ABSTRACT

Conventionally scholars consider matrix structures more advantageous than simpler structures, because the matrix structures combine the information processing capacities of multiple hierarchies (Egelhoff 1991; Wolf and Egelhoff 2002). The present chapter probes this idea and suggests that matrix structures are not multiple hierarchies, as is often supposed. Consistent with this insight, matrix structures are found to have only a limited advantage over simpler structures in internationalization, the extent to which a firm depends on foreign markets for customers, the factors of production, and the capacity to create value (Sanders and Carpenter 1998). For multinational corporations (MNC), internationalization involves making sales in foreign countries, manufacturing in foreign countries, and transferring products between the parent country and foreign subsidiaries (Elango and Pattnaik 2007; Stopford and Wells 1972). In this chapter, we examine the view of a matrix being a multi-hierarchical structure and propose a new model to estimate the advantages possessed by matrix structures over simpler structures.