configuration of this organization is called a centralized hub – comparable to
Stopford and Wells’s product-division structure. This configuration was parti-
cularly compatible with the managerial norms and processes in Japanese com-
panies. Centralized decision-making and control allowed these companies to
retain their complex management system requiring intensive communication
and personal commitment.
Transnational organizational model
By the late 1970s, there was a rising concern on the part of host countries about
the impact of MNCs on their balance of trade, national employment levels,
and on the international competitiveness of their economies. Consequently,
they gradually started to exercise their sovereign powers. Trade barriers were
erected again to limit exports and foreign direct investments were regulated by
industrial policies. In addition, other forces counteracted the previous globali-
zation process. Flexible manufacturing reduced the minimum efficient scale
by employing robotics and CAD/CAM technologies. The use of software
became important in a growing number of industries (from telecommuni-
cations to computers and consumer electronics). This development facilitated
responding to consumers who were again asking for products tailored to their
local needs. The problem is that we do not see a complete reversal to the
multidomestic era again. The worldwide innovation of the international era and
the global efficiency of the global era remain important competitive factors
and companies should pay attention to global efficiency, national responsive-
ness and worldwide learning at the same time. In order to be able to do this,
their strategy must be very flexible. The strategy (literally) is to have no set
strategy, but to let each strategic decision depend on specific developments.
Strategy becomes unclear and it may dissolve into a set of incremental deci-
sions with a pattern that may only make sense after the fact. Issues are shaped,
defined, attended to and resolved one at a time in a ‘muddling through’
process. A transnational strategy would be a deliberately planned strategy to
have an ‘adaptive’ (Mintzberg, 1988a), ‘incremental’ (Quinn, 1988), ‘muddling
through’ (Lindblom, 1987) or ‘emergent’ (Mintzberg, 1988b) strategy. The type
of organization structure that fits a transnational strategy is very flexible.
Bartlett and Ghoshal refer to an integrated network structure that links major
sub-units of the company together. Assets, resources and capabilities are nei-
ther centralized nor completely decentralized. Expertise is spread throughout
the organization and subsidiaries can serve as a strategic centre for a particular
product–market combination. To use a popular term, companies are creating
‘centres of excellence’ for each activity. It is important to realize that this con-
cept upsets the traditional notion of having one headquarters and many
dependent subsidiaries. The company becomes a kind of network with differ-
ent centres for different activities. Each centre can have a strategic role for a
particular area. The main characteristics of these four organizational models are
summarized in Figure 2.3.
48 International Human Resource Management