The Multinational Corporation as an Inter-organizational Network by Ghoshal and Bartlett - Article Example

Article Review Name Instructor Course Article Review Introduction The introduction part of ‘The Multinational Corporation as an Inter-organizational Network’ presents the shift in the focus in academic work regarding conduction research on the multinational corporations (MNC). The focus of study is on network coordination between the MNCs and the way the management of this network impacts the competitive advantage of the MNC in the foreign subsidiaries across the probable scope economies. Moving forward, the authors of the article advocate for the adoption of the inter-organizational theory when conducting future research related to MNC. The authors believe that when this theory is adopted, it will provide the necessary insight on the geographical and complicated organizational system that exists in MNC. Therefore, the authors propose a formulation concerning the way the tools and concepts of the inter-organizational analysis could be applied so that it could fit this new theory; that is the inter-organizational theory. The authors have used a multinational company named N.V. Phillips to represent other multinational corporations to frame the context of the discussion of the application of inter-organizational theory in the evaluation of the organizational systems that exist in various MNCs. One of the major findings of this assessment is that the MNCs can be appropriately conceptualized as the inter-organizational grouping as opposed to just being grouped as a unitary organization. Additionally, the authors have provided a rather deep insight which can be obtained from the operations and the internal structures which are mainly used in the exploration of inter-organizational phenomena. Critical Assessment of the Introduction The introductory part of the article has given a solid background of the theoretical approach that the entire paper will adopt in the evaluation of inter-organizational groupings of the MNCs. Therefore, this piece is significant and accessible to researchers who wish to conduct studies that are related to the MNCs and the management team of the MNCs as well. The article is accessible and relevant to researchers who wish to use theories through the use if network concepts in the explanation of particular structural attributes of MNCs. On the other hand, the management of the MNCs will benefit from the paper as it will assist them in highlighting the organizational units that exist in their organizations as well as the networks and inter-linkages that may exist between them to improve networking. Proper networking strategies will, in turn, enable the MNCs to gain competitive advantages in the foreign nations of operations. Body Inter-organizational Theories in MNCs The authors argue that the link between hierarchical power and ownership (fiat) in complex companies like the MNCs is weaker than it is usually assumed. Particularly in the case of MNCs, the link is weak because of the significant cultural and physical distances between the owning and the owned units. The weakening of these linkages has resulted in many MNCs to severe their ties with the parent companies and seek support from the local funding institutions which has overseen them becoming independent entities. Such cases of gaining independence, as argued by the authors are most common where the parent companies are located in rather small countries although there are still cases of the same shifting even when the company is headquartered in large corporations; like the case of Unilever and ITT. As the authors argue, the efficacy of fiat is limited regarding multinationals because the MNCs tend to control the existing linkages with the primary actors of their local environments, and more so, the hosting government. Additionally, the author has presented some anecdotal evidence which depicts that in most cases, the parent companies of MNCs usually enjoy some substantial hierarchical authority. However, they go on to suggest that the presence of such authority will not necessarily result in fiat as the dominant control mechanism. Critical Evaluation It is indeed true, as the authors have argued that there have been various MNCs which have sort to obtain independence from their parent companies. The lack of stable relationships between the hierarchical power and ownership has led to the significant dispersal of MNCs. This piece is valid as this has been practically experienced with large companies like ITT and Unilever which are multinational corporations. Additionally, the piece of argument shows that after all it appropriate to apply inter-organizational theories in the evaluation of the interdependent MNCs as well as their hierarchical authority. This will provide a deeper insight of defining the ways in which the fiat can be enhanced to ensure the interdependence of the MNCs which is important. Multinational as a Network The authors have continued to emphasize the linkages that exist among MNCs and its branches across their areas of operation. The linkages which exist in the various local organization sets and the members of the different units of the MNCs make up the external network within the multinational network within which the MNC is embedded. The main argument that the authors have placed regarding multinationals as a network is that the MNC’s attributes could be explained concerning some selected characteristics that are found in the external network. In this case, the particular MNC attributes include the resource distribution among the various units of MNC. The other MNC quality is the structural features which mediate the constant restructure of resource configuration and the relationships of the external exchange that exists in the MNC. Therefore, as the authors argue, the two attributes of the MNC relate with each other across and within various densities. Critical Evaluation The authors have emphasized the way in which multinationals play a role in forming networks. The authors have used a practical approach in explaining this aspect through the use of analogy to put forward some attributes of MNCs which enables them to put show how multinationals can form networks. The critical evaluation of this aspect of multinationals is relevant as it shows how these corporations can use the inter-organizational theories to reduce the drifting away of MNCs and to be independent in their various areas of operation. Additionally, this also provides a deep insight into the ways in which the MNCs can use these networks to enhance cohesion within the MNCs across the foreign countries of operation. The validity of the article has been enhanced through explaining further the impacts of within density in the national organization sets, and the impacts of across density within the external network. Large MNCs and Differentiated Networks Another important aspect that the authors have put across is the fact that the high levels of connectedness across and within the national organization sets could vary across different nations and groups of nations. Regarding interactions and networks, the density of the interactions that exist among the national organization sets are often higher in the developed nations or among some of the regional groupings. On the other hand, the density of interactions in the national organizational sets is usually low in the developing nations, especially the more autarchic and regulated. In the same light, the interactions that exist among the various members in the organizational sets may be elevated in the homogenous societies which have a distinct tradition of solid inter-organizational linkages. This may be lower in the nations where the linkages are either not supported or are rendered to be ineffective because of the absence of linking organizations. Following this, the resources configuration in MNCs that are engaged in such enterprises will be impacted by various criteria. In some countries, the organization sets are very sparsely connected internally, but the various elements of local environments could be linked strongly with the counterparts in the other nations. For these particular countries, the MNC has the probability of creating a specific resource structure which is specialized and concentrated, and in some instances, the area where the specialized resources are located could depict a reflection of the intention to access the individual resource niches. Therefore, the location choice could probably be motivated by the various modalities in the present external network. Critical Evaluation Regarding this aspect, the intention of the author was to show how the large MNCs are considered as differentiated networks. However, this has not come out quite clearly in the presentation of their arguments as they have focused more on how these MNCs and their locations can present external networks. Despite that, the authors have succeeded in showing the relationship and differences that exist regarding the connections of MNCs and their particular locations of operations. Thus although the authors’ arguments were valid, they were not very relevant regarding the way they related to the specific topic of argument. Conclusion The primary aim of the research was to evaluate the conceptualization of the inter-organizational networks that exist in the MNC. The authors have evaluates some aspects regarding the practicality of the MNC’s inter-organizational theories which have been reviewed. Some elements of MNC networking have also been highlighted. As the authors have documented, their research had various shortcomings. Some of the shortcomings include the coarse definitions of some of their points of arguments like across and within densities among others. These definitions may be different in various countries and contexts which may lead to some conflicts of understanding. The other shortcoming is about the failure of distinguishing the flows of the broad exchange of affect, products, information, among others which have various implications for the management, organization, and strategy of the MNCs. The other shortcoming is that the author has focused on density in describing MNC networks whereas densities are not complete descriptions of an MNC network. Aside from the shortcomings, the authors have successfully tried to evaluate the MNCs as inter-organizational networks. Aside from the shortcomings, the authors did not provide a summary of the methodology and findings hence the audience could not just read the conclusion and get an idea of what the paper was about as it should be. Critical Evaluation of Conclusion The authors have presented a reasonably suitable closure of the article. They have adequately reviewed the past literature which enhances the credibility and validity of their research. However, the conclusion part has significantly focused on the shortcomings of the research rather than providing a general overview of the entire article through summarizing and explaining the findings of their paper. Though doing this, the audience is forced to begin evaluating in-depth the effects that these shortcomings have had on their understanding of the article instead of being provided with the necessary ‘closure’ of the article through refreshing what was read. Additionally, since the findings of the article were not summarized sufficiently, it tends to make the article inaccessible. Despite this, the paper was relevant and comprehensive as it was in line with the current business practices. The methodology that was used was also easy to follow, and more so, it was practical which makes different audiences to succeed in following it. References Ghoshal, S. and Bartlett, C.A., 1990. The multinational corporation as an interorganizational network. Academy of management review, 15(4), pp.603-626. Read More