ABSTRACT
Probably the second-most researched topic by international business (IB) academics is the nature of the power relationships that a multinational enterprise (MNE) establishes, once it has developed an international presence, between its global (or potentially regional) headquarters and its local national subsidiaries. The chapter begins with a review of the seminal division-based analysis first formulated by Stephen Hymer, tracking the evolution of multinational structures through different functional, product and geographic phases as MNEs respond to their changing environments and/or develop and build up their product portfolios. After considering the link between practitioners’ global versus local orientations and the structures that they put in place, the chapter goes on to address more recent efforts to overcome the imperfections in both these emphases through the development of compromise hybrid matrix organisations rooted in transnational mindsets. Its final section applies core principles of organisational sociology (centralisation, specialisation, coordination, control and learning) to decision-making within a specifically multinational environment with special attention paid throughout the chapter to the tensions that can arise when strategic business units (SBUs) interact with one another up and down a company’s global value chain.
