Subsidiaries in 22 different countries were included in the study (for a more
detailed description of the results see Harzing, 1999, 2000).
Based on Bartlett and Ghoshal’s typology, ideal profiles of three different
types of MNCs were constructed: multidomestic, global and transnational. The
international model was not included since previous studies had shown that
this differed little from the other models. Following Bartlett and Ghoshal, the
strategic orientation of global firms was defined as building global efficiency,
while the main strategic thrust of multidomestic firms was defined as respond-
ing to national differences. Transnational companies would have to cope with
both strategic demands at the same time. Competition was expected to take
place at a global level for both global and transnational companies, while
multidomestic firms would be more oriented towards domestic competition,
since national product markets are too different to make competition at a
global level possible. These four aspects of competitive strategy were used as
input for a cluster analysis. As predicted, three clear clusters emerged. A first
group, which was labelled multidomestic, combined a high score on national
responsiveness with a high score on domestic competition and scored lowest
on both global competition and global efficiency. The second group – termed
global – had an opposite profile, high global and low domestic competition, a
low level of national responsiveness and a high level of global efficiency. Firms
in the transnational cluster combined a focus on national responsiveness and
global efficiency with a high level of global and a low level of domestic
competition. Subsequently, we compared these three clusters of MNCs on a
large number of characteristics related to organization design, interdepen-
dence, local responsiveness and the level and type of control. Table 2.3 gives a
summary of the characteristics that were found to be significantly different
between the three models.
Typology elementsOrganizational design
The organizational structure of the global company is centralized and globally
scaled and the main role of subsidiaries is to implement parent company strate-
gies, that is: act as pipelines of products and strategies. The multidomestic firm
is characterized by a decentralized and loosely coupled organizational struc-
ture. With regard to strategy, the transnational has characteristics of both
multidomestic and global firms. In organizational design terms, the transnational
shows some unique features as well: it functions as an integrated and inter-
dependent network, subsidiaries can have strategic roles and act as centres of
excellence and we find a large flow of products, people and information
between subsidiaries. In global companies, flows transfer mostly from head-
quarters to subsidiaries, while multidomestic companies are characterized by a
lower overall flow of products, people and information.
52 International Human Resource Management