The (Vertical) Network Firm as a Political Coalition: The Reorganization of Fiat Auto

Abstract

The article argues that organizational sociology would do well to revisit James March’s famed imagery of the business firm as a political coalition in light of today’s decentralized production regimes. Specifically, we show that the increased tendency of firms to coordinate the design and making of highly complex products across organizational boundaries has fundamentally altered and been altered by the politics of coalition building. This is demonstrated using a 15 year longitudinal qualitative case study of the vertical production network that revolves about Fiat Auto. In those years, Fiat went from one of the most vertically integrated automakers in Europe, to one of the least vertically integrated, and has in the wake of a severe crisis now swung back the other way. We argue that this evolution cannot adequately be understood without reference to an interplay of inter- and intra-firm relations, including especially to the spilling of intra-organizational rivalries across firm boundaries, and to the effects of cross-firm coalitions on intra-organizational fights. Analyzing this evolution and these relations from a 'political' perspective allows us to better understand the behavior not merely of particular firms, but also of interacting networks of firms in a world of blurred – but existent – organizational boundaries.