Interpersonal dynamics in network organizations

Network organization is an organizational form that holds a big promise of reaching organizational flexibility. It is often argued that by means of tearing down the walls of bureaucratic authority organizations can promote organization-wide cooperation and integration, essential features of competitive organizations in a changing marketplace. In this paper we look at a simpler version of network organization i.e. matrix organization in order to study interpersonal dynamics in an organization. Specifically, we look at social networks and show that the patterns of relationships predicted by the expectaions of theory of network organization does not emerge. Contrary to expectations, we find the lack of lateral networks and strong vertical communication with direct supervisors. The paper concludes by proposing a theory of status uncertainty as an explanation for the failure of network organizations to eschew bureaucracy and generate company wide integration and cooperation. The tearing down of bureaucracy creates status uncertainty within organizations which leads actors to build protective neworks recreating hierarchies in the process. The paper concludes with suggestion that bureaucracy could be altered in many ways to accommodate flexibility. But flexibility can not be achieved by tearing down bureaucracy.