Network Knowledge in International Business
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Network Knowledge in International Business

Edited by Sarianna M. Lundan

This book focuses on current cutting-edge research concerning the increasing strategic importance of subsidiary networks to the multinational firm. It combines contributions from three major related areas of inquiry: the changing theoretical conception of networks and the structure of the multinational firm, the importance of spillovers and agglomeration economies related to multinational investments, and the management of the flow of information and knowledge from headquarters to subsidiaries and vice versa.
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Chapter 4: The MNC as a network: a closer look at intra-organizational flows

Stefan Schmid, Andreas Schurig and Michael Kutschker


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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