Networked Organizations

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Networked organizations are organizations that aggregate and coordinate members through peer-to-peer network platforms. They are typically open organizations enabling them to harness the mass of people’s productive capacities, through on-demand networks. The reduction in transaction cost due to IT makes it possible to create new forms of organization that can harness the efforts of those at a much lower level of productivity than was previously possible. It now becomes viable to create open organizations, where anyone that is able to contribute anything is of value and by getting enough people contributing only a small amount a network can compete with a traditional organization. Network organizations result in a very dynamic organization that can expand to meet capacity as employees join and leave the organization in a fluid fashion, making employees available to join multiple networks at the same time or over time. Thus employees become micro-entrepreneurs broadcasting their availability and organizations become networks for aggregating them in response to demand - what can be called a networked organization.