The ghost in the production machine: the laws of production networks
Authors: Mella Piero 
Published: November 2018

Purpose

Any kind of production flow is obtained not from individual production organizations but from a more or less widespread Production Network of interconnected production modules located in different places and times. All of these modules are, consciously or not, necessarily connected, interacting and cooperating in a coordinated way to combine and arrange, step by step, the factors, materials, components, manpower, machines and equipment to obtain flows of products’ final goods, in particular’ and to sell these where there is a demand for them. The purpose of this paper is to determine, in logical and formal terms, the minimum conditions that bring about the formation of production networks and to discover the laws that explain their dynamics over time.

Design/methodology/approach

At the global level, the continuous and accelerated economic progress of mankind is witnessed. There is an increase in the quantity and quality of satisfied and yet to be satisfied needs, of attained and yet to be attained aspirations. The increase in productivity and in quality has become unstoppable and appears to guide the other variables in the system. It is natural to ask who produces and governs these phenomena. It does indeed seem there is a Ghost in the “Production” machine whose invisible hand produces growing levels of productivity and quality, increases the quality and quantity of satisfied needs and aspirations and reduces the burden of work, thus producing increasingly higher levels of progress in the entire economic system. This conceptual framework gives a simple answer: there is nothing metaphysical about this evolution towards unstoppable and irreversible progress, and it is produced by the spontaneous genesis and activity of selfish nodes and governed by the rules and laws of the production networks.

Findings

The author has identified ten “rules of selfish behavior” on the part of the nodes, whose application necessarily and inevitably produces three evolutionary dynamic processes “which refer to the network as an entity” which the author has called the “rules of the production networks” to emphasize their cogency: continual expansion, elasticity-resiliency and continual improvement in performance. The cognitive and creative processes that characterize the nodes do not allow us to predict the actual evolution of production networks; nevertheless, if it is assumed that nodes “consciously or not” follow the 10 “rules of selfish behavior”, then several typical trends, or behavioural schema, can be deduced which the author has called as the “laws of networks”, to highlight their apparent inevitability and cogency.

Research limitations/implications

More than any other structure, Production Networks display Holland’s features and Arthur’s properties as their modules, viewed as autonomous entities with cognitive functions, represent a collectivity of agents that interact and exchange information with their environment to maintain over time their internal processes through adaptation, self-preservation, evolution and cognition, making individual and collective decisions as part of a network of micro behaviours.

Social implications

This new conception of production through production networks, which takes into account the “rules” and “laws” regulating their behaviour, also sheds new light on the development of networks and their natural tendency to become globalized.

Originality/value

Although the concept of a network is becoming more popular in economic and business studies, it is yet to see an interpretation of production as deriving exclusively from the actions of increasingly larger networks. This paper presents an integrated view of production that does not discard the notion that production is carried out by organizations and companies but introduces the broader concept of the integration among organizations, which must be interpreted as nodes of a broader network that produces the flows of all the components needed to obtain the flow of a specific product. This represents an innovative view that will help us in understanding the difficulties policymakers encounter in governing production and controlling the basic variables that characterize it, specifically productivity, quality, quantity, prices and value. This perspective also allows to derive rules and laws for the behaviour of production networks that appear to be cogent and unvarying over time.