What distinguishes a network structure from other business structures?

A network structure is primarily characterized by its reliance on technology to link with external suppliers, partners, and stakeholders to achieve business objectives. This approach allows organizations to be more flexible and responsive to market demands by leveraging external resources and capabilities rather than relying solely on internal assets. By connecting with a wide array of outside suppliers through information technology, businesses can optimize their operations, reduce costs, and increase innovation through collaboration.

This distinguishes a network structure from other organizational forms, which might emphasize hierarchical or functional arrangements, or rely on internal teams to manage tasks. Traditional structures, such as functional or divisional, often limit the organization’s interaction with external entities, whereas a network structure actively seeks to integrate these relationships into the core business processes.