The role of social heuristics in project-centred production networks: insights from the commercial construction industry

Abstract

Project production networks or PPNs are now the primary means for organizing in many industries including fashion design and manufacturing, moviemaking and construction projects. PPNs enable professionally and geographically distributed participants of a common project to bring their expertise and resources together to achieve an economically and technically superior product than a single firm could produce. PPNs also have benefits over purely market-based contracting relationships as participants often recombine to work on projects serially allowing knowledge and relationships to develop in ways that support production outcomes. The growth in the use of PPNs has led to a number of studies describing the structural characteristics and benefits of this organizing strategy as compared to firms and markets. Relatively little analysis has been done of the ways in which PPNs govern themselves, however. We report here on PPN governance in commercial construction focusing on the role that social heuristics as shared rules-of-thumb play in both aiding personal decision-making while also helping to govern network coordination across economic and social space. Through the use of the ‘default-design heuristic’, the ‘value-added function and flexibility heuristics’ and ‘the reputational heuristic’ commercial building practitioners both reduce coordination costs while simultaneously providing a justifiable foundation for their decisions in the high-stakes context of networked production and exchange relations.