New Horizons in International Business series
Edited by Sarianna M. Lundan
Chapter 4: The MNC as a network: a closer look at intra-organizational flows
Chapter 4 21/6/02 11:23 AM Page 1 4. The MNC as a network: a closer look at intra-organizational flows Stefan Schmid, Andreas Schurig and Michael Kutschker INTRODUCTION For some years, it has been popular to view the Multinational Corporation (MNC) as both an intra-organizational and inter-organizational network. The intra-organizational perspective stresses that headquarters are not the single centre of MNCs; instead, subsidiaries are linked to headquarters and to other subsidiaries by various ways, making the MNC a multi-centre organization (Hedlund, 1986; Bartlett and Ghoshal, 1989; White and Poynter, 1990; Doz and Prahalad, 1991). The inter-organizational perspective considers that there are multiple relationships between the focal MNC and external stakeholders, such as suppliers, customers, competitors, joint venture partners, research institutions or governments (Håkansson and Snehota, 1989; Ford, 1990; Snehota, 1993). Some authors concentrate primarily on internal networks, others analyse external networks, and again others focus their research simultaneously on internal and external networks (Westney, 1990; Andersson and Forsgren, 1995, 1996). Taken together, the intra-organizational and the inter-organizational network perspectives have a great impact on our understanding of MNCs: both perspectives demonstrate that it is important to go beyond the unitary view of organization, which dominates in classical, neoclassical and transaction cost approaches. These perspectives take into account the social embeddedness of organizational units (Granovetter, 1985). One of the crucial characteristics of network approaches is the assumption that there are flows between different organizational units. Linkages or relationships are necessary to hold the network together. Clearly, without any interaction between...
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