Why buyer-supplier chains differ: a strategic framework for electronic network organizations

Strategic planning in electronic networks has to cope with two interdependent layers of strategies: collective network strategies and firm-level network strategies. Collective strategies take the outside view and position a network against its competitive environment, particularly against rival networks. Firm-level strategies are inside-oriented and deal with the alignment of the collective strategy, the business strategy and functional strategies (including strategies for the implementation of information and communication technologies in networks). Both strategy layers depend on the network topology, size and corresponding bargaining power distribution. In the first part of this paper, we develop a formal approach to explain bargaining power based on network size and topology. The results guide the second part of the paper, where we describe and classify contingent strategic options for the two strategy layers.