Organizing Across Borders
WHAT THIS CHAPTER COVERS
This chapter focuses primarily on the organization of multinational enterprises (MNEs), which are firms comprising parent companies and foreign affiliates with operations in more than one country. They are both the product of globalization and one of its principal drivers. The chapter begins by examining globalization and the significance of MNEs. It then considers four main strategies that MNEs adopt for international expansion in the light of their requirements for global integration as against their need to be responsive to local situations. The four strategies are the multi-domestic, international, global, and transnational. Each of these strategies implies a different organizational configuration and approach to cross-border integration in terms of the balance between standardization and flexibility.
Despite these differences, their geographical spread and multi-level composition (headquarters and subsidiaries) mean that all MNEs to some degree face similar organizational challenges in regard to control, managing integrative processes, managing cultural diversity, and the cross-border transfer of knowledge and practices. Challenges such as these have encouraged both researchers and practicing MNE executives to propose new organizational forms. The last section of this chapter looks at the different case of internationalizing small and medium-sized enterprises (SMEs).