Where Do Policy Networks Come From?

“Where do inter-organizational Networks come from?” asked Gulati and Gargiulo in an article that appeared in the American Journal of Sociology in 1999; the authors were trying to explain the formation of strategic alliances between business organizations. Their central message was that the formation of strategic alliances results from a longitudinal dynamic in which action and structure are closely intertwined. The structure of interorganizational relations is understood as a macro phenomenon emerging out of conscious micro decisions. These decisions usually have utilitarian motives (to gain access to resources). While the results of the research on policy networks presented here confirm that the development of governance systems is based on an interplay of structure and agency, it is argued that it is especially institutional factors (not only utilitarian motives) that let actors in policy networks establish multiple (horizontal) linkages. These theoretical arguments will be illustrated by data from a study on privatization networks in East Germany during the economic transformation between 1990 and 1994. The organizational center of this transformation was the privatization agency, Treu-handanstalt. The policy that Treuhandanstalt implemented was the fastprivatization of East German enterprises. Very often, however, these East German enterprises were in rather poor shape and according to strict economic standards they would have to be closed down. That, however, was politically and socially undesirable, especially in the case of large and symbolically important companies and given the negative overall development. As a conse-id quence, intensive negotiations evolved about the future of these large companies among a multitude of public and private East and West German actors. These actors determined the outcomes, which can be qualified as public policy because the decisions affected the social, economic, andultimately the political conditions of whole T regions. In this article I will use quantitative analysis to describe and analyze the policy networks that evolved during the privatization of two prominent industries, shipbuilding and steel. I will then explore the factors that contributed to the development of these Policy Networks specific governance structures. Five groups of factors can explain the development of these structures: technical necessities, comparative advantages of network forms of governance in specific situations, power and interest, contextual factors, and formal and informal institutions. I will argue that institutional factors especially played a vital role in the actors' decisions to establish multiple ties and engage in multilateral negotiations. This argument is supported by data on formal institutional structures as well as informal norms and values (cognitive assessments and attitudes of the key representatives of the corporate actors