Page 252 - Sustainable Cities and Communities Design Handbook

226 Sustainable Cities and Communities Design Handbook

Hakansson and Johnson argue that “activities and resources in interaction
are the more significant factors” in networks. Network theories can fit into the
basic social constructionist framework and work within a subjectivist
perspective for an understanding of everyday business life. Nevertheless, many
scholars in the field find themselves rapidly moving into the objectivist
paradigm because it offers structures that provide predefined and convenient
explanations of the business activities. Thus in 1994, Hakansson and Snehota
argue:
We are convinced that adopting the relationship perspective and the network
approach has rather far-reaching theoretical as well as managerial implications.
It seems to open up a quite new and different theoretical world compared to the
traditional way of conceptualizing companies within markets. It offers new
perspectives on some broad traditional problems of business management and
yields some novel and perhaps unexpected normative implications for business
management.
Emphasis ours, Hakansson and Johanson (1993, pp. 1e4)
Therefore, “Relationships between companies are a complex knitting of
episodes and interactions. The various episodes and processes that form
business relationships are often initiated and triggered by circumstances
beyond the control of people in companies. They are however never
completely random, they form patterns.” In order for the authors to understand
a network, they revert to “structural characteristics,” such as “continuity,”
“complexity,” “symmetry,” and “informality.”
Enron appears to prove to be a good negative example of networks or the
building of business relationships (also known as cronies and the “old boy”
network) to influence and control markets. In the American energy sector,
Enron indeed used “some novel” management skills and tools that have shown
how it manipulated the energy markets (HarvardWatch, 2002).
Various court cases are proving how Enron executives misled regulators,
cheated their customers and clients, pocketed unreasonable personal gains, and
influenced public energy policy through social and business networks. Much
of that influence was paid for by Enron corporation and its executives in
donations and grants to scholars and politicians who deregulated without
anticipating the negative consequences.
While all the evidence is not in as of late 2002, it is clear that these net-
works that Enron built were to influence political decision makers. This use of
networks and personal relationships was supported by money, which influ-
enced entire sectors of the economy and therefore markets. The behavior of
Enron and other firms is not unusual, but in this case, the end result was not an
open or free market but initially their control and domination of an entire
sector. The plan almost worked.