Managing the Embedded Multinational

Managing the Embedded Multinational

A Business Network View

Mats Forsgren, Ulf Holm and Jan Johanson

This book expands the business network view on managerial issues in multinational corporations. Specifically, it scrutinises the importance of a subsidiary’s external and internal business network for its strategic and organizational role within the corporation.

Chapter 1: The Multinational Corporation from a Business Network Angle

Mats Forsgren, Ulf Holm and Jan Johanson

Subjects: business and management, international business


The multinational corporation (MNC) is one of the most significant institutions of modern societies. The MNCs control resources all over the world and conduct business activities in most countries and between almost all countries. It is generally recognized that they are efficient, that they generate huge profits and are among the most powerful actors in the world. The general view of the MNC is that its corporate management possesses superior information about world markets, formulates clear strategies for the development of the corporation, allocates resources in accordance with these strategies to the most promising markets and that it controls operations wherever they are performed. But MNCs are complex organizations operating in a complex world. Anybody who has been in close contact with any part of an MNC knows that reality is not as perfect as the general view would have it. Strategic plans are frequently thrown over, resource allocations are affected by power relations between different parts of the company, control systems cannot capture all the important aspects of operations, and corporate management often has only vague ideas about business in most of the countries concerned. When Edith Penrose, the author of the influential book The Theory of the Growth of the Firm (1959), turned to the study of large firms in the international petroleum industry she reported that ‘the role of the very large privately-owned companies in a modern economy is still ill-defined and controversial, and also subject to great confusion of thought because the “models” of the “firm...

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