Multi National Corporations

Topics: Multinational corporation, Scientific method, Globalization Pages: 79 (16544 words) Published: December 15, 2012

Anne-Wil Harzing
Version October 1999

A revised version of this paper appeared in Journal of International Business Studies, vol 31 (2000), no. 1, pp. 101-120.

Copyright © 1999 Anne-Wil Harzing. All rights reserved.
Do not quote or cite without permission from the author.

Dr. Anne-Wil Harzing
University of Melbourne
Department of Management
Faculty of Economics & Commerce
Parkville Campus
Melbourne, VIC 3010



This study offers an empirical test and extension of the Bartlett and Ghoshal typology of MNCs. A three-fold typology of multinational companies: global, multidomestic and transnational is induced from the literature. This typology is tested using data from 166 subsidiaries of 37 MNCs, headquartered in nine different countries. Subsidiaries in the three types of MNCs are shown to differ significantly on aspects of interdependence, local responsiveness, control mechanisms and expatriate presence.

Most of the literature in international management either explicitly or implicitly assumes the existence of different types of MNCs. Terms such as polycentric, geocentric and ethnocentric and multidomestic, international, global and transnational are often used to denote different types of MNCs. Several of these typologies have become standard textbook matter and are widely taught in courses on international business and management. There are several reasons why a typology of MNCs can be useful for both academics and students. First, it can reduce the complexity of multinational organizational reality into a manageable number of related characteristics, making it easier to understand and explain the functioning of multinational companies. Second, if meaningful organizational typologies can be discovered they can then be used in a predictive way. When certain characteristics are shown to cluster in distinct typologies, the presence of one or more of these characteristics in other samples can lead to a prediction of the remaining elements. This would make it easier to compare and integrate different studies in the field and may go some way to remedy the “lack of (both) conceptual integration and empirical corroboration” in the field of international business and management (Macharzina & Engelhard, 1991:24). In a final stage, if meaningful typologies of mutually reinforcing characteristics can be derived, these typologies might serve as prescriptive configurations of MNCs. MNCs that conform more closely to these ideal types and that show a fit between environment, strategy, structure and processes would then be expected to outperform MNCs that do not show such a fit.

Up until now, however, very few studies in the international management literature have tried to derive and test comprehensive typologies of MNCs. Bartlett & Ghoshal (1989) probably provided the most extensive typology of MNCs. Bartlett & Ghoshal’s work and in particular their idea of the transnational company has been extremely influential. In a recent book (International Business: An emerging vision), in which 12 chapters, all consisting of contributions by various authors, give a comprehensive overview of the field of international business, Bartlett & Ghoshal’s work is referred to in 10 of the 12 chapters. A reference would of course be expected in chapters that discuss the strategic management, organization theory and organizational behavior perspectives on International Business. In addition, however, their work is also referred to in chapters that discuss economic, political, marketing and financial perspectives and in the two introductory and one of the two concluding chapters. Bartlett & Ghoshal’s research, however, was based on case studies in nine MNCs only,...
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