Mike Geppert

The Social Construction of Contextual Rationalities in MNCs: An Anglo-German Comparison of Subsidiary Choice*

This paper seeks to examine empirically the extent to which actors in subsidiaries of multinational companies (MNCs) are able to exercise some choice in the face of global pressures from the MNC headquarters (HQ). We argue that managerial practices in MNCs are not the result of a simple imposition of a global or a MNC organizational rationality but are subject to an interactive process, where differing contextual rationalities come into play. Using data from MNC subsidiaries in Britain and Germany, the paper compares the power resources and strategic choices of subsidiary level actors and shows the ways in which they seek to influence global strategy implementation as it affects local work systems. We investigate the different abilities of German and British managers to shape global restructuring processes in their local organizational contexts and conclude that national contexts impact on both the formulation of parent company strategies via a home country rationality and on the implementation of global strategies via a host country rationality. There are greater national barriers to a MNC policy of convergence based on standardized products and processes in Germany than in the UK.

Subsidiary Integration as Identity Construction and Institution Building: A Political Sensemaking Approach

This paper develops a political sensemaking approach to the post-acquisition integration process, which directs attention to how powerful social actors construct the relationship between multinational enterprises (MNEs) and their multiple local contexts. This political, processual, and actor-centred perspective explores subsidiary integration as identity construction and institution building. The different characteristics that local and head office managers attribute to the subsidiary establish diverse interests in and political stances towards it and, through actions to resolve these differences, senior decision makers shape the subsidiarys strategic and structural location in the MNE. We illustrate this argumentation with reference to post-socialist acquisitions by Western multinationals, whose contrasting institutional and management experiences put the problem of multiple contexts and subsidiary integration into sharp relief. This approach complements mainstream international business research by attending directly to the neglected processual nature of subsidiary integration and examining different socio-political dynamics resulting from sensemaking and sensegiving interactions between key actors in the MNE.

Transnational institution building and the multinational corporation: An emerging field of research

Since the 1980s, the international business and management field has produced a large amount of analysis and research on the multinational corporation (MNC) as an organization. Particularly influential has been the work of Prahalad, Doz and Bartlett (see particularly Doz et al., 1981; Bartlett, 1986; Prahalad & Doz, 1987) who, drawing on contingency theory, developed the integration-responsiveness framework to depict the different environmental forces exerting conflicting demands on MNCs. This literature is concerned, for example, with how organizations respond to task-related demands by centralizing or decentralizing activities. However, the analysis of environmental forces is restricted to the task or technical environment and the effects it has on the structuring of organizations. In contrast to this by and large more strategy-oriented literature, MNCs have not received sustained attention from other organization theorists (see for exceptions, Rosenzweig & Singh, 1991; Morgan et al., 2001, 2005; Westney & Zaheer, 2001; Ghoshal & Westney, 2005). This is surprising; after all, it would seem that MNCs offer great potential for developing and testing organization theories (Evans, 1981) and research on the organizational aspects of MNCs could be enriched by the insights of organization theorists (Ghoshal & Westney, 2005). These arguments apply especially to the different strands of institutional theory which emphasize the relationships between organizations and their institutional environments, namely new institutionalism (Meyer & Rowan, 1977; Powell & DiMaggio, 1991; Scott,

Knowledge and learning in transnational ventures: an actor‐centred approach

The aim of this article is to develop the foundations of an actor‐centred, processual approach to examining the influence of cross‐border knowledge transfer and management learning on transnational institution building in post‐socialist countries. We argue that there is a need for more research to understand how key social actors go about (re)structuring, (re)defining and sharing knowledge within new international ventures. We contend that social actors can play a significant role in creating and structuring the “transnational social space” in which the new venture takes shape, exercising strategic choice that can mediate, adapt or even reject the apparently constraining effects of technical‐economic or cultural‐institutional factors. The role of social actors is conceptualized as a socio‐political sensemaking process, a perspective that would complement the current structuralist bias in the discussion about the emergence of transnational social space in international management research literature.

Institutional Influences on Manufacturing Organization in Multinational Corporations: The ‘Cherrypicking’ Approach

Research on the multinational corporation (MNC) is increasingly concerned with the alleged evolution of companies towards a more standardized and rationalized global organization. Only recently, this field has been informed by alternative approaches which generate a more differentiated picture and consider the influence of divergent national institutional contexts on the multinational organization. This paper makes a contribution to this debate from a comparative institutionalist perspective by focusing on manufacturing organization within MNCs. It argues that organization structures and processes in MNCs are sector specific and influenced by national institutional features of the home and host countries. Drawing on data from a specific industrial sector, it identifies the crucial role of home country and host country embeddedness in the (re)organization of manufacturing tasks and work systems. The key question is how actors shape the interaction of these institutional pressures and, hence, manufacturing approaches, location choices and work system designs. Research in British and German subsidiaries of three MNCs suggests that, particularly at subsidiary level, MNCs apply a ‘cherrypicking’ strategy of selected use of work system elements, shaped by the host country business system. It is shown that manufacturing strategies of MNCs originating from highly coordinated business systems are highly context specific and difficult (if not impossible) to transfer elsewhere. Moreover, ‘cherrypicking’ strategies in subsidiaries embedded in such contexts turned out to be highly problematic, especially when managers attempt to combine them with group-wide standardizing work systems.

Sensemaking and Politics in MNCs: AComparative Analysis of Vocabularies Within the Global Manufacturing Discourse in One Industrial Sector

This article compares sensemaking processes in multinational corporations (MNCs) situated in the same industrial sector. Our comparative analysis of three MNCs and their subsidiaries in Germany and the United Kingdom aims to shed light on the contextual dimension (institutions, culture, and politics) of the sensemaking process. First, I discuss ideologies related to the discourse about global restructuring of manufacturing. Second, I compare similarities and differences in vocabularies of the (multinational) organizations. Third, I compare cross-national vocabularies of work in German and U.K. subsidiaries. Finally I suggest a political approach of sensemaking referring to stories used to legitimize or delegitimize dominant ideologies about global manufacturing, established decision-premises within the MNC, and specific nationally entrenched work paradigms.

Managerial Risk-taking in International Acquisitions in the Brewery Industry: Institutional and Ownership Influences Compared

This paper deals with the role that institutional differences play in managerial risk‐taking when firms engage in international acquisitions. It is assumed that multinational corporations (MNCs) have different interests and capabilities when dealing with international acquisition, which in the authors’ view are significantly shaped by specific home country institutional influences. This study concerns the question of how different forms of ownership – concentrated (e.g. family and bank based) and dispersed (stock market based) – influence risk‐taking and managerial decision‐making in large international acquisitions. Comparing a total of 12 large acquisitions of four leading MNCs in the global brewery industry, the paper shows that mutually reinforcing influences of country of origin (coordinated vs liberal market economies) and ownership (family ownership vs stock market ownership) lead to different risk profiles and managerial risk‐taking with regard to international acquisitions.

Challenges for European management in a global context

This book provides cutting edge research and knowledge and an academic study of theimpact of globalization in different areas affecting management and how ...

Subsidiary staffing and initiative-taking in multinational corporations: A socio-political perspective

Purpose – This paper seeks to explore the personal motives of subsidiary CEOs in taking initiatives in multinational corporations. In essence, the paper proposes that subsidiary initiative‐taking is strongly driven by the socio‐political positioning of subsidiary CEOs, which consists of specific “social aspects” that account for the basic orientation that subsidiary CEOs maintain in initiative‐taking, as well as “political aspects” that affect the ability of subsidiary CEOs to strategize and the ways they do it in the highly politicized processes of initiative‐taking.Design/methodology/approach – The paper is based on four exploratory case studies undertaken in German subsidiaries in France. Applying a matched pair approach it compares two subsidiaries run by parent country nationals (PCNs) with two subsidiaries run by host country nationals (HCNs).Findings – The paper demonstrates that the nationality of the subsidiary CEO alone does not explain subsidiary CEOs initiative‐taking behaviour. Other factors ...

Politics and Power in the Multinational Corporation: Politics and power in the multinational corporation: an introduction

The current financial and economic crisis has negatively underlined the vital role of multinational corporations (MNCs) in our daily lives. The breakdown and crisis of flagship MNCs, such as Enron, WorldCom, Lehman Brothers, Toyota and General Motors, does not merely reveal the problems of corporate malfeasance and market dysfunction but also raises important questions, both for the public and the academic community, about the use and misuse of power by MNCs in the wider society, as well as the exercise of power by key actors within internationally operating firms. Given these and previous similar developments, it is surprising that questions about organizational power and politics have not had a more central role in the study of the MNC. Historically, research on the MNC was focused on studying the influence and changing role of headquarters (HQ) management (e.g. Stopford and Wells 1972; Vernon 1966), with, for example, Hymer (1970) actually predicting that more geographical dispersion of MNCs would lead to greater concentration of decision-making power at the center. As long as HQ management was seen in the driving seat, the role of lower level managers, e.g. in local subsidiaries, and of other employees was mainly reduced to adaptation either to centrally set strategies or to external environmental pressures. Later, studies on the “evolution” of the MNC stressed that MNCs can hardly be managed top-down, especially if “diversification” and internationalization are increasing, but they did not “dare” shed more light on power relations and organizational politics.