Home > Articles > Business & Management

The Network Imperative: Community or Contagion?

Network-based models for business challenge the traditional firm-centric view of competencies and strategies that are the focus of most business education and management thinking. This chapter makes it clear that the opportunities and threats presented by networks cannot be ignored.
This chapter is from the book


The rising importance of networks creates challenges and opportunities for business enterprises. On the one hand, networks lead to contagion and other risks, as can be seen in the rise of global terrorism and the spread of the 2008 global financial crisis. On the other hand, networks present opportunities for building community, as can be seen in the rapid rise of companies such as eBay, Google, Facebook, and other network-based enterprises. In this chapter, the editors of The Network Challenge point out that network-based models for business challenge the traditional firm-centric view of competencies and strategies that are the focus of most business education and management thinking. The authors challenge managers to consider the implications of networks in addressing issues such as risk management, strategy, marketing, human resources, and value creation. They emphasize the need to take diverse viewpoints on networks, including drawing upon fields such as biology, infectious diseases, and other areas with a long history of studying networks. Finally, the authors offer a summary of the key sections and chapters in The Network Challenge, which provide a broad, multidisciplinary view of networks and their implications for business. This chapter makes it clear that the opportunities and threats presented by networks cannot be ignored.

The network-based nature of our businesses and financial systems was clearly evident in the deep global financial crisis that unfolded across the summer of 2008. The collapse of U.S. subprime mortgage markets led to a ripple of effects across all sectors of the U.S. economy, necessitating the rescue of Bear Stearns, Fannie Mae and Freddie Mac, and insurer AIG. The U.S. government passed a hastily developed $700 billion bailout package designed to help unfreeze the banking industry, and other governments around the world have followed suit. The ultimate outcome of these emergency measures remains to be seen. However, network contagion and the complexity of cause and effect in a networked world are now routinely put forward as the reasons for the continuing crisis in financial markets. In explaining the conflagration of global markets, network dynamics have become the new phlogiston—a mysterious and ultimately fictitious substance used to explain combustion prior to the discovery of oxygen in the 1770s. We clearly need a deeper and more precise understanding of network interactions.

The network challenge can also be seen in the Chinese “toxic-milk scandal.” A few years ago, the logic of outsourcing manufacturing to China and other low-cost producers was irresistible. Any manufacturer who wanted to remain competitive needed to be able to meet the so-called “China price.” But a series of problems, including tainted pet foods, recalls of toxic toys, and the spreading scandal of tainted milk powder in China, have revealed the hidden risks of unbundling strategies, with their ensuing more complex supply chains and difficulties in governance of global networks. The results of the tainted-milk event will take months or even years to play out, with global recalls of baby formula, candy, and other food products containing powdered milk now underway. The sheer complexity of uncovering and recalling all potentially contaminated products that have been shipped globally is formidable. The economic damage to the reputation of China’s food industry will be staggering as the scandal has heightened concerns in the United States and Europe about the quality of Chinese products. One evident lesson from the toxic-milk scandal is that the spread of information and the measures that are needed to reestablish trust in global networks are of a different and far more complex nature than single-channel, controlled marketing and distribution networks of the past.

At the same time, networks have emerged as a tremendous source of value creation. Companies such as eBay, Google, Facebook, YouTube, and Twitter have risen from the primordial swamps of cyberspace to become major players based primarily on the power of their networks. Established corporations such as Procter & Gamble and Toyota are harnessing networks to tap into new sources of innovation around the globe or engage in word-of-mouth marketing for new products. The successful 2008 U.S. presidential campaign of Barack Obama has been attributed to his deft ability to mobilize and manage an unprecedented network of volunteers and contributors. Networks of suppliers are creating and delivering products through supply webs that stretch around the globe and can be reconfigured rapidly. Networks are now a powerful driver of value creation across society, but they follow different rules than command-and-control hierarchies. To tap into the value of networks, managers need a deeper understanding of how they work.

Companies and governments today face a dilemma: They cannot compete without networks to access resources or markets, but these networks present new risks and challenges that must be managed. The threats that face our world today—from financial crises to global competition to terrorist attacks to global diseases—are network-based. Effective solutions, in many cases, are also network-based. In such an interlinked world, we need a deeper understanding of networks to drive growth and manage risks. We need to understand what makes networks tick. This book is an attempt to provide a starting point for understanding the nature of networks and their implications for business. We brought together a broad cross section of researchers from diverse fields within business and outside—from biologists to antiterrorism experts—to help understand the nature of networks more broadly, and the specific knowledge that managers need to work in a networked world.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020