Splitting the rent: a strategy for managers to address instability in network organization governance

Purpose This study aims to develop an analytical model for generating relational rent within network organizations and to establish a comprehensive framework for the allocation of such rent. Design/methodology/approach The design stage involves the formulation of integrated computer-aided manufacturing definition (IDEF0) methodologies. The construction stage comprises the detailed elaboration of three distinct stages for rent allocation methods. Findings The “relational rent” perspective has illustrated that firms create value and distribute rent within network organizations by identifying partners with complementary resources, establishing high levels of robust informal trust, sharing knowledge and making customized investments tailored to their partners’ needs. Practical implications This innovative approach, for the first time, sheds light on the path for managers to secure the stability of network organizations by implementing multiple iterations of benefit distribution. However, it remains an area lacking standardized guidelines for decision-makers. Essentially, our paper pioneers the endeavor, marking the inaugural step toward ensuring network organization stability through profit distribution decisions. Additionally, it constitutes the initial attempt to bridge the gap between qualitative analysis and a quantitative profit distribution framework. Originality/value This rent allocation method unequivocally highlights the importance of efficient allocation within network organizations, emphasizing the streamlining of the allocation process and thus substantiating the rationality of the proposed method.