William G. Egelhoff

Using Technology as a Path to Subsidiary Development

Subsidiary development deals with the evolution and growth of foreign subsidiaries after they are established, or.after initial foreign direct investment has occurred (Birkinshaw and Hood, 1997). Unlike the initial foreign direct investment decision, which necessarily is a HQ decision, subsequent subsidiary development decisions are open to both HQand subsidiary influence. This chapter is primarily concerned with how subsidiaries attempt to influence their own development, and how they use technology as a path to further such development. Based on recent research in Irish subsidiaries, the view taken is that Irish subsidiaries are increasingly using technology to further subsidiary development within multinational corporations (MNCs).

STRATEGY AND STRUCTURE: EXTENDING THE THEORY AND INTEGRATING THE RESEARCH ON NATIONAL AND INTERNATIONAL FIRMS

In this paper, we seek to extend and integrate national and international strategy-structure theory. We use an information-processing approach to model the relationship between both national and international elements of strategy and macro structure. We test our hypotheses with data from 156 German firms. The inclusion of new elements of strategy (type of competitive strategy, degree of internationalization, and type of international strategy) produces a model that is superior to existing models in explaining the newer and more complex forms of strategy and structure.

Why MNCs tend to concentrate their activities in their home region

Purpose – The current paper seeks to analyze to what degree theories from different fields of social science are able to explain the home‐region orientation of MNCs. This is necessary since there has been only a relatively narrow, economics‐oriented explanation for such an orientation.Design/methodology/approach – The analysis is based on a thorough review of the literature that refers to a MNCs home‐region orientation and on different theories from the social sciences.Findings – The paper shows that several theories from economics, psychology, and sociology are able to explain an MNCs home‐region orientation.Research limitations/implications – The paper contributes to the development of a more multi‐faceted explanation of why MNCs generally prefer a home‐region orientation. The paper derives propositions that are consistent with each theory. These propositions can be tested empirically in subsequent research studies.Originality/value – The paper discusses a number of different theories and streams of r...

Organizational equilibrium and organizational change: two different perspectives of the multinational enterprise

This article contrasts traditional models of MNE organizational design against newer models, represented by transnationalism and heterarchy. The important characteristics are fundamentally different. Traditional models tend to be models of equilibrium, while the newer models are largely models of change. With the intent of reconciling the two theories, it is argued that the new change-oriented models are most applicable at the micro levels of MNEs, while traditional equilibrium models are more applicable at the macro levels.

Strategy, size of firm, and the use of technical alliances: An explanatory study

Abstract This paper describes an explanatory study of business strategy, size of firm, and the use of technical alliances in a sample of 52 semiconductor firms. The study seeks to view and understand technical alliances not in terms of when a firm chooses to engage in a particular kind of technical alliance, as much of the literature does, but in terms of the magnitude and importance of technical alliances in a firms strategy and the factors that determine this. The use of technical alliances is pervasive across Porters generic strategies and across emerging and mature product and process technologies. Both nonusers and firms spending the highest percentage of their R & D budgets on technical alliances tend to have strategies emphasizing technically unique products. Spending on consortia research varies significantly by size of firm, with small firms spending the lowest percentage of their R & D budgets on consortia research. The data suggest that firms may still be experimenting with technical alliances and that present usage patterns may not be stable. Hypotheses aredeveloped and directions for future research are proposed.

Limitations of the network organization in MNCs

Purpose – The purpose of this conceptual chapter is to discuss the limitations of the network organization in multinational corporations (MNCs). Since many IB/IM publications concentrate on the advantages of this organizational form, the focus of the chapter is on identifying the limitations that MNCs need to be aware of when they use network organizations. Methodology – The analysis is based on a sound review of the literature that refers to the network organization in general and its application in MNCs. Findings – The chapter shows that MNCs present a context that can aggravate the problems of a network organization. Four types of problems are identified: (1) knowledge transfer between MNCs’ subunits, (2) trust-building and corporate culture within MNCs, (3) subsidiary development and subsidiary managers’ stress, and (4) additional problems of a more general nature. Practical implications – As a result of these problems, it is expected that the formal, hierarchical structure will remain an important organizational instrument for MNCs. The chapter specifies in which ways the formal organizational structure can help to reduce the limitations of the network organization. Finally, the chapter argues that, among the formal organizational models, the matrix structure should be considered more intensively in the future. Originality/value of chapter – Since existing discussion of the network organization in MNCs tends to ignore the limitations and downsides of this organizational form, the chapter contributes to a more balanced understanding of the network organization.

Network or Matrix? How Information-Processing Theory Can Help MNCs Answer This Question

This chapter discusses the network organization and the matrix structure as alternative ways to organize MNCs. This discussion is based on information-processing theory which facilitates specifying the coordinating characteristics of organizational forms. Information processing in a network organization is quite different from that occurring in a matrix structure. Given this difference in information-processing capacities, it is argued that the network organization and the matrix structure fit different strategic contexts. Therefore, a final section specifies the contextual conditions under which the network organization or the matrix structure is most appropriate.

Designing Matrix Structures to Fit MNC Strategy

This chapter uses a similar information-processing logic to hypothesize fits between the individual dimensions of a matrix and elements of MNC strategy. The hypotheses are empirically tested with a sample of 57 matrix structure firms. The testing both confirms the overall information-processing logic underlying the theory and helps to refine and extend that theory in a number of areas that are unique to matrix structures. These include (1) the combination of the functional division and product division dimensions in a matrix, (2) the multiple roles of a geographical region dimension in a matrix, and (3) the still missing element of strategy that is required to uniquely define a three-way matrix structure.

The Role of Headquarters in the Contemporary MNC: A Contingency Model

Abstract The role of HQ in the contemporary MNC has recently received a good deal of research attention. This article argues that the contemporary MNC requires an organizational model that can embrace different perspectives of the HQ role. The same HQ must at times hierarchically lead the firm and at other times assume a more passive, facilitative role that allows direct interaction and decision making among the subunits to coordinate interdependency within the firm. To achieve this integration, the article proposes a contingency model that specifies when the HQ should assume a hierarchical role and when it should assume a facilitative role.

Understanding the Causes of Conflict in Matrix Structure Firms

While conflict is generally regarded as a common characteristic of matrix structures, empirical investigation of this issue has largely been limited to clinical research and case studies. This chapter reports on a survey study of conflict in matrix and elementary structure MNCs, which supports the use of statistical analysis. The research shows that conflict may be influenced by the structural configuration of a matrix structure. Structures which matrix a product division dimension with a geographical region dimension tend to have significantly higher levels of conflict than structures which matrix a functional division dimension with either a product division dimension or a geographical region dimension. The chapter discusses what this may be saying about the causes of conflict in matrix structures.