ORGANIZATIONAL DYNAMICS

Organizational Dynamics

Organizational Dynamics

Introduction

Global strategies are most frequently analyzed using the global integration-local responsiveness (I-R) paradigm (Doz; Doz; Prahalad and Prahalad). A number of studies have extended various aspects of this framework including structural determinants (Birkinshaw; Kobrin; Porter and Yip), operational flexibility (Bartlett and Kogut), subsidiary mandates and initiatives (Birkinshaw; Birkinshaw and Roth, K. and Morrison, A.J., 1992. Implementing global strategy: characteristics of global subsidiary mandates. J. Int. Bus. Stud. 23 4, pp. 715-736.Roth) and strategic groups (Johnson; Jarillo; Roth and Taggart). The I-R framework and these subsequent studies commonly assume that integration and responsiveness are primarily determined by environmental forces. 1 Pressures for integration include environmental and industrial forces that necessitate worldwide business resource deployment and global integration of dispersed businesses across national boundaries (Ghoshal; Prahalad; Roth and Yip). Pressures for local responsiveness are environmental and industrial forces that necessitate local context-sensitive strategic decision-making and quick responses to each local market or industrial setting (Bartlett; Doz and Prahalad).

Compared with the above line of research, an empirical analysis of organizational dynamics in relation to global integration is inadequate. This is an important issue because an MNE's ability to globally expand and succeed is constrained by administrative heritage, that is, organizational capability and internal infrastructure (Bartlett and Ghoshal, 1988). Such a heritage, together with the strategic goals and environmental factors, jointly shape the simultaneous balance between global coordination and national flexibility (Bartlett and Ghoshal, 1989). I-R imperatives are thus influenced by organizational dynamics in addition to environmental and industrial forces. This study suggests that the optimal level of overall integration, as perceived by MNE subsidiary managers in a dynamic foreign environment, is affected by internally differentiated dynamic corporate capabilities, organizational infrastructure and strategic needs. These organizational dynamics explain global integration heterogeneity among different businesses confronting similar contextual contingencies.

Review of the Topic

From the theoretical viewpoint, previous studies often use the information processing theory to underpin their propositions and analyses. From this theoretical perspective, different environments impose varying information costs in scanning, analyzing and interpreting environmental conditions as well as in interacting, responding and changing such environmental conditions (Hannan and Freeman, 1989). As a result, MNEs are likely to maintain different global integrations and employ different global strategies when they face different global environments (Yip, 1995). The present study extends this view by including the resource-based theory in an illustration of how global integration is influenced by organizational dynamics such as strategic capabilities and administrative heritages. As a critical component of global strategy, cross-border integration is shaped by an MNE's existing resources as well as the firm's needs for developing new resources. Resource-based view explains that MNEs in the same environment are still likely to use different strategies because of idiosyncratic resources and capabilities. This notion has been virtually missing in previous studies.

From the practical viewpoint, organizational dynamics are becoming more critical than ever before to the coordination of geographically dispersed businesses and the achievement of strategic benefits from integration. This is because the competitive environment is increasingly globalized, which more vigorously ...