinant
of power/dependencerelations between organizations.
The more power an organizationhas, the more influenceit has to determinethe
nature of the interorganizationalexchange; that is, to determine the form of the
interactionand the ratio of exchange. Benson (1975) provides an example of the
relationshipbetween power and dependence in interorganizationalrelations.State
employment security agencies, he argues, gain power because clients must be
referredfor job placement.
The proportionof clients referred from a community action agency to an employment
security office will typically be much higher than the proportionflowing in the opposite
direction. Thus the employmentagency is less dependenton the communityaction agency
than vice versa. (Benson, 1975:233)

The power of an organizationin an exchange relationis increasedas the scope of

the resources (or the numberof differentresources) mediatedby the organization
increases. Lehman (1975:73) argues that the greater the array of resources

7Essentiality is Jacobs' (1974:50) measure of value. It is determined by the function of the

organization and the substitutability of other commodities or services for the entity in question.

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 Exchange and Power in Interorganizational Networks 67
controlled by an organization, the greater the need for coordination of activities
dealing with the utilization and exchange of resources. The expansion of an
organization's resource base is thus defined as a mechanism for gaining power
through increasing the dependency of other organizations which value or need the
resources obtained by the dominant or more powerful organization.
An exchange relation is balanced according to Emerson's formulation when the
actors have equal power or conversely, equal levels of dependence.
D4-An exchangerelationAx; By is balancedif DAB = DBA. ImbalanceDAB - DBA
(Emerson, 1972b:62).
Dependence determines the probability of initiation in a given exchange relation;
the more dependent party in an imbalanced exchange relation is the more frequent
initiator. The probability of initiation by A or B is equivalent if the Ax;B, exchange
relation is balanced. There is a tendency for actors to prefer exchange with equally
powerful actors because there are fewer costs attached to the exchange process.
Such costs include the cost of initiations of exchange offers, the increased
likelihood of failure to arrive at a profitable exchange ratio, and the potential for
exploitation in an imbalanced exchange relation.
There are several propositions from exchange theory regarding the use of power
which provide insights into interorganizational exchange processes. The first
proposition relates to the use of power, given that one actor in the unit exchange
relation has a power advantage.
P2-In any exchange relation, Ax;B,, if A has a power advantage,then A's use of power
will increaseacross continuingtransactionsas a functionof power advantage.(In an
unbalanced relation, the "exchange ratio" changes in favor of the party with a
power advantage.) (Emerson 1972b:66).
Muller (1970:105) in reference to the inevitability of the use of power states "to have
it is to use it." Organizations with a power advantage in an exchange relation will
exploit the situation to alter the exchange ratio to make it more favorable. In
balanced exchange relations the exchange ratio is relatively stable, since there is no
power differential between the actors involved in the exchange.
The consequence of the use of a power advantage, Emerson argues, is the loss of
power. The following proposition states this more formally:
P3-In any exchange relationAx;B,, if A has a power advantage DBA > DAB) at time ti
then DBA decreases or DAB increasesacross continuingtransactionsuntil DAB = DBA
at time t, (Emerson, 1972b:67).
The use of power by the actor with the power advantage to obtain increased
rewards across time increases his dependence upon the other party to the exchange.
In this way unit exchange relations tend toward balance.8 It should be noted that
this process occurs within a unit exchange relation across a continuing series of
transactions (in a longitudinal exchange relation).
Proposition 3 presents an interesting paradox for organizations involved in
exchange relations since the use of a power advantage to acquire increased levels of
resources from a single source leads to an increased dependence upon the relation
8Benson(1975:235-6)appliesthe concept, balance, to the networkas a whole, makingthe argument
thatthe variousdimensionsof interorganizational
equilibriumtendtowardbalance.Thefourdimensions
include: domain consensus, ideological consensus, positive evaluation and work coordination. One
difficultywith his approachis the conceptualconfusion between balance and equilibrium.

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68 THE SOCIOLOGICAL QUARTERLY

over time. Firm attachments or commitments often develop between exchange

partnersdue to the investments made and the costs involved in establishingand
maintainingthe exchange relation. This attachment or commitment serves to
prolong the exchange and tends to limit the mobility of the exchange partnersby
preventing the exploration of alternatives in order to take advantageof oppor-
tunities which would increase their rewardlevels and improvetheir positionsin an
exchange network (Blau, 1964:161).This factor may account for the tendency of
organizationsto form short-termcontractualrelations in an attemptto curtailthe
inevitablereductionin power advantageor increase in dependence uponany single
source across time. By maintainingalternativeexchange relations, an organization
can retain the option to shift exchange partners and thus maintain its power
advantage.Otherfactors may mitigatethe tendency towardbalance. For example,
as Lehman(1973)has suggested, an increase in an organization'sresourcebase will
increase an organization'spower advantagecreatingdisperseddependencies,thus
decreasing the degree of dependence upon any particularexchange relation. We
will return to the issue of alternative exchange relations and power balancing
mechanisms after we have introducedthe notion of an exchange network.
Interorganizational Linkages as Networks of Exchange Relations
Since organizations must engage in exchange relations to achieve negotiated
environments,obtainingnecessary resourcesthroughexchange linkageswithother
organizations,it is fruitfulto conceive of an interorganizationalfield (Warren,1967)
as a network of exchange relations among member units or organizations(cf.
Lehman, 1975).Recently, Benson (1975)and Lehman(1975)have definednetwork
characteristics as an important object of explanation for interorganizational
theorists. The fundamentalmode of analysis of networks proposed by Benson
(1975)focuses uponprocesses of resourceacquisition. Organizationalinteractions,
he argues, ultimately must be explained at the level of resource flow. Benson
defines the interorganizationalnetworkas a politicaleconomy concernedwith the
distributionof money and authority, both scarce resources. Two featuresof the
networkare importantdeterminantsof the organization'sability to secure needed
resources:(1) the organization'smarketposition, and (2) the amountof powerit has
to affect the resource flow in the network. Although the exchange model has
addressed attention to processes of resource acquisition (cf. Levine and White,
1961;Thompson, 1967;and Jacobs, 1974),the representationof interorganizational
relationsas networksof exchange transactionsor patternsof resourceflow has not
been systematicallypursuedby exchangetheorists. The extension of the exchange
model presented here draws upon Benson's (1975) analysis and Lehman's (1975)
recent study of interorganizationalfactors in the coordination of health care
systems in addition to Emerson's (1972b) treatment of exchange networks to
identify importantcharacteristicsof networks of interorganizationallinkages.
ConnectedExchange Relations. Exchangenetworksconsist of sets of exchange
relations among actors, individual or collective. An exchange network can be
defined as follows:
D5-An exchangenetworkis a set of threeor moreactorseach of whomprovides
opportunitiesfor transactions with at least one other actor in the set. (Thus a
network can be considered an "opportunity structure" for each actor in the
network.) (Emerson, 1972b:70).

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 Exchange and Power in Interorganizational Networks 69
Let us treat organizations as collective actors. Using this terminology, an
interorganizationalfield might consist of many, possibly overlapping,interorgani-
zationalexchange networks or exchange opportunitystructures. In fact, degree or
extent of overlap of networks in the field could be used as an indicator of
environmental complexity in the form of organizational interdependence. (cf.
Aldrich, 1974b)Fields characterizedby relatively high levels of interdependence
(according to this measure)9 could be predicted to exhibit higher levels of
interorganizationalactivity (e.g., merger activity as demonstrated by Pfeffer,
1972b)or have a higherprobabilityof interorganizationalactivation (Turk, 1973).
Previous exchange formulations have not specified the criteria by which
exchange relations are connected in a network sense. Exchange relations which
form network structures are defined as connected if exchange in one relation is
contingent upon exchange in another relation. More specifically:
D6-Two exchangerelations,A;B and A;C are connectedat A if the frequencyor
magnitudeof the transactionsin one relationis a functionof transactionsin the
otherrelation(Emerson,1972b:70).
A simpletwo-by-two typology of types of connections is presentedby Emerson
(1972b)includingtwo dimensions:bilateralvs. unilateralexchange and positive vs.
negative connections. Two exchange relationsarebilateralnegativelyconnected if
linkedby an inversefunction such that an increasein the frequencyor magnitudein
one exchange relation leads to a decrease in the frequency or magnitude of
exchange in the other (or vice versa). The relation is unilateral negatively
connected if the inverse contingency is one-directional (cf. Emerson, 1971:8).
Consider the case of two suppliers of the same resource (B1 and B2) engaged in
exchange relationswith the same organizationA. The A - B1 and A - B2 relations
are bilateralnegativelyconnected at A if an increase in the frequencyof the A - B1
exchange (of money for supplies)decreases the frequency or magnitudeof the A -
B2 exchange. In this example, B1and B2 are competitors, engagedin commensalis-
tic competition.
Two exchange relations are bilateralpositively connected if an increase in the
frequency or magnitudeof exchange in one relation stimulates or produces an
increase in the frequency or magnitudeof exchange in the connected exchange
relation. When the contingency is one-directional, the relations are unilateral
positively connected. This distinctionbetween connections tends to coincide with
previous distinctions made in the literature on interorganizational relations
between competitive and cooperative relations, commensalistic and symbiotic
relations. To clarify these distinctions, one further notion should be introduced
from Emerson's (1972b) version of exchange theory: the notion of an exchange
category.
Exchange relations link actors in particular exchange categories where an
exchange category is defined as follows:
D7-An exchange category represents the set of all actors who possess the same
resources and value the same resources to be received in exchange.

9Wherethere are overlappingnetworksof exchangeopportunitiesthere is an increasedprobability

that interorganizationalactivitywill resultgiven some instigativeevent due to the increasedprobability
that actors in the overlappingnetworks will come in contact with each other.

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70 THE SOCIOLOGICAL QUARTERLY

The category is defined in terms of "shared values and common resources"

(Emerson, 1972b:83).'0Actors withinthe same category in a negativelyconnected
networktypically compete for resources (commensalisticcompetition)when there
exists a scarcityof resourcesin the environment,as in the examplepresentedabove
of two suppliersto the same organization.Actors in differentexchange categories
(when theirresourceneeds are complementary)are morelikelyto formcooperative
exchange relationsin positively connected networks (symbioticcooperation).For
example, organizationswhich can be linked through vertical integration(e.g., a
wholesale supply company, a retail store and a marketingfirm)representdifferent
exchange categories (with complementaryneeds) connected by positive functions.
In contrast, a retail store connected to two marketingfirms might represent a
negatively connected network in which the marketing firms are in the same
exchange category and are likely to compete for resources (providedresourcesare
scarce)."1 Thus, the nature of the connections in the exchange network will
determineto some extent the natureof the inter-unitrelations.Coalitionformation,
for example, we predict is more likely to occur in negatively connected networks
among members of the same exchange category as a "power balancing"
mechanism.
Power and Position in Exchange Networks. The notions of power and
dependence as applied to exchange relations can be extended to apply to power
relations in exchange networks. Alternative exchange relations in a networkare
defined as follows:
D8-The set of exchangerelationsjoiningan actorto two or moremembersof an
exchangecategoryis a set of alternativerelationsfor thatactor12(Emersonand
Cook, 1974:20).
In exchange networkscomposed of interorganizationalrelations,such alternatives
are importantdeterminantsof power and dependence within the net since these
relations represent alternative paths for access to needed resources. Power
differences also emerge in exchange networks as a result of resource flows. As
Lehman(1975:62)points out, resource flows that are inordinatelyin one direction
tend to give rise to power advantages, generatingdependence on the part of the
recipients and consequently power on the part of the sender.
Directed line graphscan be used to representtheflow of resources in exchange
relations (unilateral: --. and bilateral: Organizations may be linked by single
<--). may be linked in a series or clustered
or multiple, direct or indirect ties. They
around one or a few mediating or dominant organizations (Benson, 1975:230).
Aldrich (1974b)has used digraphtheory to represent the flow of informationand
communicationlinks amongorganizations,definingthe environmentas a network
of organizations.
Concepts from graph theory can be employed in the analysis of exchange
networks in such a way that measures can be obtained for importantnetwork
'oThis distinction is similar to the economists' definition of industries as collections of firms pro-
ducing a homogeneous product (cf. Ferguson and Gould, 1975:226).
"Ecological theory would suggest that one resolution to competition in this situation would be
horizontal differentiation or specialization. That is, the firms might agree to market mutually exclusive
sets of goods eliminating competition.
2This allows for the introduction of the distinction between CL and CLat (Thibaut and Kelley, 1959).

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 Exchange and Power in InterorganizationalNetworks 71
features includingcentrality,distance, balance, reachability,etc. For example, the
centralityof a position in a networkrefersto its location in relationto other units in
the network. Centralityas a structuralfeatureof an exchange networkis frequently
associated with the power of an actor or what Lehman(1975)refersto as "systemic
power." Considerthe set of exchange relationsrepresentedin Figure 1; position A
representsthe position of highestcentrality.'"By virtueof A's positionin the net, A
should be in a more powerfulexchange position, with the potential to gain power
over the units on the periphery: D, E, and F.

Figure 1.*
E

B1

D C ----A

B2

F
*(A-F representactors in distinct exchange categories. Note that B, and B2 representalternative
exchange relations.)

If the letters in Figure 1 are used to referto organizationswhich must exchange

resources, the organizationoccupying position A should be in an advantageous
bargainingposition, whereas organizationsE, F, and D, having no alternativesin
this network, would be the least powerful units. An example of this situation is
presented by Benson (1975:233):
areengagedinthedeliveryof multiple,differentiated
Wherenetworkorganizations services
to clients, an organizationat the centerof referralflow, namely, one to which all clients must
be referred, may gain power over those at the periphery.

Thus, an importantdeterminantof the power of an organizationis its location in

the network of interorganizationalrelations. This is the essence of what has been
referred to in community power studies as a "positional" or structural power
advantage. In addition, B1, B2, and C derive power over organizations on the
peripheryof the network by virtue of their position as mediators in the flow of
resources from A to E, F, and D respectively. It would appearfrom this example
that we could hypothesize that the greater the centrality of an actor's position
within an exchange network, the greaterthat actor's systemic power. However, to
formalize this proposition at this stage would be prematurebecause other factors
can determinethe degree of power of an actor in any particularnetwork.

13Fora precise measureof centrality,see Emerson, 1971:16-17.

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72 THE SOCIOLOGICAL QUARTERLY

If, for example, the outer arrows in Figure 1 are reversed, we end up with the
network diagrammedas Figure2. In this network, D, E, and F become "source
points" for the entry of resourcesinto the system (cf. Emerson, 1973;Emersonand
Cook, 1974). This alters the exchange network significantly; C, B1, and B2 as
"mediators"become morepowerfulin this networkthan A because A is dependent
upon their successful negotiationwith D, E, and F for exchange resources even
thoughby most measuresof centralityA occupies the positionof highestcentrality.
Power in the network might include for organizationsthe ability to determinethe
flow of resources and the rates of exchange as well as politicalpower to stake out
new claims (domain extension) and attempts to control the introductionof new
"actors" into the network (e.g., deter the accreditationof new hospitals, block
fundingfor additionalservice organizations,etc.). Accordingto Benson(1975:234),
"'Thepowerfulagency may see that the terms of interorganizationalexchange are
set in a way that protects its dominance."

FIGURE2.
E

B1

D --- C----B A

B2

Power in this discussion is attachedto a position in a networkand networkscan

be analyzed in terms of the extent to which exchange in the networkis dependent
upon one particularpartyor position. Emerson (1971:16)refers to this propertyas
"structuraldependence" to distinguish it from dependence within a two-party
exchange relation.Whatis at issue here is the "vulnerability"of the networkto the
removal of a particular point (actor) or line (exchange relation). Centrality
represents one measure of structuraldependence which, under some conditions,
can be used as an indicatorof an organization'ssystemic powerin an interorganiza-
tional network. Thus power derives not only from resource dependencies within
specific exchange relations, but also has a structural component, namely the
position or location of the actor within the exchange network. However, as
Lehman's (1975) findings suggest, there are several determinantsof an agency's
positionalpower within a network. Not only is the distributionof resourcecontrol
important, but also the distributionof responsibility for decision making. Our
analysis has focused primarilyupon resource control. Future empiricalresearch
shouldbe addressedto the problemof specifyingthe relationshipamongthe various
bases of power in networks of interorganizationalexchange relations.

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 Exchange and Power in Interorganizational Networks 73
Power Balancing Processes and Forms of Interorganizational Activity
Severalbalancingoperationsare identifiedby Emersonas mechanismsfor reducing
the degree of imbalancein an exchange relation (e.g., These mechanisms
Ax; B,).
can be identified as processes organizationsengage in to minimize the power or
control of other organizations(cf. Jacobs, 1974)over their exchange relationships.
The following mechanisms are proposed:
1. A decreasein the valueof Y for A ("Withdrawal");
2. An increasein the numberof alternatives,or CL* for alternatives,open to A
("NetworkExtension").*CL = comparisonlevel;
fromA to B);14and
3. An increasein the valueof x for B ("Status-Giving"
opento B ("CoalitionFormation"
4. Areductioninalternatives,or CLforalternatives,
by A). (Emerson,1972:67-8).
The two most interestingmechanismsin terms of organizationalinteractionare
operations2 and 4, networkextension and coalition formation.An imbalancein an
exchange relation may instigate a search process for alternative suppliers,
supporters (or buyers), and new exchange relations may form, extending the
network of interorganizationalrelations. This process may have repercussions
throughout the network creating new alliances, identifying new competitors or
suppliers, destroying old alliances and possibly alteringthe distributionof power
within the network. In contrast, the use of mechanism 1, referred to as
"withdrawal," would serve to decrease the size or extent of the network by
reducing the number of potential exchange opportunities for actors within the
network.
The fourthalternative,coalitionformation, is predictedto occur as a method of
reducingthe power advantageof one organizationover a set of competitors. This
process has been referred to as cooperation through coalition formation, as-
sociationalismor federation, and merger (at one extreme), and is more likely to
occur among commensals or members of the same exchange category. Two
possible outcome states for the network resulting from coalition formation are
identified in the following proposition:
P4-Given Bi- A- B2at time tl, if B1- A or (Bi, B2)* -- A forms at t2, then
DAB1 is greater at t2 than ti (Emerson, 1972b:73).
*(B,,B2) symbolizes coalition formation.

Thus, a reductionin the power advantageof A in the network occurs either if one
competitor (e.g., B2) is removed from the network, or if B1 and B2 coalesce,
increasing theirjoint power advantageover A in the network. The removal of a
competitor, B2, is referredto by Emerson(1972b)as an increase in divisionof labor.
Ecologists (e.g., Hawley, 1950)have labeled this process functionaldifferentiation
or specialization.
The situation is more complicated when additional resources are introduced
into the network. For example, B1and B2 may, in additionto yi, possess resources
y2 . .. y These resources can be introducedinto the A;B1 and A;B2 exchange
relations altering
,. the network. If B1 and B2 introducedifferent resources into the
network a form of specialization or product differentiation occurs which is more
14Thompson (1967) defines prestigeas the "cheapest" way of acquiringpower.

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74 THE SOCIOLOGICAL QUARTERLY

likely to happen when B1 and B2, as competitors, are in positions of relative

dependence upon A (or at a power disadvantagein the network). For example, B1
could begin to specialize in the productionand exchange of yl whereas B2 could
specialize in the production and exchange of y2 and y3. However, if the same
resources are introduced into the network by B1 and B2 and the resources are
uniformlydistributedamong Bi in the network, a form of "exploitation"occurs,
maintainingA's position of dominance and Biand B2 remaincompetitorsto their
own eventual disadvantage.15
In addition, when multiple resources are introduced, the theory moves from
relatively simple exchange networks involving intercategory exchange among
actors to complex networks composed of actors which occupy more than one
exchange category. Thus any single actor may be involved in several different
exchange networks (or exchange opportunity structures). Mueller (1970) has
discussed the advantagesof conglomeratesover specializedbusinesses. If an actor
which occupies more thanone exchange category is referredto as a conglomerate,
the advantages of multicategory exchange are obvious. The conglomeratecan
engage in a variety of exchange relations in different networks, enabling it to
maintaindispersed dependencies and to utilize its power in one networkto obtain
resources necessary for exchange in another network (cf. Scherer, 1970:280).
Accordingto Mueller(1970:101)the conglomeratehas a power advantageover the
more specialized firm because "it operates in many markets" and "its potential
customers are also often its potential suppliers"giving it increased opportunityto
engage in reciprocal selling arrangements.
Coalitionformationis a mechanismfor gainingpower in an exchangenetwork,
reducing the power advantage of the dominant actor by the consolidation of
resources among the less powerful actors. For example, Mueller (1970:104)
describes the formationof a mergerbetween Purexand one of its competitorsas a
result of the inabilityof Purex to cope with Procterand Gamble's "brandwar" in
1967. Coalitionformation,however, can take several forms. The relationmay be
relatively specializedand shortterm (e.g., an agreementjointly to mounta political
campaignor fund raisingdrive) involving a low degree of organizationalinvolve-
ment or it mightbe ratherdiffuse and long termleadingto a more permanentcoali-
tion, allianceformationor merger,increasingthe degree of organizationalinvolve-
ment.
The following propositionmust be introducedinto our theoreticalformulation
in order to allow us to predict the natureof the interorganizationalactivity which
organizationsare likely to engage in, given differing structuralconditions (e.g.,
varying positions of centrality and differenttypes of exchange connections).
P5-Organizations seek to form that type of interorganizationalexchange relationship
which involves the least cost to the organizationin loss of autonomy and power.

Support for this proposition is derived from work by Thompson (1967), Cook (1970)
and Aiken and Hage (1968). Given this proposition in conjunction with proposition
4, it is possible to hypothesize, for example, that organizations will engage in
contractual, short-term exchange relations (e.g., coalition to establish joint
"'This is defined by Emerson (1972b:77) as a form of "exploitation" because the introduction of
additional resources (y2 . . y,) may lead to the eventual decline in value of yi as well as the potential
depletion of the additional resources, given that they are uniformly distributed among Bi in the network.

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 Exchange and Power in Interorganizational Networks 75
programs, cf. Aiken and Hage, 1968; Lehman, 1975) before entering into more
permanentforms of alliance or merger (cf. Pfeffer, 1972b).
Powerful or dominant organizations are more likely to enter into symbiotic
relationswith organizationsperformingdissimilarfunctions (in differentexchange
categories)in orderto protect theirautonomyas well as to protect againsta loss of
power. On the other hand, weaker or less powerful organizations have less
influenceupon the natureof the exchange relationshipunless due to conditions of
supplyand demandthe element they produceincreases in demand, thus giving the
weaker organizationpower with respect to exchanges of that particularelement.
Under conditions of scarcity of resources, less powerfulorganizationsperforming
similarfunctions (in the same exchange category), as we have suggested, are likely
to form cooperative relations in order to gain competitive advantage. Lehman
(1975)describes several instances of this process amonghealth care organizations.
Three hospitals in Passaic, New Jersey are described as forming cooperative
relationsestablishinga joint school of radiology, poison control center and mental
health program. In addition, the joint purchase of resources such as fuel oil,
oxygen, intravenous solutions, and linen services allows the hospitals greater
bargainingpower in negotiatingan exchange rate or price. A related advantageto
this form of cooperationis the reductionin costs for the participatingorganizations,
not only due to the attainment of a better bargaining position with other
organizations,but also due to agreementsto share resources and facilities (i.e., to
loan equipment). The value derived for the health care system in general is
increased efficiency and a reduction in the duplicationof efforts.
Exchange Networks and Market Structures
Exchangeprocesses amongorganizations,we have argued,are determinedby such
factorsas the relative importanceof the availableresources to the organization,the
frequencyof interactionnecessitatedby the organizationalfunction, the conditions
of supply and demand in the environmentalfield, the availability of alternative
sources or exchange partnersand the nature of the power differentialsamong the
actors in the network. In addition, the number and density of the interrelated
organizationsand the extent of the network should be taken into account. Econ-
omists tend to refer to these aspects of exchange networks in terms of relatively
abstractmodels of marketstructure:monopoly, perfect competition,oligopoly and
imperfector monopolistic competition(cf. Boulding, 1966; Mueller, 1970;Robin-
son, 1933, 1965; Chamberlain, 1933; Scherer, 1970). In previous work (Cook,
1970),I have referredto dominatedand undominatedinterorganizationalfields (see
also Scherer, 1970), a distinction which tends to parallel the economists'
distinction between imperfectly and perfectly competitive markets.
The marketstructuredeterminesto some extent marketconduct, the natureof
the competitive and cooperative strategies organizations engage in. For
economists, the key elements includethe numberof buyers and sellers or the degree
of marketconcentrationand the nature of the entry barriersto new firms. Much
economic theorydeals with the competitivemarketin which manycommoditiesare
exchangedamongmanybuyersand sellers. The simplifiedmodel is the model of the
perfectly competitive market,defined as "a large numberof buyers all engaged in
the purchase and sale of identically similar (homogeneous) commodities, who buy
and sell freely among themselves" (Alchian and Allen, 1969:108). There is
complete knowledge on the part of the economic actors of the existence of potential

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76 THE SOCIOLOGICAL QUARTERLY

exchangepartnersandtheirprices,thatis, the ratioof exchangetheyarewillingto

offer;andthereareno limitationsto thepossibilitiesof exchangetransactions with
any economicactor in the market.This model is rarelyever approximated in
reality. Economists have attempted to formulate models to dealwith "imperfect"
and increasinglyregulatedmarkets.
There are three models which refer to specific marketconditionsunder
imperfectcompetition.Themodelof monopolisticcompetitionsimplyreducesthe
numberof sellersin the marketto one. Technicallyit refersto a sellerfacedwitha
negativelyslopingdemandcurvefor his product(Alchianand Allen, 1969:143).
Whenmanyfirmsareproducing heterogeneous products, andtheproduct of eachfirmis
similarto, butnot identicalwith,the productof otherfirmsin the sameindustry, the
condition is knownas monopolistic competition. (Boulding,1966:468).
Theperfectoligopolytermrefersto a marketinwhicha fewfirmscompeteto sella
homogeneousproductandtheactionof anyone organization affectstheactionsof
the others.Finally,the marketcondition,imperfectoligopoly,refersto themarket
conditionin whichfew organizations are sellingheterogeneousproducts.Imper-
fectlycompetitivemarketsarenot self-regulative as areideallyperfectlycompeti-
tive markets;thusrestrictionsuponexchangeandproductionarecommonunder
these marketconditions(e.g., governmentregulationsconcerningmonopolies).
Thus, some boundariesto exchangeopportunityand productionunderthese
conditionsaredeterminedby limitsset by law or custom."Minimumwagelaws,
usurylaws,pricecontrols,andquotacontrolsareallexamplesof suchboundaries"
(Boulding,1966:457).
Networksof interorganizational exchangerelationsfrequentlyapproximate one
of thesemodels.Blau(1965)andEmerson(1972b)discussexchangerelationsunder
conditionsof bilateralmonopoly.Inaddition,Emerson(1972b)describesstructural
changeswhich may occur given a unilateralmonopoly.16 If we returnto our
discussionof coalitionformation(Proposition4) it is clearthatthetypeof coalition
formationreferredto as mergercan be predictedto occurmorefrequentlyin an
exchange network characterizedas a unilateralmonopoly.When additional
resourcesin a unilateralmonopolyare available,we have arguedthat B1 and
B2 . . . Bn mayengagein productdifferentiation or geographicmarketsegmenta-
tion. Marketstructurescanbe differentiated inourtheoreticalframework in terms
of the numberof actorsin eachexchangecategoryandthe natureof theexchange
connectionsamongthe actorsin the network.
Ouranalysisof formsof interorganizational activityhasfocusedprimarily upon
the activityof theless powerfulactorsin thenetwork(e.g. coalition,mergerto gain
a poweradvantage).Perhapsof greaterinterestto organizational analystsarethe
interorganizational activitiesof the dominantactorsin exchangenetworks(e.g.,
collusion,cartels,price leadership).Dominantorganizationsmayenhancetheir
marketpowerby engagingin anti-competitive practicesthroughmechanisms such
as price discrimination and geographicdiscrimination (Mueller,1970;Scherer,
1970).Thesepracticesaremorelikelyto occurgiventhatorganizations areengaged
in longitudinalexchange relations.For example, dominant organizations maygrant
exchangefavors(e.g., lowerprices)to "loyal"exchangepartners.Mueller(1970)
16In manyof the service industries,althoughthereare frequentlya largenumberof sellers,
monopoly
power exists due to strong product differentiationand cartelization in some fields like medicine
(Scherer, 1971:58).

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 Exchange and Power in InterorganizationalNetworks 77
refers to this type of practice as "business reciprocity," a form of nonprice
competition (and thus a contributingfactor to imperfectionsin the market place).
As businesses have become increasinglyconglomerated,business reciprocity has
increased. According to Mueller(1970:95)"100 percent of the purchasingagents
interviewed in a recent study reported that reciprocity is a major factor in
buyer-sellerrelations in the chemical, petroleum, and steel industries." This type
of activity tends to reduce price rivalryamong competitors, but also creates entry
barriersfor new firms since "a potential competitor will find that much of the
market is foreclosed" (Mueller, 1970:96), composed of already committed ex-
change partners. Similar practices occur in other sectors of the economy (e.g.,
social services sector) and are a naturaloutcome of longitudinalexchange relations
(cf. the analysis of commitmentformationin social exchange relations, Emerson
and Cook, 1974). Although additionallinks can be drawn between the notion of
exchange networksproposedhere and what economists have traditionallyreferred
to as market structures(Emerson, 1975), the discussion would not lead to further
elaborationof ourbasic theoreticalmodel. Ratherthanpursuingthe similaritiesand
differencesbetween social exchange networksandeconomic markets,let us turnto
a brief critique of the exchange analysis of interorganizationalrelations before
discussing avenues for future theoretical development.
Summary
Since the introductionof the exchange approachto the analysis of interorganiza-
tionalrelationstherehas been continuingdebateover its utility. Muchof this debate
arises due to a failureto understandthe scope conditions of the theory. No single
theoretical perspective will enable us to explain everything about organizational
interaction. Every theory typically has a set of (explicit or implicit) scope
restrictions,andthus is limited.Exchangetheory is no different.We have specified
its scope previously. Hallet al. (1975)arguethatthe exchange modeldoes not apply
when interorganizationalrelations are mandated by law or regulatory agencies
(e.g., as in the case of Model Cities programsandjuvenile justice programs).While
this may be true, Hall does acknowledgethat it is frequentlydifficultto separateout
the exchange process from the emergence of mandates. "Mandates will be
developed to regularizeexchange and exchanges will occur to modify mandates"
(Hall et al., 1975:4). Given that an analysis of the exchange process may lead to an
understandingof the emergence of mandates as well as other forms of regulatory
practices, it is probablyprematureto exclude this category of interactionsfromthe
scope of this theoretical formulation.
Aldrich(1974)has arguedthatthe exchange model tends to focus attentionupon
the relations between organizations of equal power or control over resources,
deemphasizingdominance and vertical relations among organizations. While the
latter criticism does apply to some extent to Lehman's (1975)recent work and the
study conducted by Levine and White (1961), the criticism does not apply to
Thompson's (1967) analysis or to more recent theoretical formulations (e.g.,
Jacobs, 1974;Benson, 1975).Nor is the criticism valid with reference to exchange
theory per se. The emergenceof power differentialsandthe use of power have been
topics of central concern to exchange theorists (cf. Blau, 1965; Emerson, 1971,
1972b). The theoretical framework presented here has focused primarily upon
power as it affects exchange relationsamong organizations.Othercriticismsof the
exchange approachrelateto the problemswhich arise when "micro-level" theories

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78 THE SOCIOLOGICAL QUARTERLY

are applied to "macro-level" phenomena.17I have addressed these criticisms at

length elsewhere (Cook, 1970, 1974);they will not be treated here.
Finally, while exchangetheory does providea usefulframeworkforthe analysis
of interorganizationalrelations, the theory itself needs additionaldevelopmentand
testing. Despite the proliferationof exchange theoretic formulations,there is a
paucity of empiricalresearch devoted to testing exchange propositions. Thus the
study of interorganizationalexchange processes may well lead to significant
extensions of exchange theory in general.
This article has focused upon the analysis of interorganizationalrelations.The
predominanttheoretical perspective, the exchange approach, is reviewed and an
extension of the exchange model is presented. The formal model of exchange
proposed here is only a first approximation to a more complete theoretical
statement. Additionalformalizationin termsof propositionsand hypothesesmust
await furtherempirical research. Future theoretical development should include
the explicit treatmentof multiple resource networks involving multipleexchange
relations or links among organizations. Any specific organization may occupy
variouslocations in differentnetworksdependinguponthe content of the particular
exchange relations represented in the network and the segment or subunitof the
organizationinvolved in the exchange network.
Techniques must be developed for treatingoverlappingexchange networksin
interorganizationalfields. As we have indicated, the degree of overlap of various
exchange networksin a communitymaybe an importantdeterminantof the level of
potential interorganizationalactivation to meet a communitycrisis (cf. Form and
Nostrow, 1968) or emergent need (e.g., poverty programs, Turk, 1973). Graph
theory (cf. Cartwrightand Harary, 1956)provides one potential avenue for future
theoretical development. Prior to formalization of this type however, more
empirical work must be conducted concerning the actual characteristics of
networks and their determinants. Research is needed before such concepts as
"distance" and "reachability," which have less intuitivemeaningthancentrality,
can be fruitfullyapplied. The primaryproblems to be addressed are conceptual.
What does "distance" mean in the context of interorganizationalnetworks:
geographic distance or the extent to which two organizations are directly or
indirectly connected in exchange relations? Similarly, what substantivemeaning
can be attachedto the term "reachability"in networksof organizationalexchange
relations? Once these conceptual difficulties are faced, various measurement
problemsmust be addressedbefore proceedingwith a graphtheoreticalformaliza-
tion of interorganizationalexchange networks.
The representationof organizationalinteractionsin termsof Emerson's(1972b)
conceptualization of exchange networks allows us to make distinctions (e.g.,
between positive and negative connections) previously obscured in exchange
formulations of interorganizationalrelations. This leads to clarificationof the
conditionsunderwhich differenttypes of cooperativeandcompetitiverelationsare
likely to occur. In addition, the distinction between unilateral and bilateral
connections enables us to representmoreclearly relationsof dominance,influence,
power and dependence among organizations.
'7According to Blalock (1967:21), "One of the most challenging problems that continually arise in
almost all substantive fields within the social sciences is that of how one translates back and forth
between the macro level, where groups are the unit of analysis, and the micro level, where the focus is on
individuals."

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 Exchange and Power in Interorganizational Networks 79
Futuretheoreticalwork mightdistinguishamongvarioustypes of interorganiza-
tionalnetworks. Mitchell(1969),for example, identifiesthree kindsof networks:(1)
exchange networks (flow of resources), (2) communication networks (flow of
information), (3) social networks (flow of sentiments). The flow of resources
representedin terms of a networkof exchange relationsamongorganizationsmay
take an entirely different form from the flow of communications(Aldrich, 1974b)
among the same set of organizations; and the degree of overlap of these two
networks may be an importantfeature of the interorganizationalfield. Further-
more, we must begin to formulatetheories which will enable us to deal with the
dynamicpropertiesof interorganizationalnetworks(e.g., an increaseor decrease in
dominance, shifts in alliances or coalitions, the formationof mergers, the rise and
fall of competitive activity, and the instigation of regulatory practices). Future
theoretical development of this type will entail a commitmentto the longitudinal
study of interorganizationalrelations.

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