Horses for courses: organizational forms of multinational corporations – Sumantra Ghoshal, Nitin
Nohria
2 decades ago form of organization dependent on environment/ complexity
For managers guidelines available in ‘stages model’ (Stopford & Wells)
o 2 dimensions on complexity:
Nr of products sold internationally
Importance of international sales to company
when both are high = global matrix
Now we developed far more elaborate understanding of organizations
Stages model is only partial representation of worldwide organization
C. Bartlett: organizations have an anatomy (formal structure), but they also have a
physiology (core management processes) and a psychology (mindset of managers)
o Don’t just look at the anatomy but also physiology & psychology
There is not a mechanistic view; you should recognize the flow, multidimensional, and
changing nature of both environment & organization
2 main points of this article:
1. Stages model is not completely wrong; managers need simple organizational models as
starting point and academics need them to build theory. Therefore the proposed model is
also a bit simplistic
2. Flexibility is important, but fit as well. A company can be too simple if its operating in a
complex environment, but it can also be too complex if its operating in a simple environment
Research:
- 66 MNCs in 10 prespecified countries
- Mailed questionnaire survey completed by senior headquarter manager responsible for
international operations
- Assign values 1 (low) to 5 (high)
- 2 indicators to measure national responsiveness:
o Extent of government regulations
o Advertising intensity
- 3 indicators to measure company performance:
o Average annual return on net assets
o Average revenue growth
o Average annual growth in return on net assets
- Only complete data of 41/66 companies
Forces for national responsiveness = contingencies that can be found in every environment
Forces for global integration = linkages across national boundaries that force subsidiaries to
coordinate activities
These dimensions not opposites, they are related but we consider them as separate
dimensions (so when 1 is weak, the other is not perse weak)
All possible combinations are possible
Nohria
2 decades ago form of organization dependent on environment/ complexity
For managers guidelines available in ‘stages model’ (Stopford & Wells)
o 2 dimensions on complexity:
Nr of products sold internationally
Importance of international sales to company
when both are high = global matrix
Now we developed far more elaborate understanding of organizations
Stages model is only partial representation of worldwide organization
C. Bartlett: organizations have an anatomy (formal structure), but they also have a
physiology (core management processes) and a psychology (mindset of managers)
o Don’t just look at the anatomy but also physiology & psychology
There is not a mechanistic view; you should recognize the flow, multidimensional, and
changing nature of both environment & organization
2 main points of this article:
1. Stages model is not completely wrong; managers need simple organizational models as
starting point and academics need them to build theory. Therefore the proposed model is
also a bit simplistic
2. Flexibility is important, but fit as well. A company can be too simple if its operating in a
complex environment, but it can also be too complex if its operating in a simple environment
Research:
- 66 MNCs in 10 prespecified countries
- Mailed questionnaire survey completed by senior headquarter manager responsible for
international operations
- Assign values 1 (low) to 5 (high)
- 2 indicators to measure national responsiveness:
o Extent of government regulations
o Advertising intensity
- 3 indicators to measure company performance:
o Average annual return on net assets
o Average revenue growth
o Average annual growth in return on net assets
- Only complete data of 41/66 companies
Forces for national responsiveness = contingencies that can be found in every environment
Forces for global integration = linkages across national boundaries that force subsidiaries to
coordinate activities
These dimensions not opposites, they are related but we consider them as separate
dimensions (so when 1 is weak, the other is not perse weak)
All possible combinations are possible
