adhocracy is a highly organic organization, flexible and decentralized to cope
with dynamic and complex environments, with mutual adjustment as a rather
informal coordination mechanism. Mintzberg indicates that diversified
markets formerly led multinationals to using the divisionalized form, grouping
their major divisions either by area or by product line. However, ‘those multi-
national firms with interdependencies among their different product lines,
and facing increasing complexity as well as dynamism in their environment
will feel drawn toward the divisionalised adhocracy hybrid.’ (Mintzberg,
1983: 269). More than 40 years ago Burns and Stalker (1961) had already
identified the organic organization – with characteristics such as continual
adjustment, lateral communication and commitment – as opposed to the
mechanic organization. And finally, in Peters and Waterman’s best-seller In
Search of Excellence(1982) the ‘soft’ aspects of organizing – skills, shared
values, style (of management) and staff – are at least as important as the
formal aspects of structure, strategy and systems.Strategy and structure: recent developmentsIn the previous section we discussed the early approaches to the structuring of
MNCs, based on Stopford and Wells’s seminal work. We also indicated that
nowadays more sophisticated approaches have developed. These approaches
take a more integrated approach by looking at the interaction between environ-
ment, strategy, structure and processes. Table 2.2 summarizes these ideas. It is
based on the environment–strategy–structure paradigm, which suggests that
superior company performance comes from a good fit between strategy and
environmental demands, and between organizational structure (and processes)
and strategy.
A prime example of this more integrated type of approach described above,
is Bartlett and Ghoshal’s (1989, 2000) typology of international firms that
includes a discussion of the changing international and industry environment
as well as the company’s strategy, structure and processes. Bartlett and Ghoshal
distinguish four types of MNCs: multidomestic, international, global and
transnational.
Multidomestic organizational model
The period between the two world wars was characterized by a rise in nation-
alistic feelings. Countries became more and more protectionist and erected
high tariff barriers. There were large national differences in consumer prefe-
rences and communication and logistical barriers remained high. These cir-
cumstances favoured national companies. For multinational companies, the
strategy of centralized production in order to capture economies of scale, com-
bined with exports to various countries, was made impossible by high tariff
and logistical barriers. In order to be able to compete with national companies,
multinational firms had to set up a larger number of foreign manufacturing
Strategy and Structure of Multinational Companies 45