K a trin G la tz e l E d ito ria l

As discussed in Chapter 2, global competitiveness increas-
ingly requires the simultaneous optimization of scale,
scope, and factor cost economies, along with the flexi-
bility to cope with unforeseen changes in exchange
rates, tastes, and technologies. The transnational’s com-
plex configuration of organizational assets and capabil-
ities more closely approximates this optimization than
the traditional organization’s centralization or decen-
tralization.
In Chapter 3, we described three organizational models
– the centralized hub, the decentralized federation,
and the coordinated federation – as stylized representations
of the configurations typically associated with
global, multinational, and international companies. The
distribution of the transnational’s assets and resources is
best represented as an integrated network. This term emphasizes
the very significant flows of components, products,
resources, people, and information that must be
managed in the transnational. 5 Beyond the rationalization
of physical facilities, the company must integrate
tasks and perspectives; rich and complex communica-
tion linkages, work interdependencies, and formal and
informal systems are the true hallmarks of the transnational.
6 In Chapter 5, we shall illustrate this organizational
model and suggest how such a configuration can
be built and managed.
Differentiated Organizational Roles and Responsibilities
In the global organization, the cost and quality advantages
of global efficiency are expected to provide sufficient
value that customers will eschew idiosyncratic
differences in preferences and accept standard products.
In the multinational organization, it is assumed that tai-
loring products and strategies to individual national
markets will offset the higher costs that may result.
The international organization settles on a middle path,
allowing local operations to choose from a menu of products
and processes, perhaps modifying them in minor
ways to suit local conditions.
All these organizations, however, make a common assumption:
the subsidiary’s role is local, limited to activ-
ities within its own environment; the headquarters plays
a global role, deciding on issues that affect the company’s
operations in multiple environments.
We argued in Chapter 2 that in transnational industries
the need for responsiveness is complex. Customers
demand differentiated products, but with the same high
quality and low cost as standard global products. In such
an environment, the local-for-local responsiveness of the
multinational organization is decreasingly viable economically,
while the center-for-global insensitivity of the
global organization is increasingly vulnerable to more
nationally responsive competitors.
The challenge of responsiveness is exacerbated by the
unpredictable and frequent changes in economic, technological,
political, and social environments. The real
challenge is not to be responsive today, but to build the
capability to remain responsive as tastes, technologies,
regulations, exchange rates, and relative prices change.
Flexibility in sourcing, pricing, product design, and over-
all strategies is now the key for maintaining »requisite
differentiation.« 7 Both the centralized and the
dispersed organizational forms are too inflexible to meet
the challenge.
The transnational develops responsiveness by building
multinational flexibility in many ways. It designs
some slack into its production facilities and adopts flexible
automation to respond to unforeseen shifts in de-
mand or in supply. It creates products with modular
structures so that features and styling can be differentiated
by market while basic components and core design
are standardized. Most important, the transnational
builds systematic differentiation of roles and responsibilities
into different parts of its organization. 8
Recognizing that differentiation is not necessary in
all markets, only in some, the transnational varies the
roles of its national operations. In some markets, national
subsidiaries adopt standard global products, and their
3 This approach to configuration of assets and resources is consistent
with work of Kogut (1985a) and Porter (1986) who differentiated
the activities of the MNC into different value-generating
activities – the so-called value-added chain – and proposed
different strategic logics for the configuration of each of the
activities.
4 The distinction among pooled, sequential, and reciprocal interdependencies
has been made by Thompson (1967). For each type
of interdependencies he proposed an appropriate coordination
mechanism: rules, plans, and mutual adjustment, respectively.
5 For an excellent conceptualization of networks as a distinctive
organizational form, see Aldrich and Whetten (1981).
6 Our use of »integrated« parallels Kanter’s (1983) description of
the »integrative« organization.
7 This conception of requisite differentiation follows from Ashby’s
(1956) law of requisite variety: »only variety can kill variety.«
8 The theoretical underpinnings of our conception of differentiation
may be traced to Blau and Schoenherr (1971), Lawrence
and Lorsch (1967), and Lawrence and Dyer (1983).
The Transnational 25 Revue für postheroisches Management / Heft 5