Cooperative network structures as innovative form of interaction between members of major projects

Summary . Cooperation of partners is a necessity for innovative projects with a high influence on a society. Such projects are usually closely related to changes in socio economic environment of a city, region or even a whole country. In this day and age, number of projects impossible to implement by a resource of a single (even diversified) company, has grown significantly. “Network cooperation” have gone mainstream in many countries and industries. But even these days this term has multiple descriptions. This article observe specifics of network cooperative structures that affecting regions of project implementation in a considerable way. The key topics of this article are factors affecting business to establish cooperative network structures as well as potential outcome of such a management practice. This management practice will require an additional demand for development of processes and mechanisms of cooperative network management. In order to create these mechanisms and practices it is necessary to combine methodological approach of disciplines like “net economy”, project management, institution economy and neoinstitutionalism, organizational theory, management science etc. On the border of these approaches and methods might be received a result of methodology, algorithms and practical approaches for management of such structures. At this moment we may constant a global tendency for an increasing share of cooperation projects among all innovative projects implemented by separate companies In a long-term perspective global players will strengthen this tendency due to a globalization of markets and economies. These trends indicate necessity of development of an efficient way of management and models of coordination of network cooperative structures.


Introduction
Cooperative network structure is a form of organized business activity characterized mostly by mechanisms of partner coordination. These mechanisms are two or multiple side's agreements and market contracting. Although, other ways of coordination and cooperation such as controlling company and subsidiary company might exist within a cooperation, they doesn't affect relationships between members of cooperative network structure. Sides of cooperation are interacting based on equal and mutually profitable relationships confirmed by common market contracting [1].
Market contracting assumes respective economic motivation of sides involved. Contracting partners choosing partnership only due to an economic motivation, which is specifically important during the stage of development of management mechanisms of a project. This way of interaction assumes that no one of the members of contracting agreement might pretend on a role of single coordinator of a project. On the other side, this is obvious that it is necessary to coordinate interactions between several members of a cooperative network structure.
Development of an effective and efficient ways of management of several equal right members of cooperative projects is a highly topical question from both practical and theoretical sides due to the fact that number of projects using cooperative network structure has grown significantly in all industries [2].
"Network cooperation" have gone mainstream in many countries and industries. But even these days this term has multiple descriptions. Sometimes, meaning of this term is only related to the way of technical interaction between sides. Term "network" assume the way and method of communication. In this case "network interaction" is a way of communication for business coordination.
Sometimes members of "network" are interacting between each other companies, performing a concrete technological functions and operations within a same technological process. An example of such a network is a multiregional or multinational telecommunication performed by several operators In this case "network" means a complex process of exploitation of a united technological complex, which utilizing parts belongs and utilized by a different, not related to each other as a controlling and subsidiary company members of the project. In this case it's going to be right to use a term "technological cooperation" [3]. Coordination of such a cooperation performed in accordance with previously developed rules, policies and standards.
Adding term "cooperative" to a phrase "network structures" allows us to elaborate a topical area and specify the phenomena of this article. An accent of this article is made, mostly on the market contracting approach between members of network cooperative structure. An alternative way of market contraction is contraction within a single company and its variations (inner corporate contracting or inner holding contracting).
Contracting within a company as well as its variations assuming opportunity and necessity of a single coordination center, which will become a management structure for all members of cooperation in both direct and indirect ways. In our case we don't have a coordination center, therefore creating a number of complications for member's interaction during project implementation.
Firstly, due to the fact that the main subject of interaction between independent economic entities is always a project with concrete goals, timeframe, and members' responsibilities, means that it is necessary to develop proper mechanisms of coordination of members' interaction. Usually these mechanisms stated in signed agreement between the members of cooperation as well as other attributive aspects of the project. Breach of any element of this agreement causes suffer like fees and surcharges stated in the agreement. On the other hand, usually sides are going too formal with this part of the agreement counting on partners' involvement into the project. As a result, in case of a breach of any formality stated in the agreement sides have to use a judicial instance of different levels, ad hoc arbitration or mediation. In all cases, sides bearing losses due to lost business opportunities from breaching the agreement as well as losses of time and resources.
Secondly, in spite of direct loss, due to a breached agreement from either sides, additional losses might occur due to an ineffective coordination of sides interaction during the project implementation. Due to the lack of coordination center might occur common inconsistencies of works, miscommunication, supply disruptions therefore creating additional costs for maintenance and logistics.
Thirdly, besides direct loss and additional costs, breach of a contract agreement by either side is a common reason for "reputational loss". This type of loss related to unavailability of performance of certain obligations by a side involved into project and therefore bearing additional costs due to unfair practices of a partner, which might affect other companies unrelated to this project. Economic entity bearing loss in one project should reassign it's own resources between his other projects, which might affect them in a negative way and as result cause a reputational loss.
Direct and indirect loss as well as an additional costs due to ineffective coordination of project members, often cause to a situation when economical entities are not willing to participate in cooperative network structures, instead trying to make a business using only their own assets and competences. Such a strategy might cause a competence and resource delusion. Companies utilizing such a strategy are trying to add those competences that were not previously presented on their portfolio in order to avoid partnership with unreliable partners. In the economic theory such companies got a specific term "apanage principality". In essence, their strategy is a simple replacement of market transactions by inner transactions, which might be characterized by an efficiency of cooperation, due to a presence of managerial mechanism within a company [4].
An efficiency of coordinating mechanism is directly related to phenomena well known in economic theory as "size of a company". It is a fact of common knowledge that company is willing to include to their business those transactions which will become more cost effective within a company than on an open market (purchasing services from a partner, for example). Until the cost of coordination of a transaction allows making profit, a company is "growing". As soon as costs for coordination become significant enough a company stops its growth or even starting decrease its size.
In all cases, when an economic entity might choose an option of a project implementation (either implement it on their own or establishing a partnership), all factors should be considered before the decision was made. In such a case it is necessary to use "risk management" practices in order to minimize potential risks and therefore decrease potential losses.
In this day and age, number of innovative projects impossible to implement by a resource of a single (even diversified) company, has grown significantly. Firstly, project might require a considerable amount of different resources, which can't be allocated at once even by a huge company. Secondly, modern management practice assumes that activity diversification might be toxic and even harmful business practice. We have to distinguish two types of diversification, "Finance diversification" and "Diversification of activity" [5]. First type of diversification assumes creation of an investment portfolio with a different dynamics of assets. Finance diversification considered as an extremely useful practice for a modern business. "Activity diversification" or "Diversification of directions" might be considered as a negative condition due to competence degradation of a company. Such an effect prevents company to concentrate it's efforts in order to become a market leader. On the other hand, it is fair to say that this argumentation is correct only in terms of markets and economics with a developed infrastructure characterized by a high availability of competences as well as low risks of partnerships.
Cooperation of partners is a necessity for projects with a high influence on a society. Such projects are usually closely related to changes in socio economic environment of a city, region or even a whole country. A perfect example of such projects are: implementation of GLONASS technology and associated services; a "Safe city" initiative and projects of Ministry of Internal Affairs and other projects require a considerable attraction of various resources and many sides involved. These projects are highly topical in terms of regional economy as well as a whole country. An efficiency of these projects implementation has a high influence on every particular city and region as well as on the prestige of Russia, due to a high coverage in a mass media which is highly in terms of economy and image of domestic policy of our country in the world [6].
Conclusion Development of an efficient and proactive methods and mechanisms of project members coordination is not only a theoretical question of socio-economical management, but a question of making our country a leader of a global economy. This process will require an additional demand for development of processes and mechanisms of cooperative network management. In order to create these mechanisms and practices it is necessary to combine methodological approach of disciplines like "net economy", project management, institution economy and neoinstitutionalism, organizational theory, management science etc. On the border of these approaches and methods might be received a result of methodology, algorithms and projects of working documents (typical agreements).
At this moment we may constant a global tendency for an increasing share of cooperation projects among all innovative projects implemented by separate companies In a long-term perspective global players will strengthen this tendency due to a globalization of markets and economies [7]. Modern trends for specialization of assets and competences in order to achieve a competitive advancement are key factors for sustainable development of business. These trends indicate necessity of development of an efficient way of management and models of coordination of network cooperative structures.