MARKETING IN THE 21STCENTURY Changes in the Theory of I nterorganizational Relations Marketing: Toward a Network Paradigm Ravi S. Achrol The George Washington University The marketing environment in the 21st century promises to be knowledge rich and very turbulent. The classic, vertically integrated, multidivisional organization, so suc- cessful in the 20th century, is unlikely to survive in such an environment. The evidence indicates it will be replaced by new forms of network organization consisting of large numbers of functionally specialized firms tied together in cooperative exchange relationships. This article explores the characteristics of four types of network organization that may represent prototypes of the dominant organiza- tions of the next century. These include the internal market network, the vertical market network, the intermarket net- work, and the opportunity network. The economic ration- ale and the types of coordination and control mechanisms driving network organizations are very distinct from those studied under the current exchange or dyadic paradigm. This article analyses the kinds of changes involved in key variables and their meanings in moving from a dyadic view of exchange to a network view. It is an honor to have been asked to write the inaugural article in the "Marketing in the 21st Century" series, an exciting innovation David Cravens has created for the Journal of the Academy of Marketing Science. Volume 25, No. 1, pages 56-71. Copyright 9 1997 by Academy of Marketing Science. Journal of the Academy of Marketing Science. It is an honor I doubt I deserve, and it certainly made me no more sanguine to learn that my feeble efforts to gaze into the future would receive the scrutiny of commentaries by such renowned scholars as Charles Snow and Orville Walker, Jr. The reassuring thought is that their vision will compen- sate for my prognostic inadequacies. In the risky business of futuristics, it is safest to start with what we already know. In the accompanying article, Charles Snow, one of the pioneers in studying network organizational concepts, describes this era as the age of the network. In marketing, the term most often used in describ- ing the emerging environment is relationship marketing (the special issue of the Journal of the Academy of Mar- keting Science, Fall 1995, on the subject is surely destined to become a classic). A key premise of this article is that there is a fundamental, even inalienable, nexus between network and relationship concepts and processes. I would go as far as saying one cannot exist over a significant period of time without the other. Let us briefly consider the genesis of the two. Networks have risen to prominence due to industrial restructuring. Large-scale downsizing, vertical disaggre- gation and outsourcing, and elimination of layers of management have gutted the mighty multidivisional or- ganizations of the 20th century. Replacing them are leaner, more flexible firms focused on a core technology and process, laced in a network of strategic alliances and partnerships with suppliers, distributors, and competitors. The magnitude of the socioeconomic change that network organization portends may be as great as the Industrial