1 Governance Problems in Networks: Cases of Franchising Chains and Co-operative Federations

A variety of inter-organizational networks have emerged between hierarchy and market. They are either internal networks in the same industries such as franchising and co-operatives, or external networks among organizations operating in the supply chain such as alliances. In the distributive trade, a strong tendency towards hierarchal corporate chains is observed in many places but there still exist successful franchise chains and co-operative federations (consortiums). These networks are not necessarily regulated by the top-down authority and require specific coordination mechanism to solve inherent governance problems. This paper describes how networks work in the Japanese retail chains and examines governance problems