General Managers Role in Balancing Subsidiary Between Internal Competition and Knowledge Sharing

TL;DR

This paper examines how general managers in multinational corporations balance internal competition and knowledge sharing to adapt to a complex, multi-dimensional organizational environment, emphasizing the importance of subsidiary autonomy.

Contribution

It introduces a new perspective on MNC organizational structure, highlighting the role of general managers in managing internal markets and subsidiary autonomy amidst increasing complexity.

Findings

MNCs are multi-dimensional with overlapping structures.

Subsidiary autonomy influences initiative-taking behavior.

Effective management of internal competition and knowledge sharing is crucial.

Abstract

In our work we saw that during the last decades the environment that the MNCs operate in has changed becoming more volatile and less pacedly growing. In this environment the MNCs themselves have become more complex and also flexible. We found that MNCs are essentially three dimensional, that is, they organize around product, functional and geographical dimensions and exhibit characteristics that having a common origin can be applied along any one dimension. Therefore we depicted MNCs as having a divergent, partially overlapping structural map. On that map there can, for instance, be functionally oriented Centers Of Excellence, product dimension World Product Mandates, and for capturing synergy of a big set of operations country dimension based arrangements. Analyzing the development of organizational aspects of MNC theories we saw different bodies of work pointing to a similar direction. We followed developments of concepts Heterarchy, Transnational (and the related Individualized Corporation), works of interorganizational theories school (the multicentered MNC), works considering autonomous strategic decisions, and works originating from subsidiary (host) country research. In addition to the structural developments mentioned earlier these works also point to a need to empower the frontline units. Outlining our research problem the conceptualization of MNCs as operating (competitive) internal markets was shown to rely on entrepreneurial, initiative taking behavior and result in the development of the subsidiary. We classified the subsidiaries first selecting operations substantial enough and then differentiating them based on the autonomy level, as it has implications for the types of initiatives taken.