Network governance is "interfirm coordination that is characterized by organic or informal social system, in contrast to bureaucratic structures within firms and formal relationships between them.
Network governance constitutes a "distinct form of coordinating economic activity" (Powell, 1990:301) which contrasts and competes with markets and hierarchies.
[2] Network governance involves a select, persistent, and structured set of autonomous firms (as well as nonprofit agencies) engaged in creating products or services based on implicit and open-ended contracts adapt to environmental contingencies and to coordinate and safeguard ex-changes.
On the one hand, the efficiency is enhanced through distributed knowledge acquisition and decentralised problem-solving; on the other, the effectiveness is improved through the emergence of collective solutions to global problems in different self-regulated sectors of activity.
Beyond that, it allows the constitution and piloting of internal teams and external partners as well as the setting up of a control system enabling to validate the performance of the whole.
Some doubt its ability to adequately perform as a democratic governance structure while others view it as phenomenon that promotes efficient and effective delivery of public goods and services.
All participating parties of the government must adhere to specific guidelines in order to cultivate a fair and even playing field that is both beneficial and just to the population it affects.
[22] Prominent examples of such networks that have been instrumental in forming successful working arrangements are the World Commission on Dams, the Global Environmental Facility and the flexible mechanism of the Kyoto Protocol.
[23] Another ongoing effort is the United Nations Global Compact, which combines multiple stakeholders in a trilateral construction including representatives from governments, private sector and the NGO community.
[24]: 6 One main reason for the proliferation of network approaches in environmental governance is their potential to integrate and make available different sources of knowledge and competences and to encourage individual and collective learning.
Most notably, these transnational networks made it possible to avoid the institutional apathy that is typically found in political settings with many actors of conflicting interests, especially on a global level.
[2] One particular form of networks important to governance problems is epistemic communities in which actors share the same basic casual beliefs and normative values.
In these situations, network institutions can create a synergy between different competences and sources of knowledge allowing dealing with complex and interlined problems.
[28] Network governance, in the form of NGOs, is effectively bringing to light "bad practices" by corporations, as well as highlighting those actively working to reduce their carbon footprints.