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Network forms of organizing are becoming increasingly common, yet less is known about their governance mechanisms than either markets or hierarchies. In this paper, we examine the restructure of a large government R&D agency from a network governance perspective. This longitudinal study tracks the R&D agency as it implemented purchaser-provider, a popular public sector management reform with the intention of creating market-based competition as a governance mechanism to increase efficiency and effectiveness. In contrast, we found that this R&D purchaser-provider implementation behaved more like a partnership that was better characterized as network governance. That is, we observed a complex multi-stakeholder environment in which a mix of cooperation and competition work hand-in-hand, and social control mechanisms were prevalent. We analyze both the characteristics and the governance of this public-sector R&D network using several business network frameworks. To examine the characteristics of the network we drew mainly on the Scandinavian IMP group’s actor-activity-resource model of business networks. To analyze network governance, we examine the four social mechanisms proposed by Jones, Hesterly and Borgatti (1997). We find that while some mechanisms, namely reputation and macro-culture were prevalent, other mechanisms such as sanctions and restricted access were not observed. Through these analyses of a business network in a somewhat unusual context, we develop a number of managerial and theoretical insights about network governance.
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