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Horses for Courses: Organizational Forms for Multinational Corporations
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By Sumantra Ghoshal and Nitin Nohria
Winter 1993
Reprint 3422
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Volume 34, Number 2, pages 23-35, 13 pages
Primary Topic: Corporate Strategy
Secondary Topic: Global Business
SummaryOne of the most enduring ideas of organization theory is that an organization's structure and management process must "fit" its environment, in the same way that a particular horse might be more suited to one course than another. Ghoshal and Nohria show the continued relevance of this classic insight for the organization of multinational corporations. They offer a simple scheme to classify the environment and structure of MNCs. Then, based on data on forty-one large MNCs, they show how some combinations of environment and structure fir better than others. What drives fit is the principle of requisite complexity -- the complexity of a firm's structure must match the complexity of its environment. Though developed for MNCs, their argument can also apply to multidivisional firms that operate in different markets or business segments. |
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