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Networks as Resources, Organizational Logic, and Change Mechanism: The Case of Private Business Schools in Post-Socialism

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Sociological Forum

The paper differentiates between three conceptualizations of organizational networks: as resources, as organizational logic, and as a change mechanism. We integrate and apply these conceptualizations in one of the first comprehensive studies of private business schools in post-socialism. Using case studies, content analysis of websites, and an open-ended survey of administrators, we show how East-West networks helped in establishing a new type of organization at the end of socialism, how schools use networking as a core organizational principle to enhance efficacy and legitimacy, and how their activities help build capitalism from the bottom up by transmitting market-based knowledge to post-socialist economic actors.

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Notes

  1. There is also a lot of literature on the importance of networks for organizations other than business firms, such as social movement organizations (e.g., Soule, 1997; Van Dyke, 2003, for review, see Diani and McAdam, 2003) and community and voluntary associations (e.g., McPherson et al., 1992; Rotolo, 1999; Cornwell and Harrison, 2004).

  2. For an analogous argument about downsides to social capital resulting from incorporation in immigrant enclaves, see Portes and Sensenbrenner (1993) and Portes and Landolt (1996).

  3. Some previous studies apply a culturalist perspective to networks. For instance, Nicole Biggart (1988) in her research on direct-selling organizations (DSOs) shows how, for such organizations, networking is the way to do business and represents a core organizational principle. Examining cultural change in organizations, Smith-Doerr (2005) shows how life scientists legitimate work in the biotechnology industry and thus help institutionalize the network form of organization prevalent in the knowledge economy.

  4. Examples of this literature include (Lipton and Sachs, 1990; Blanchard et al., 1991; Przeworski, 1991; Staniszkis, 1991; Koslowski, 1992; Stark, 1996; Amsden et al., 1994; Hausner et al., 1995; Campbell and Pedersen, 1996; Stark and Bruszt, 1998; Eyal et al., 1998; Orenstein, 2001; Bandelj, 2002; Hanley et al., 2002; Ekiert and Hanson, 2003; Walder, 2003).

  5. Other research shows that in cases of uncertainty, actors resort to informal relations to carry out their business transactions (DiMaggio and Louch, 1998; Ingram and Roberts, 2000; Guseva and Rona-Tas, 2001).

  6. For simplicity, we use the general term socialism to denote political systems ruled by the Communist Party, set in place after World War II in Central and Eastern Europe. In reality, there were some differences in the types of socialism that were implemented in individual Central and East European countries, in particular self-management in former Yugoslavia in contrast to state socialism in the countries under direct Soviet influence.

  7. Slovenia was the northernmost republic of the Federal Socialist Republic of Yugoslavia until 1991, when Yugoslavia split up, and Slovenia became an independent, sovereign state.

  8. During her studies, Purg traveled extensively abroad, and her doctoral dissertation was a comparison of self-management practices in the Netherlands and Yugoslavia. This influenced her vision of what a management-education center should offer and led her to insist that it should be an international institution.

  9. Personal interview, April 24, 2004.

  10. At that time, several studies conducted in the United States recommended improvements to the international business education offered to the U.S. college graduates (Sharma and Roy, 1996).

  11. The Central European University was established in 1991 with funding and support largely provided by George Soros, a philanthropist of Hungarian ancestry, who was one of the key founders of the IMC.

  12. In a socialist system, the economic elite was closely coupled with the political elite because of Communist Party membership.

  13. The Phare program is one of three pre-accession instruments financed by the European Union to assist the applicant countries of Central and Eastern Europe in their preparations for joining the European Union (EU 2006a). For an instance of how Phare funds were used to establish management programs, see the history of the Graduate School of Business Economics, Higher School of International Commerce and Finance, Warsaw, Poland (GSBE-HSICF 2006). Moreover, the European Union also supports cross-organizational cooperation among educational institutions in a program called ERASMUS, which facilitates student and teacher exchanges, joint programs, and other kinds of networks between schools (EU 2006b). Currently, 31 countries are members, including Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia. Thus, networking activities between business schools in Central and Eastern Europe are encouraged also by a transnational institutional framework.

  14. Many schools apply for funding from international agencies, but they rely on tuition and fees as their primary sources of income. Often (especially for executive education) these fees are paid by corporations that send their managers for further training. Increasingly, students now take out loans to finance their own education.

  15. For other studies on the creation of new organizational fields see for instance, DiMaggio's (1991) study of the rise of professionalization of the U.S. art museums, Haveman and Rao's (1997) study of the development of the thrift industry or Rao's (1998) study of the construction of nonprofit consumer watchdog organizations.

  16. As stated on its website, “CEEMAN … is an international management development association established in 1993 with the aim of accelerating and improving management development in Central and Eastern Europe” (CEEMAN, 2005). CEEMAN activities include organization of the IMTA (International Management Teachers Academy), annual conferences and deans and directors meetings, and case-writing seminars and competitions. CEEMAN also has its own International Quality Accreditation system.

  17. These countries include Albania, Belarus, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Georgia, Kazakhstan, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia, and Ukraine.

  18. In general, because the phenomenon is relatively new, comprehensive information about private business schools in Central and Eastern Europe is hard to come by. Currently, no reliable estimates exist of how many schools there are in the region, how many degrees they confer, and what kinds of organizational structures and resources they have.

  19. We used the search words “business school,” “management school,” and country name.

  20. While we looked through all the sources known to us to identify schools, we recognize that our sample is limited to those schools that have an established website. Because Internet communications are by now common in all of these countries, and it is quite unlikely that a school would not have a website (since their peers/competitors all have them), we believe the chance that our sample is biased is very small.

  21. For instance, we decided to rely on published information about the schools rather than interviews with administrators, since in interviews it would have been difficult to distinguish between an organizational perspective (conveyed by an individual speaking on behalf of an organization) and the interviewee's own interpretation of that perspective.

  22. In 2002, CEEMAN sent an open-ended questionnaire about patterns of collaboration via e-mail to all its members. Among those were 44 that met our definitional criteria for a private, post-socialist business school, and 32 administrators replied: Belarus (1), Croatia (1), the Czech Republic (1), Estonia (1), Georgia (2), Hungary (2), Latvia (4), Lithuania (2), Poland (4), Romania (4), Russia (7), Slovenia (2), and Ukraine (1). The questionnaire asked representatives of the school (usually dean's assistants) to list and describe the most important cooperative relationships cooperations that their schools were currently engaged in with (1) national or international governmental agencies; (2) with domestic or international NGOs; (3) with the research or educational programs of other schools, such as joint degrees; or (4) any other type of institutional cooperation. For each of the cooperations that the schools listed, they were asked to provide a brief description, names of institutions or individuals involved, start year, expected duration, how initial contacts were established, reasons for entering the cooperation, what benefits they gained from it, and what some of its disadvantages might be. Since the survey asked the administrators only about specific cooperations and not about the role that networking played in the school's overall spectrum of activities, we used these data merely to supplement our website content analysis with some direct quotations from administrators.

  23. Some of the schools do not list their faculties on the website, or mention their composition, so in actuality the number of those that have faculty from abroad is probably even higher.

  24. They refer here to the CEEMAN Membership Directory that lists all CEEMAN members. To become a member, one needs to fill out a membership form and attach the most recent brochure of the organization. The applicant also must be “devoted to teaching and research in management” and must have “available the required human, physical and financial resources for the achievement of its objectives [and] high academic standards of excellence” (CEEMAN, 2006b). The “academic standards of excellence” are judged by the expressed commitment of the institution to these standards rather than by an evaluation/ranking by an external agency.

  25. Drawbacks listed were that “it is time consuming,” “can result in financial loss,” and that there may be “problems because of cultural differences.”

  26. While we certainly found evidence in our data that schools try to function as change agents to facilitate broad transformations, further research is needed to specify in more detail the micro-macro link between learning market-based behaviors in educational institutions, such as business schools, and consequent macro-level changes in post-socialist economies.

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ACKNOWLEDGMENTS

We would like to thank Frank Dobbin, anonymous reviewers, and the editor of Sociological Forum, Robert Max Jackson, for comments and suggestions that greatly improved the paper. We also thank David Gedlička for research support.

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Correspondence to Nina Bandelj.

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Bandelj, N., Purg, D. Networks as Resources, Organizational Logic, and Change Mechanism: The Case of Private Business Schools in Post-Socialism. Sociol Forum 21, 587–622 (2006). https://doi.org/10.1007/s11206-006-9039-x

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  • DOI: https://doi.org/10.1007/s11206-006-9039-x

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