Multinational Corporation as an Interorganizational Network - Essay Example

JOURNAL ARTICLE REVIEW By Name Course Instructor Institution City/State Date Review of the Multinational Corporation as an Interorganizational Network Introduction Ghoshal and Bartlett (1990) study suggest theories that link certain characteristics of the multinational corporations, like configuration of resource as well as internal power distribution, to particular structural attributes of its peripheral network. Basically, a multinational corporation (MNC) is made up of a group of geographically disseminated and goal-incongruent corporations that consist of its head-quarters as well as the distinct national subsidiaries (Ghoshal & Bartlett, 1990, p.603). This unit can be considered as an interorganizational network that is entrenched in a peripheral network, which includes every other group like clients, contractors, supervisory bodies, and all that, with which the various multinational units have to network. Anchored in this conceptuality, Ghoshal and Bartlett employ interorganization hypothesis to build up a paradigm of the MNC as an in-house recognized interorganizational network. Latest studies have advocated that MNCs must be regarded as knowledge repositories, as well as a capabilities network. Therefore, Ghoshal and Bartlett posit that if the world espouses this opinion, then the organizations’ property is the resources, instead of unit assets. Besides, acknowledging the view of MNCs as a network of capabilities as well as resources means that the connection amongst entities in the units is a vital aspect in the knowledge transfer between such units. Such lines of reasoning have considerable effects for which hypothetical lenses must be employed to analyse activities of MNC. For this reason, the review paper seeks to critically analyse Ghoshal and Bartlett’s paper ” Multinational Corporation as an Interorganizational Network,” with regard to the arguments provided and their line of reasoning. The body Since the late 80s there has been a considerable academic interest in Multinational Corporation, but according to Ghoshal and Bartlett this interest has evolved for two decades now. An imperative factor of such evolution has been the transition in the research focus from outside the dyadic association of headquarters-subsidiary in MNCs, or a certain organisation decision to go global, to the management tasks of administering a network of instituted foreign subsidiaries. However, Ghoshal and Bartlett research focus orders novel hypothetical, theoretical, in addition to practical anchors. For instance, global competition analysis has by now adopted an array of novel theories like those of multipoint competition, multiplant production, as well as assessment of alternatives to examine the benefits and drawbacks of the MNC's geographic range of processes. For this reason, Ghoshal and Bartlett suggest a related implementation of interorganizational hypothesis for upcoming MNC-interrelated study; even though with a number of changes to reflect the ownership-established intraorganizational connections that subsist between the Multinational Corporation H.Q. as well as its distinct foreign subsidiaries. Ghoshal and Bartlett deem that when interorganizational hypothesis is correctly tailored, it can offer novel insights concerning a multifaceted and geographically disseminated organizational system such as the MNC. In this regard, Ghoshal and Bartlett’s key goal is to advocate a primary conceptualization concerning how the ideas as well as paraphernalia of interorganizational analysis can be used to conform to this somewhat distinct, but corresponding case. Summary Ghoshal and Bartlett suppose that a unit like any of such enormous MNCs can be more suitably formulated as an interorganizational grouping instead as a single group; in addition, helpful perceptions can be achieved on the in-house operations as well as structures of such units from the networks and sets of organisation concepts that are more universally employed for digging into interorganizational developments. Above all, Ghoshal and Bartlett believe on the network concept, both as an allegory and based on the analysis paraphernalia and methods it presents. According to Ghoshal and Bartlett network concept reflects on the intricacy as well as nature of the MNC and can offer a handy lens, which can be used to analyse such a unit. For this reason, they present a model that conceptualizes the MNC as an exchange relationships network in the midst of various organizational entities, which entails the H.Q. as well as the various foreign subsidiaries that are jointly implanted in what is termed as structured context (Ghoshal & Bartlett, 1990, p.604). By pursing other scholar’s line of reasoning, Ghoshal and Bartlett foresee this milieu as a peripheral network including every group like clients, contractors, supervisory bodies, as well as competitors with which the different MNC entities have to work together. The study key suggestion is that various characteristics of MNCs may be described by chosen characteristics of the peripheral network wherein it is entrenched and on which it relies for its continued existence; however, a warning note has to be fathomed at this level. Ghoshal and Bartlett talk about a number of the drawbacks pertaining to the current endeavour and recommend how such may be triumphed over through future theoretical and experiential study Ghoshal and Bartlett study can be viewed, as a result, as a primary endeavour to recognize the likelihood of developing a MNC hypothesis network, instead of as a thorough presentation of such a hypothesis. Even though the endeavour to officially use the interorganizational network point of view to the MNCs research is comparatively novel, it must as well be acknowledged that the theoretical basis for such a theory already subsists in the global literature about management. For instance, a plan for grouping MNCs as geocentric, polycentric, and ethnocentric organizations is evidently compatible with a theoretic view of the network. Correspondingly, based on previous studies such as the stylized paradigms of multinational corporation organizations and paradigm for formulating MNC strategy-structure patterns have all been unreservedly or unequivocally anchored in the MNC formulation of as interorganizational systems. Even though it reposes on this basis, Ghoshal and Bartlett’s study disagrees from such previous studies. A great deal of the presented hypothesis as well as greater part of interorganizational networks experiential examinations has concentrated on interorganizational categorisations that are not related to ownership connections. Prior to using any of the empirical findings or concepts from these previous studies to the MNCs analysis, Ghoshal and Bartlett posit that is first crucial to realize that the ownership connections that subsist in the multinational does not essentially prevent the connection of optional activities that are likely in the midst of the relating organizations. Critique I concur with Ghoshal and Bartlett’s that the conceptualization of interorganizational network can offer novel concepts like graph hierarchy or centrality, which seem to be hypothetically more suitable for such macrostructural comparisons in the midst of internally discerned and diverse organizational systems such as MNCs. Subsequently, offered with such heterogeneity, analysis of macro-structural single-handedly could be inadequate and must be balanced with analyses of micro-structural of such in-house disparities in order to develop almost absolute hypothetical comprehension of the manners wherein an MNC operates. For instance, in the differentiated MNC network, Ghoshal and Bartlett posit that there is no recognized macrostructure that “accommodates” every part of the corporation's heterogeneous settings. Still, it must select a recognized departmental structure and could somewhat randomly, select one that seems to be straightforward as well as compatible with its own management custom. The concept that the MNC can be well thought-out to be a mutually supporting units system with flows of artefacts, knowledge, and resources between them in various nations is not novel. Even though recognising that there are disparities in the foreign units' local state of affairs, I observed that just internal interdependence was talked about. Ghoshal and Bartlett (1990) have enlightened various characteristics of a MNC based on the networks’ attributes wherein the different subsidiaries are entrenched through a perspective of resource reliance; therefore, for the subsidiaries to operate, they must rely on certain resources. In Ghoshal and Bartlett’s literature with regard to resource reliance, they claim that the settings accompanied by their resources can be defined as resource spheres instead of certain relationships. On the contrary, network hypothesis discerns that vital resources are related to certain exchange correlations of the subsidiaries with buyers, contractors as well as other equivalents. Therefore, Ghoshal and Bartlett’s network hypothesis provides a more accurate explanation of the vital resources and acknowledges that for all units, the principal resource is the network of particular correlations wherein it is embedded. However, Ghoshal and Bartlett paper failed to widen the view of the subsidiaries’ pertinent network to take account of external foils, like contractors, buyers and other equals who are outer the legal limits of the MNC, but are however interconnected with it by means of their correlations with the subsidiaries. A setting of subsidiary is at the outset its cluster of direct exchange relationships amid other foils as well as indirect exchange relationships, which relate to the direct ones. One method of determining the level of embeddedness in such a cluster is to figure the number of links with regard to probable links, which time and again is acknowledged as density. Acknowledging the MNC as an interorganisational network, wherein the particular settings of subsidiaries contain their imperative counterparts exchange, offers us basis to believe that foreign subsidiaries consolidation is not mainly a question of developing the organisation in a manner of getting sufficient collaboration levels between the units. Instead, it is an issue of attempering to support suppleness as well as scale and scope economies in the midst of units entrenched in different networks of business, which according to Ghoshal and Bartlett are not essentially made for assimilation. Permitting the detailed peripheral exchange associates to influence the analysis of MNC as well as subsidiaries’ development by utilising the perspective of network as well offers us basis to examine what the significances are for headquarters’ capability to put into effect control and deal with the subsidiaries. Bearing in mind the fact that exchange associates have several effects over the subsidiaries through interdependence and acclimatization. I project that the more the subsidiaries are entrenched in their networks, the greater the opportunity that the ability of headquarter to manage the subsidiaries' activities has been abridged. Ghoshal and Bartlett have suggested a reformulation of the multinational corporation as an interorganizational system instead of as an organization. Such a reformulation generates the likelihood of using network methodologies as well as exchange theory to the MNCs study and has a number of vital implications for future study on MNC-based issues. At the collective level of macrostructural disparities in the midst of MNCs, conventional analysis has inclined to presume in-house homogeneity in such corporations. This according to Ghoshal and Bartlett has given rise to arbitrary conclusions at the general level of the corporation rooted in experiential analyses that have concentrated on specific dyadic connections or entity actors. For instance, a surveyed set of American multinational corporations have been deduced to be more centralized as compared to their European and Japanese counterparts founded on analysis of the relationships of the parent corporations with their subsidiaries positioned in one area. Still, as Ghoshal and Bartlett have maintained, H.Q. subsidiary connections in an MNC can differ extensively from one subsidiary to another. Conclusion In conclusion, it has been argued that MNCs are actually disseminated in environmental circumstances that characterize extremely distinct social, cultural, as well as economic settings, and are internally distinguished in multifaceted modes to act in response to both organizational and environmental disparities in various corporations, geographic locations, and also functions. In consequence of such dissemination and demarcation, the study has established that MNC has internal connections in addition to coordination methods that symbolize and act in response to scores of different types and levels of interdependency and dependency and in the relationships of inter-unit exchange. Acknowledging that subsidiaries are entrenched in relationships of business that takes the business network form, and examining their embeddedness level in such networks, Ghoshal and Bartlett posit that we can further expand our understanding of the international corporation management. Additionally, it assists us to better comprehend that the international corporation development is a mutually dependent course of strategic decisions as well as effects from peripheral actors taking part in the subsidiaries organisational processes. It has also been observed that the fundamental question of running the international corporation is rooted in finding the correct deal between local acclimatization and subsidiaries integration. Conclusively, an intricate but essential task for international corporation management of is to collect information concerning the contexts of subsidiaries. Reference Ghoshal, S. & Bartlett, C.A., 1990. The Multinational Corporation as an Interorganizational Network. The Academy of Management Review, vol. 15, no. 4, pp.603-25. Read More