Suchergebnisse

This paper examines how multinational corporations (MNCs) selectively assign supervisory responsibilities to units in countries with varying levels of institutional quality. Arbitraging across institutional contexts is an important function of MNCs, but it also creates coordination challenges. The choice of organization structure, such as the differential assignment of supervisory responsibilities, is an important tool for managing these coordination challenges. Using data on the business activities and supervision relationships within U.S. multinational manufacturers in 1996–2008, I find that frontline subsidiaries in countries with weaker institutions are more likely to be supervised by foreign rather than domestic supervisory units. Foreign supervision is even more likely when subsidiaries in weak-institution countries conduct activities that are more central to or interdependent with their parents' global operations. These findings confirm that MNCs use differential supervision to enhance global coordination. The paper highlights one of the most unique features of MNCs: a multinational hierarchy that resides within a firm's boundary but across national borders. It also connects MNCs' hierarchical structure with institutional imperfections that give rise to the emergence of the firm in the first place.

This paper studies the impact of task complexity and decomposability on the degree of organizational divisionalization and hierarchy within firms. Drawing upon the team theory and modularity literature, it argues that the degree of divisionalization is predicated not only on the extent of interdependence (complexity) among tasks but also on the extent to which those interdependent relationships are decomposable. As such, the feasibility and benefits of modularization in organizational design may be overstated when the underlying tasks are not decomposable. In addition, this paper argues that organizational hierarchy serves to mitigate the tension between complexity and decomposability by facilitating a higher degree of divisionalization. These arguments are tested using data on the business activities and organization structures of U.S. equipment manufacturers in 1993–2003. Results show that divisionalization increases with task complexity, suggesting that complex task systems encourage more division of managerial responsibilities. However, divisionalization decreases as task systems become less decomposable. Meanwhile, organizational hierarchy increases with task complexity, and it increases as task systems become less decomposable. These findings highlight the constraints firms face in designing modular organization structures and the role of hierarchy in coordinating complex task systems that are not fully decomposable.