A network organizational structure refers to a system of delegating and coordinating tasks among a number of partner companies or business entities with a common goal of producing a specific product. This arrangement gives a company the chance to collaborate with other related business entities to concertedly work toward realizing a common goal.
The working together of different business entities forms the premise on which this system is built. Network structures bring together different companies with the aim of obtaining and maintaining a competitive advantage over others outside of their network.
The merit of network organizational structure over any other form of organizational structure is its flexibility and efficiency. This is because coming up with a network structure requires a thorough selection and use of the best players available, who come together as partners. These partners are charged with the responsibility of providing specific needs within the network structure.
The core objective of an organizational structure is to support and complement the strategy of any business arrangement used to realize the objectives and goals of the organization. However, over-reliance on individual partners within network organizational structures may make these systems susceptible to a number of challenges within the network structure.