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

Since consumer needs, technologies, political forces, and
competitive strategies are in constant flux, any company
with a static view of coordination needs, or an inflexible
approach to problems will face significant difficulties,
not unlike those of ITT.
The very nature of the transnation-
al organization dramatically
expands the number of issues that
have to be integrated
Most companies tend to concentrate on one primary
mechanism for coordination and control – one »way of
doing things.« At ITT, for example, it was »the sys-
tem« – Harold Geneen’s sophisticated control mecha-
nisms, which were highly formalized and institutional-
ized throughout the organization. At Kao, coordination
and control were achieved primarily through centralization
of decision making; corporate management was
directly involved in most strategic and even operation-
al tasks. Unilever relied primarily on socialization –
an intricate process of instilling a common culture and
a shared perspective in all managers – to hold the organization
together and integrate managers responsible
for different areas and functions. But no single mechanism
can deal with the complex coordination needs
that arise in worldwide companies.
The transnational requires highly flexible coordination
processes to cope with both short-term shifts in specific
role assignments and long-term realignments of
basic responsibilities and reporting relationships. Furthermore,
it must be capable of modifying roles and relationships
on a decision-by-decision basis. The company
must develop multiple means of coordination and allocate
its scarce coordinating resources on the basis of a
careful assessment of specific task demands. 17
The very nature of the transnational organization
dramatically expands the number of issues that have to
be integrated. But three flows are crucial. First, the company
has to coordinate the flow of parts, components,
and finished goods. Second, it must manage the flow of
funds, skills, and other scarce resources among units.
Third, it must link the flow of intelligence, ideas, and
........
knowledge that are central to its innovation and learning
capabilities.
The transnational company builds a portfolio of coor-
dinating processes that includes centralization (substantive
decision making by senior management), formalization
(institutionalization of systems and procedures to guide
choices), and socialization (building a context of common
purpose, values, and perspectives among managers to influence
their judgments). 18 It uses the entire portfolio,
rather than just one process, to achieve a richer and more
differentiated kind of coordination. The flow of parts,
components, and products is often managed through systems;
the flow of resources is usually directed through
more substantive involvement of top management; and
the flow of information and knowledge may be facili-
tated primarily through mechanisms that lead to norma-
tive integration of managers and to a common culture
and unifying vision. Similarly, different parts of the
organization may be managed differently: some businesses,
functions, and areas may require more direction
and centralization, while formalization or socialization
may be the primary integrative process in others.
Chapter 9 will examine how the transnational develops
and deploys its diverse coordination tools. We will
draw on the experiences of Philips, Unilever, and Ericsson
to illustrate the process of differentiation in coordinative
processes and to explain the choice of different
tools for different tasks. We shall also describe how
such companies use both the visible hand of managed
integration and the invisible hand of coordination
through internal market mechanisms to build powerful
centripetal forces and counterbalance the pressures of
fragmentation that are unavoidable in the transnational
mode of operation. 19
Unifying the Organization Through Vision and Cooption
Transnational management processes differ from those
of more traditional organizations in two significant
ways. First, the reliance on control tends to erode as unidimensional
systems and practices are supplemented by
new coordination mechanisms. Second, the processes are
managed in a differentiated fashion, not only from issue
to issue, but across businesses and organizational units.
Internal differentiation in organizational roles and
management processes can lead to severe conflict within
The Transnational 30 Revue für postheroisches Management / Heft 5