ABSTRACT
In 1960, a young economist named Stephen Hymer wrote a seminal text analysing how companies approach Foreign Direct Investment. According to Hymer, multinational enterprises begin life under the tight control of a few key managers working out of a single location. The emphasis on international differentiation shifts power from the centre to the periphery, with group headquarters performing little more than simple resource allocation, performance control and strategic coordination missions. By 1983, observers like Theodore Levitt were proclaiming the convergence of many international markets, particularly ones dominated by branded consumer goods. Some of the key variables that multinational enterprises consider before deciding upon a given type of organisation are strategic in nature. Others have more to do with the sociology of organisations – which plays out in a particular way where international business is concerned. Conflict is inevitable and can be especially hard to manage in an international environment where employee values and notions of self-interest are particularly divergent.
