Geography Reference
In-Depth Information
MNE HQ
L A1
L A2
L B1
L B2
L B3
L C1
L C2
Figure 3.25
Heterarchical decision-making structure
well as directly to the parent headquarters in the case of L A2 . As we can see
from both the strength and direction of the arrows in FigureĀ 3.24, in this
case the decision-making structure does not imply any specific hierarchical
order between second and third tier affiliates.
As also highlighted in Chapter 2, 5 capabilities and competencies created
in one location can be used in another, so that there may be a multi-
directional flow of inputs, resources, knowledge and products between
relatively autonomous subsidiaries. In order to realize these advantages,
the 'heterarchical' MNE (Hedlund 1986) has to adopt more sophisticated
means of coordination so as to continually maintain their local and global
advantage, and this centres on allowing the subsidiaries not only high
degrees of autonomy, but also a key role in reconnaissance, knowledge
gathering and learning. The resulting flat organizational structure is
depicted in Figure 3.25.
Figure 3.25 represents the case where all of the individual foreign
investment establishments are largely autonomous both with respect to
each other and also with respect to the parent establishment. This type
of organizational structure would be representative of a very flat and
'democratic' decision-making structure in which the individual establish-
ments are largely responsible for their own decision-making, and compete
directly for resources emerging from the parent firm headquarters. We
can consider the purely hierarchical and the basically flat organizational
structures portrayed by Figures 3.23 and 3.25, respectively, as representing
opposite extremes of a spectrum of multinational and multiplant organi-
zational possibilities, with the quasi-hierarchical structured depicted in
Figure 3.24 as being situated somewhere between these two polar cases.
Moreover, linkages among subsidiaries and other network structures both
within and outside the firm (e.g., outsourcing and offshoring agreements,
alliances with competitors, and so on) can enrich these stylized representa-
tions, showing at the same time more hierarchical or networked structured
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