A Business Network View
In this last chapter we will elaborate further on the basic character of the Embedded Multinational, comparing it with some alternative MNC models. References to institutionalization theory and contingency theory will help to highlight some major differences, especially in terms of the interaction between the environment and the MNC and the role of HQ in the Embedded Multinational. In Chapter 1 we referred to Edith Penrose’s description of the model of the large MNC as ‘ill-defined and … inadequate even for analytical purposes’ (Penrose 1971, p. 266). The author’s concern at that time was that top managers in such firms were much more powerful in relation to owners and other interest groups than the received theory allowed. She argued that top managers were ‘non-accountable in the sense that they themselves define the international public interest to be considered’ (ibid., p. 267). This comment is probably as relevant today as it was in 1967. However, Penrose did not take into account that, even if MNC HQs are very powerful in their exercise of ‘economic statesmanship’ in society (Berle and Means 1933), their opportunities for exerting power inside the MNCs are another matter. In the preceding chapters we have outlined a model of the MNC as a heterogeneous, loosely coupled organization in which no unit, not even HQ, possesses full knowledge of the MNC’s operations. If we assume that knowledge is crucial for the exercise of power, we can conclude that the control exerted by HQ inside the MNC is limited. So, where...
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