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An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational
Companies
Author(s): Anne-Wil Harzing
Source: Journal of International Business Studies, Vol. 31, No. 1, (1st Qtr., 2000), pp. 101-120
Published by: Palgrave Macmillan Journals
Stable URL: http://www.jstor.org/stable/155623
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A n Empirical A n alysis an d Exten sion of
th e B artlett an d G h osh al Typology of
Multin ation al Compan ies
A n n e-Wil Harzin g*
UNIVERSITYOF B RA DFORD
Th is stud y of f ers an empirical test
an d exten sion of th e B artlett an d
G h osh al typology of multin ation al
compan ies (MNCs) A th ree-f old ty-
pology of multin ation al compan ies:
G lobal, Multid omestic an d Tran s-
n ation al is d eveloped f rom th e liter-
M /r ost of th e literature in in tern a-
tion al man agemen t eith er explic-
itly or implicitly assumes th e existen ce
of d if f eren t types of MNCs. Terms such
as Polycen tric, G eocen tric, Eth n ocen tric,
Multid omestic, In tern ation al, G lobal,
an d Tran sn ation al of ten are used to d e-
n ote d if f eren t types of MNCs. Several of
th ese typologies h ave become stan d ard
textbook matter an d are wid ely taugh t in
courses on in tern ation al busin ess an d
man agemen t. Th ere are several reason s
wh y a typology of MNCs can be usef ul
f or both acad emics an d stud en ts. First, it
can red uce th e complexity of multin a-
tion al organ ization in to a man ageable
n umber of related ch aracteristics, mak-
in g it easier to un d erstan d an d explain
th e f un ction in g of multin ation al compa-
n ies. Secon d , if mean in gf ul organ iza-
tion al typologies can be d iscovered th ey
ature. Th is typology is tested usin g
d ata f rom 166 subsid iaries of 37
MNCs, h ead quartered in 9 d if f eren t
coun tries. Subsid iaries in th e th ree
types of MNCs are sh own to d if f er
sign if ican tly in aspects of in terd e-
pen d en ce an d local respon siven ess.
can th en be used in a pred ictive way.
Wh en certain ch aracteristics are sh own
to cluster in d istin ct typologies, th e pres-
en ce of on e or more of th ese ch aracteris-
tics in oth er samples can lead to a pre-
d iction of th e remain in g elemen ts. Th is
typology would make it easier to com-
pare an d in tegrate d if f eren t stud ies in
th e f ield an d may go some way to remed y
th e "lack of (both ) con ceptual in tegration
an d empirical corroboration " in th e f ield
of in tern ation al busin ess an d man age-
men t (Mach arzin a an d En gelh ard , 1991:
24). In a f in al stage, if mean in gf ul typolo-
gies of mutually rein f orcin g ch aracteris-
tics can be d erived , th ese typologies
migh t serve as prescriptive con f igura-
tion s of MNCs.MNCs th at con f orm more
closely to th ese id eal types an d th at
sh ow a f it between en viron men t, strat-
egy, structure, an d processes would th en
*A n n e-Wil Harzin g is Lecturer in In tern ation al Man agemen t at th e Man agemen t Cen tre,
Un iversity of B rad f ord . Her research in terests in clud e h ead quarters-subsid iary relation sh ips,
in tern ation al HRMan d cross-cultural man agemen t.
JOURNA LOF INTERNA TIONA LB USINESS STUDIES, 31, 1 (FIRST QUA RTER 2000): 101-120 101
A TYPOLOG YOF MULTINA TIONA LCOMPA NIES
be expected to outperf orm MNCs th at d o
n ot sh ow such a f it.
Up un til n ow, h owever, very f ew stud -
ies in th e in tern ation al man agemen t lit-
erature h ave tried to d erive an d test com-
preh en sive typologies of MNCs. B artlett
an d G h osh al (1989) probably provid ed
th e most exten sive typology of MNCs.
B artlett an d G h osh al's work - in partic-
ular th eir id ea of th e Tran sn ation al com-
pan y
-
h as been extremely in f luen tial.
Th eir research , h owever, was based on
case stud ies in on ly n in e MNCs, com-
bin ed empirical d ata with prescriptive
elemen ts, an d d id n ot d iscuss th e ch ar-
acteristics of th e various types of MNCs
in a systematic way. A ccord in g to Hed -
lun d an d Rid d erstrale (1997) empirical
groun d in g of B artlett an d G h osh al's
stud y an d stud ies in th e same trad ition
(Hed lun d , 1986; Prah alad an d Doz, 1987;
Wh ite an d Poyn ter, 1990) is "sparse an d
impression istic, an d perh aps colored
main ly by th e pion eers amon g th e MNCs
rath er th an a more represen tative sample"
(Hed lun d an d Rid d erstrale, 1997: 334).
G h osh al (1997) puts it even more stron gly:
"imost of us
[.. .1 are pilin g up con ceptual-
ization upon con ceptualization , un en -
cumbered by [...
.] th e d isciplin e of empir-
ical verif ication ." (G h osh al, 1997: 362).
Th is article will, th eref ore, take B art-
lett an d G h osh al's typology as a startin g
poin t but will con struct explicit typolo-
gies in corporatin g a larger n umber of d if -
f eren t ch aracteristics. Th ese typologies
will th en be tested on a large sample of
MNCs. In th is way, our stud y could pro-
vid e a valuable exten sion of th e origin al
B artlett an d G h osh al f ramework. Th e re-
main d er of th e article is structured as
f ollows. First, we will review an d clas-
sif y previous stud ies th at h ave tried to
con struct typologies of MNCs an d d is-
cuss th eir stren gth s an d weakn esses. A
subsequen t section will th en d escribe
th ree h ypoth esized typologies of multi-
n ation al compan ies. Th e n ext section
th en d iscusses meth od ology of our d ata
collection an d th e operation alization of
th e variables in clud ed in th e th ree ty-
pologies. Th e results of an empirical test
of th e th ree typologies subsequen tly are
d escribed . A f in al section th en summa-
rizes an d d iscusses our f in d in gs an d pro-
vid es recommen d ation s f or f uture re-
search .
CONCEPTUA LFRA MEWORK A ND
LITERA TURE REVIEW
Th is section reviews previous stud ies
th at h ave tried to con struct typologies of
MNCs. Some of th ese stud ies f ocused on
on e or two variables on ly, usually corpo-
rate strategy an d structure, wh ile oth ers
in clud ed a larger variety of ch aracteris-
tics. However, all of th e variables in -
clud ed can be summarized un d er th e
broad h ead in gs: en viron men t, strategy,
structure, an d systems an d processes.
Un d er th e h ead in g systems an d pro-
cesses th e topics th at are stud ied most
are con trol mech an isms an d h uman re-
source man agemen t. Strategy an d struc-
ture h ave been stud ied at both h ead quar-
ters an d subsid iary levels. Table 1 sum-
marizes th e variables in clud ed in MNC
typologies.
Table 2 brief ly summarizes th e most
importan t stud ies th at h ave tried to con -
TA B LE I
A N OVERVIEW OF THE VA RIA B LES
INCLUDEDIN MNC TYPOLOG IES
1. En viron men t/in d ustry
2. Corporate level strategy
3. Corporate level organ ization al d esign
4. Subsid iary strategy/role
5. Subsid iary structure
6. Con trol mech an isms
7. Human resource practices
102 JOURNA LOF INTERNA TIONA LB USINESS STUDIES
A NNE-WILHA RZING
struct typologies of MNCs.1 Some of
th ese stud ies were explicitly presen ted
as attempts at con structin g MNCtypolo-
gies, wh ile oth ers f ocused on in vestigat-
in g th e relation sh ip between two vari-
ables - usually strategy an d structure.
Table 2 in d icates th e auth ors of th e stud -
ies an d wh eth er th e stud y was empirical
or con ceptual. Th en , af ter a d escription
of th e stud y's sample an d results (in case
of an empirical stud y), th e f if th column
men tion s th e variables th at were in -
clud ed in each of th e stud ies, f ollowin g
th e n umberin g in Table 1. Th e n ext f our
column s categorize th e stud ies' resultin g
typologies un d er th e f our types of f irms
put f orward by B artlett an d G h osh al.2
Several con clusion s can be d rawn f rom
th is table. First, alth ough th ere are sub-
stan tial d if f eren ces in th e d etails an d th e
variables th at are used to d istin guish th e
d if f eren t categories, th ere is a reason able
con vergen ce in th e basic ch aracteristics
of th e categories d istin guish ed by th e
various auth ors. Man y of th e auth ors re-
f er to oth ers, poin tin g out comparable
n otion s. It is con f usin g, h owever, th at
some auth ors use th e same terms f or d if -
f eren t typologies. A d ler an d G h ad ar
(1990) use th ree of th e terms th at B artlett
an d G h osh al (1989) use, but f or d if f eren t
typologies. Th eir d escription of th e
G lobal compan y, h owever, clearly f its
th e Tran sn ation al category; th e same
goes f or th eir Multin ation al an d In tern a-
tion al in relation to th e G lobal an d Mul-
tid omestic f irm. Furth er, sin ce th e pub-
lication s by B artlett (1986) an d Prah alad
an d Doz (1987), all auth ors implicitly
or explicitly ref er to a con tin uum of
in tegration /coord in ation /globalization ad -
van tages versus d if f eren tiation /respon -
siven ess/localization ad van tages in d e-
scribin g th eir strategy at eith er h ead -
quarters or subsid iary level. Followin g
Prah alad an d Doz, th is con tin uum is re-
f erred to as th e in tegration /respon sive-
n ess f ramework. Roth an d Morisson
(1990) an d G h osh al an d Noh ria (1993)
use similar terms to d escribe th e en vi-
ron men tal pressures. Even th e terms
used by Porter (1986) an d Doz (1980) are
easily related to th is con tin uum, with
d ispersed con f iguration /low coord in a-
tion an d political imperatives located at
th e respon siven ess en d an d con cen -
trated
con f iguration /h igh
coord in ation
an d econ omic imperatives located at th e
in tegration en d . Th e f irst two publica-
tion s are n ot usually seen as typologies
an d are of ten used to d escribe man age-
men t attitud es an d HRM(Perlmutter) or
in tern ation al organ ization al structures
(Stopf ord an d Wells).
Th ree types of f irms are d istin guish ed
by n early every stud y: Multid omestic
(combin in g low in tegration an d h igh re-
spon siven ess), G lobal (combin in g h igh
in tegration with low respon siven ess)
an d Tran sn ation al (combin in g h igh in te-
gration with h igh respon siven ess). Th e
In tern ation al f irm d oes n ot f it easily in
th is sch eme; n ote th at it was n ot in -
clud ed in B artlett's origin al classif ica-
tion . Some auth ors (Sun d aram an d
B lack, 1992) simply equate it with th e
Tran sn ation al compan y, wh ile oth er au-
th ors (e.g. G h osh al an d Noh ria, 1993;
Welge, 1996) place it in th e lower lef t
corn er (low in tegration /low respon sive-
n ess). Man y oth er auth ors d o n ot d istin -
guish th is particular type of f irm, an d
man y of th ose th at d id h ad d if f iculty in
empirically d istin guish in g it f rom th e
oth ers. We will come back to th is poin t
later.
A s is appropriate in th e d evelopmen t
of n ew th eories, th e f irst stud ies were
main ly d escriptive an d f ocused on rela-
tively small samples employin g eith er
in terviews or in -d epth case stud ies.
Later stud ies h ave attempted to test th e
VOL. 31, No. 1, FIRST QUA RTER, 2000 103
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A TYPOLOG YOF MULTINA TIONA LCOMPA NIES
in teraction between variables in a more
systematic man n er. Man y of th ese stud -
ies h ave used th e B artlett an d G h osh al
typology as th e basis of th eir stud y. B e-
low, we will sh ortly d escribe th e results
of th e later empirical stud ies th at h ave
attempted to test th e B artlett an d
G h osh al typology.
Roth an d Morrison (1990) segmen ted
busin ess un its in th ree groups ch aracter-
ized respectively by global in tegration ,
local respon siven ess an d a multif ocal
approach ; th ey related th ese ch aracteris-
tics to f our strategic d imen sion s (com-
plex in n ovation , marketin g d if f eren tia-
tion , breath , cost con trol). Th e G lobal
an d Multif ocal groups were very similar;
th e Locally Respon sive group scored low
on all strategic d imen sion s, wh ich was
n ot completely as expected . Roth ,
Sch weiger an d Morrison (1991) con -
structed two id eal prof iles of wh at th ey
called implemen tation variables f or two
types of strategy: G lobal an d Multid o-
mestic. Con trol mech an isms (called ad -
min istrative mech an isms) were a major
part of th ese id eal prof iles. A pplication
of th ese con trol mech an isms was con sis-
ten tly h ypoth esized to be lower f or mul-
tid omestic strategies th an f or global
strategies. Th e top-5 perf ormers of each
strategy type were in d eed f oun d to d if f er
sign if ican tly in th eir use of con trol
mech an isms, con f ormin g to th e pred ic-
tion s of th e con ceptually d erived id eal
types. Furth er, f or th e remain in g f irms,
th ere was a sign if ican t positive correla-
tion between th e level of f it with th e
empirically con structed id eal type an d
perf orman ce. It must be n oted , h owever,
th at th is stud y f ocused on con trol mech -
an isms with in 82 A merican busin ess
un its (th at migh t also be subsid iaries of
MNCs) operatin g in global in d ustries,
rath er th an on th e level an d type of con -
trol exercised by h ead quarters toward s
th eir subsid iaries. Th is stud y is th eref ore
n ot comparable to th e oth er stud ies.
Leon g an d Tan (1992) tried to test em-
pirically B artlett an d G h osh al's typology
on a n umber of ch aracteristics. Th ey
asked sen ior executives of MNCs to clas-
sif y th eir organ ization s as bein g Multin a-
tion al, G lobal, In tern ation al or Tran sn a-
tion al. Th ey f urth er asked th em to eval-
uate th eir organ ization 's con f iguration of
assets an d capabilities, roles of overseas
operation s, an d d evelopmen t an d d if f u-
sion of kn owled ge. Th e G lobal an d Mul-
tin ation al organ ization s scored broad ly
as h ypoth esized , but th e In tern ation al
an d Tran sn ation al organ ization s d id n ot
d if f er sign if ican tly f rom each oth er an d
f rom th e oth er organ ization s. G h osh al
an d Noh ria (1993) tested th e relation sh ip
between th e en viron men t (classif ied in
terms of in tegration /respon siven ess) an d
a MNC's govern an ce (con trol) mech a-
n isms. Compan ies th at h ave a f it be-
tween en viron men t an d con trol mech a-
n isms were sh own to outperf orm compa-
n ies th at d id n ot. Mach arzin a (1993)
presen ted h ypoth esized levels of in ter-
d epen d en ce an d application mod els of
con trol mech an isms f or MNCs f ollowin g
various in tern ation al strategies. Un f ortu-
n ately, th e results - arrived at th rough
cluster an alysis
- d id n ot provid e a
clear-cut pattern .On e of th e f our clusters
th at were f oun d d id n ot provid e a clear
structure at all an d was n ot in clud ed in
th e f urth er an alysis; two oth ers clusters
were similar on man y of th e ch aracteris-
tics in clud ed . Th e stud y also d id n ot
provid e much support f or th e n ecessary
f it between strategy an d con trol mech a-
n isms, sin ce two clusters of f irms th at
f ollowed d if f eren t strategies h ad very
similar con trol portf olios. Fin ally, Wolf
(1996) id en tif ied pattern s of strategic ori-
en tation of both MNCs an d subsid iaries
an d accompan yin g levels of certain con -
106 JOURNA LOF INTERNA TIONA LB USINESS STUDIES
A NNE-WIL HA RZING
trol mech an isms. However, in th e subse-
quen t empirical an alysis little support
was f oun d f or th ese id eal prof iles.
In sum, empirical stud ies h ave n ot yet
f oun d clear-cut support f or a well-d evel-
oped typology of MNCs. G h osh al an d
Noh ria d id f in d support f or a perf or-
man ce ef f ect of a f it between en viron -
men t an d con trol. However, th eir typol-
ogy f ocused on a limited n umber of ch ar-
acteristics on ly, an d th eir classif ication
of th e en viron men t was based on rela-
tively crud e measures. Th e classif ication
also was based on a relatively simple
above-or-below-th e-mean criterion th at
d oes n ot n ecessarily lead to maximizin g
in ter-group an d min imizin g in tra-group
variability as cluster an alysis would .
Roth , Sch weiger, an d Morrison also
f oun d support f or a positive perf orman ce
ef f ect of a f it between (busin ess un it)
strategy an d con trol mech an isms, but
make a rath er crud e d istin ction between
just two types of strategies an d a h igh /
low application of various con trol mech -
an isms. Leon g an d Tan d id n ot f in d clear
support of eith er th e Tran sn ation al or
th e In tern ation al type of f irm an d n on e of
th e G erman stud ies f oun d support f or
th eir pred icted pattern s of strategy an d
con trol.
Non e of th e empirical stud ies in -
clud ed Japan ese compan ies, an d in most
samples A merican compan ies take a
d omin an t place. A s f ar as can be d e-
d uced f rom th eir publication s, all empir-
ical stud ies used sin gle in f orman ts,3
wh ich migh t pose problems sin ce man y
stud ies also in clud ed (on ly) perceptual
measures. Our stud y will th eref ore try to
remed y th e limitation s of previous stud -
ies by in clud in g a larger n umber of h ead -
quarters coun tries (in clud in g Japan ), by
in clud in g f our of th e variables men -
tion ed in Table 1,4 by combin in g percep-
tual measures with more f actual mea-
sures, an d by usin g multiple in f orman ts.
HYPOTHESIZEDTYPOLOG IES
In th is section , we d ef in e our proposed
typology of multin ation al compan ies.
Firms are categorized by th e type of strat-
egy (G lobal, Multid omestic or Tran sn a-
tion al) th at is f ollowed by corporate
h ead quarters. We d ecid ed n ot to in clud e
th e In tern ation al type of f irm. Sin ce
man y auth ors d o n ot in clud e th at type in
th eir categorization , it is n ot as clearly
d ef in ed as th e oth er types an d h as n ot
received much empirical support. We
d iscuss h ow several variables of corpo-
rate level organ ization al d esign f it our
th ree types of strategies. Th e expected
role an d structure of subsid iaries in
th ese types of compan ies also is out-
lin ed . We d o recogn ize th at n ot every
subsid iary in an MNC plays th e same
role (see also Martin ezan d Jarillo, 1991);
h en ce, with in an MNC we migh t f in d
subsid iaries th at score very d if f eren tly
on th e ch aracteristics in clud ed in our
typologies. However, Multid omestic
compan ies h ave a relatively h igh per-
cen tage of auton omous subsid iaries;
man y subsid iaries in G lobal compan ies
are receptive; active subsid iaries are
most likely f or Tran sn ation al compan ies.
Th eref ore, we expect to f in d overall d if -
f eren ces in subsid iary ch aracteristics
amon g th e th ree types of f irms.
Corporate Strategy an d
Organ ization al Design
Followin g B artlett an d G h osh al, th e
strategic orien tation of G lobal f irms is
d ef in ed as "build in g cost ad van tages
th rough realization of econ omies of
scale". Th e main strategic th rust of Mul-
tid omestic f irms is "to respon d to n a-
tion al d if f eren ces". Tran sn ation al com-
pan ies h ave to cope with both strategic
VOL. 31, No. 1, FIRST QUA RTER, 2000 107
A TYPOLOG YOF MULTINA TIONA LCOMPA NIES
d eman d s at th e same time. Competition
takes place at a global level f or both
G lobal an d Tran sn ation al compan ies,
wh ile Multid omestic f irms are more ori-
en ted toward d omestic competition -
sin ce n ation al prod uct markets are too
d if f eren t to make competition at a global
level possible.
Th e organ ization al structure of th e
G lobal compan y is cen tralized an d glo-
bally scaled , an d th e main role of subsid -
iaries is to implemen t paren t compan y
strategies - th at is, main ly to act as
pipelin es of prod ucts an d strategies
(B artlett an d G h osh al, 1989, 1992).
Th e Multid omestic f irm is ch aracterized
by a d ecen tralized an d loosely coupled
organ ization al structure (B artlett an d
G h osh al, 1989, 1992). With regard to
strategy, th e Tran sn ation al h as ch arac-
teristics of both Multid omestic an d
G lobal f irms. In organ ization al d esign ,
th e Tran sn ation al is expected to sh ow
some un ique f eatures as well. It f un c-
tion s as an in tegrated an d in terd epen -
d en t n etwork; subsid iaries of Tran sn a-
tion als can h ave strategic roles an d act as
cen ters of excellen ce; we expect a large
f low of prod ucts, people, an d in f orma-
tion amon g subsid iaries (B artlett an d
G h osh al, 1989, 1992). In G lobal compa-
n ies, f lows would be expected to go
mostly f rom h ead quarters to subsid iar-
ies; Multid omestic compan ies would be
ch aracterized by a lower overall f low of
prod ucts, people, an d in f ormation (see
also Perlmutter, 1969).
Local Respon siven ess
Local respon siven ess is d ef in ed as th e
exten t to wh ich subsid iaries respon d to
local d if f eren ces in customer pref eren ces
an d is, th eref ore, an importan t elemen t
of subsid iary strategy/role. Th ere are
several ways in wh ich respon siven ess to
local d if f eren ces can be con ceptualized .
First of all, prod ucts can be actively
ad apted to d if f eren ces in local tastes an d
pref eren ces. Sin ce bein g locally respon -
sive is a key strategic requiremen t f or
both Multid omestic compan ies an d
Tran sn ation al compan ies, we expect a
relatively large proportion of prod ucts
th at are sold by th eir subsid iaries to be
ad apted or mod if ied to th e local market.
In man y in d ustries th at are trad ition ally
ch aracterized as Multid omestic
-
f or in -
stan ce th e f ood in d ustry (B artlett an d
G h osh al, 1989; Kobrin , 1994; Porter,
1986; Rall, 1989) - ad aptation of prod -
ucts is also easier an d less costly th an f or
global prod ucts - such as computers.
Th e key strategic requiremen t f or G lobal
compan ies is to man uf acture stan d ard -
ized prod ucts in a cost-ef f icien t way;
th eref ore we d o n ot expect th eir subsid -
iaries to sell a h igh proportion of prod -
ucts mod if ied f or th e local market.
In a more limited sen se, local respon -
siven ess can in volve ad aptation of mar-
ketin g to local circumstan ces to make
prod ucts more appealin g to a variety of
customers. B ecause both Multid omestic
compan ies an d Tran sn ation al compa-
n ies place h igh importan ce on local re-
spon siven ess, we expect th at subsid iar-
ies of th ese compan ies would ad apt a
h igh percen tage of marketin g to local cir-
cumstan ces. In subsid iaries of G lobal
compan ies, wh ich try to sell relatively
stan d ard ized prod ucts world -wid e, we
expect a much lower exten t of marketin g
ad aptation . However, sin ce ad aptation of
marketin g is a relatively easy an d less
expen sive way to respon d to local mar-
kets, we expect th e d if f eren ce f or th is
measure to be lower th an f or prod uct
mod if ication .
A lth ough local prod uction an d local
R&Dare n ot absolutely essen tial f or a
compan y to be locally respon sive, a local
presen ce in th is respect d oes make it
108 JOURNA LOF INTERNA TIONA LB USINESS STUDIES
A NNE-WIL HA RZING
easier. Havin g prod uction an d R&Dclose
to th e en d customer makes it easier to
perf orm th e ad aptation s th at are required
to successf ully sell th e prod uct. G lobal
compan ies are less likely to locate th ese
parts of th e value ch ain close to th e cus-
tomer, sin ce th ey will f eel less n eed to
access th is type of market in f ormation .
Th eref ore, we expect prod ucts sold by
subsid iaries of both Multid omestic an d
Tran sn ation al compan ies to h ave a
h igh er local prod uction an d R&Dcon ten t
th an prod ucts sold by subsid iaries of
G lobal compan ies. However, sin ce Tran -
sn ation al compan ies also h ave to re-
spon d to th e d eman d f or cost ef f icien cy
by f ocusin g on econ omies of scale, th ey
are n ot so pron e as Multid omestic com-
pan ies to d uplicate value ch ain activi-
ties. Subsid iaries of Tran sn ation al com-
pan ies are th eref ore expected to be less
likely to perf orm local prod uction an d
R&D. Hen ce prod ucts sold by subsid iar-
ies of Tran sn ation al compan ies are ex-
pected to h ave a lower local prod uction
an d R&Dcon ten t th an prod ucts sold by
subsid iaries of Multid omestic compa-
n ies.
In terd epen d en ce
In terd epen d en ce in d icates th e exten t
to wh ich various un its of a MNC are
d epen d en t on each oth er an d so suggests
th e level of in tegration with in th e MNC
as a wh ole. Th eref ore in terd epen d en ce is
an importan t elemen t of subsid iary
structure. We d istin guish th ree d if f eren t
levels of d epen d en cies. First, in d epen -
d en ce: th e subsid iary is barely or n ot at
all d epen d en t on h ead quarters or oth er
subsid iaries an d is operatin g as a stan d -
alon e compan y. Secon d , d epen d en ce:
th e subsid iary is main ly d epen d en t on
h ead quarters. Th ird , in terd epen d en ce:
th e subsid iary, h ead quarters an d oth er
subsid iaries all f orm part of an in terd e-
pen d en t n etwork; th ey are all d epen d en t
on each oth er. (Th ese d if f eren t types of
in terd epen d en cies can n ot be d irectly
lin ked to Th ompson 's (1967) classic
stud y, sin ce Th ompson d oes n ot d istin -
guish between d if f eren t types of sub-
un its in a compan y. His reciprocal in ter-
d epen d en ce, h owever, is probably most
comparable to our in terd epen d en ce.)
B artlett an d G h osh al (1989, 1992)
ch aracterize th e Multid omestic compan y
as a loosely coupled f ed eration of rath er
in d epen d en t n ation al subun its. Subsid -
iaries can be in d epen d en t f rom th e rest
of th e compan y, sin ce th eir major ties are
with th e local en viron men t, to wh ich
th ey h ave to be very respon sive (see also
below). We, th eref ore, expect th e major-
ity of subsid iaries in Multid omestic
compan ies to be relatively in d epen d en t
f rom both h ead quarters an d subsid iaries.
Sin ce th is relation sh ip may seem almost
tautological with our d escription of a d e-
cen tralized organ ization , we will h ave to
measure in terd epen d en ce in an objective
way. In terd epen d en ce in our stud y is
th eref ore measured as th e percen tage of
in tra-compan y sales an d purch ases in re-
lation to total sales an d purch ases. Sub-
sid iaries in Multid omestic f irms are th us
expected to buy/sell a low proportion of
th eir purch ases/sales f rom eith er h ead -
quarters an d oth er subsid iaries. Mach ar-
zin a's (1993) stud y h ypoth esized low in -
tra-compan y sales f or compan ies with a
multin ation al strategy, but h e d id n ot
f in d a Multid omestic cluster in h is em-
pirical results.
In G lobal compan ies, on th e oth er
h an d , operation s are typically in te-
grated , an d man uf acturin g is con cen -
trated in a limited n umber of location s.
Th eref ore, we expect a h igh overall level
of in tra-compan y sales an d purch ases.
G lobal compan ies of ten are organ ized ac-
VOL. 31, No. 1, FIRST QUA RTER, 2000 109
A TYPOLOG YOF MULTINA TIONA LCOMPA NIES
cord in g to a h ub-an d -spoke mod el (B art-
lett an d G h osh al, 1989, 1992), in wh ich
man y strategic f un ction s (in clud in g a
large proportion of man uf acturin g) are
still cen tralized at h ead quarters. Man y
subsid iaries h ave a sales f un ction on ly,
simply tran sf errin g prod ucts f rom h ead -
quarters to th e local market. We th ere-
f ore expect th e level of in terd epen d en ce
amon g in d ivid ual subsid iaries an d h ead -
quarters to be greater th an th e level of
in terd epen d en ce between d if f eren t sub-
sid iaries. Th us, in subsid iaries of G lobal
compan ies d epen d en ce would be more
importan t th an in terd epen d en ce.
Th e Tran sn ation al compan y is ch arac-
terized by B artlett an d G h osh al as an
in tegrated an d in terd epen d en t n etwork
of d if f eren t but equivalen t subun its, in
wh ich h ead quarters d oes n ot a priori
play a d omin an t role. Subsid iaries also
can act as strategic cen ters f or a particu-
lar prod uct or process an d can h ave spe-
cialized roles. In Tran sn ation al compa-
n ies, we th eref ore also expect a relatively
h igh level of in tra-compan y sales an d
purch ases. However, sin ce strategic
f un ction s such as prod uction may be as-
sumed by specialized subsid iaries, we
expect th e level of in terd epen d en ce be-
tween d if f eren t subsid iaries to be h igh er
th an th at between in d ivid ual subsid iar-
ies an d h ead quarters. In oth er word s, in
subsid iaries of Tran sn ation al compan ies
in terd epen d en ce is more importan t th an
d epen d en ce. Sin ce Tran sn ation al com-
pan ies h ave receptive subsid iaries as
well, we expect th e level of HQ d epen -
d en ce to be h igh er th an f or subsid iaries
of Multid omestic compan ies. Mach ar-
zin a (1993) pred icted an d f oun d a h igh
level of in tra-compan y sales f or both
G lobal an d Tran sn ation al f irms, but d id
n ot d if f eren tiate between subsid iaries
an d h ead quarters. Table 3 summarizes
th e h ypoth esized con f iguration s of MNC
an d subsid iary strategy an d structure.
TA B LE3
TYPOLOG IES OF MULTNA TIONA L COMPA NIES
Organ ization al Strategy Multid omestic G lobal Tran sn ation al
Organ ization al d esign an d
subsid iary role
Decen tralized f ed eration High Low Low
Network structure Low Low High
In ter-subsid iary
f lows Low Low High
HQ's
pipelin e
Low High Low/med ium
Cen ter of excellen ce Low Low High
Local
respon siven ess
Local
prod uction High Low Med ium
Local R&D High Low Med ium
Prod uct mod if ication High Low High
A d aptation of marketin g High Low/Med ium High
In terd epen d en ce
Total level of in terd epen d en ce Low High High
Level of HQ d epen d en ce
(d epen d en ce) Low High Med ium
Level of subsid iary d epen d en ce
(in terd epen d en ce) Low Low High
110 JOURNA L OF INTERNA TIONA L B USINESS STUDIES
A NNE-WILHA RZING
-METHODOLOG Y
Data Collection an d Sample
Data f or th e stud y were collected by
mean s of a large-scale in tern ation al mail
survey. Th e survey was sen t to CEOs an d
h uman resource man agers at th e h ead -
quarters of 122 MNCs an d to th e man ag-
in g d irectors of 1,650 wh olly own ed sub-
sid iaries in 22 coun tries. With regard to
subsid iary coun tries, six of th e eigh t
common ly d istin guish ed cultural clus-
ters (see e.g. Ron en an d Sh en kar, 1985)
are presen t in our sample (A n glo, G er-
man ic, Nord ic, Latin European , Far East,
an d Latin A merican ). Head quarters were
located in th e Un ited States, Japan , an d
seven European coun tries (Un ited Kin g-
d om, Fran ce, G erman y, Swed en , Fin -
lan d , th e Neth erlan d s, an d Switzerlan d ).
Compan ies operated in eigh t in d ustries
(electron ics; computers; motor veh icles
an d parts; petroleum prod ucts; f ood an d
beverages; ph armaceuticals, paper; an d
in d ustrial ch emicals). Sin ce th e n umber
of respon ses at h ead quarters level (25 f or
HRMman agers an d 26 f or CEOs) was too
small to allow statistical an alysis, th is
paper on ly uses th e d ata collected at sub-
sid iaries, alth ough some d ata f rom th e
CEO sample are used f or verif ication .
Question n aires were mailed in two
batch es: on e in October 1995 an d on e in
Jan uary 1996.5 Remin d ers to th e f irst
batch were sen t in Jan uary 1996, about
th ree mon th s af ter th e origin al mailin g.
Remin d ers to th e secon d batch were sen t
in March 1996, about six weeks af ter th e
origin al mailin g. Question n aires were
prin ted on a pale yellow paper an d cover
letters were mail-merged f or an in d ivid -
ualized appeal. Th e question n aire con -
tain ed 56 question s, most of th em
closed -en d ed . A respon se card , in clud -
in g th e respon d en t's n ame an d ad d ress,
was in clud ed with th e question n aire. Re-
spon d en ts could use th is respon se card
to in d icate th at th ey d id n ot wan t to par-
ticipate in th e survey or to in d icate th at
th ey h ad sen t back th e question n aire
an on ymously by separate post.
In cen tives to in crease respon se rates
in clud ed an of f er of th e results, an in ter-
n ation al committee of recommen d a-
tion 6, an d several meth od s of makin g th e
relation between research er an d respon -
d en ts less an on ymous an d more in terac-
tive th an in th e usual mail question n aire
approach . Th e overall respon se rate at
subsid iary level was 20 percen t, varyin g
f rom 7.1 percen t in Hon g Kon g to 42.1
percen t in Den mark (see Harzin g, 1997
an d 1999 f or an an alysis of respon se rate
d if f eren ces). Th e total n umber of 287
subsid iary respon ses represen ts 104 d if -
f eren t h ead quarters (85 percen t of our
population ). Th e n umber of respon ses
per h ead quarters varied f rom 1 to 11.
Measures
Sin ce n o question s were read ily avail-
able to measure th e corporate strategy,
we created our own question s, based on
th e ch aracteristics of th e d if f eren t types
of f irms as d escribed in B artlett an d
G h osh al (1989, 1992).7 Four statemen ts
were con structed to measure wh eth er
competition was pred omin an tly global
or local an d wh eth er th e corporate strat-
egy was f ocused on ach ievin g econ omies
of scale or local d if f eren tiation . Subsid -
iary man agers migh t n ot be f ully in -
f ormed of th e strategy applied by th e
MNCas a wh ole, an d th eir perception of
th is strategy migh t be in f luen ced by th eir
own ch aracteristics. We took various
measures to resolve th is problem. First,
we d ecid ed to exclud e f rom th e an alysis
all h ead quarters f or wh ich we h ad less
th an th ree respon ses
- in ord er to limit
th e ch an ce th at our results would be in -
f luen ced by sin gle respon d en t peculiari-
VOL. 31, No. 1, FIRST QUA RTER, 2000 111
A TYPOLOG YOF MULTINA TIONA L COMPA NIES
TA B LE 4
SCORES OF THE THREE CLUSTERS ONTHE FOUR STRA TEG YVA RIA B LES
G lobal Domestic Nation al Econ omies
Cluster Names Competition Competition Respon siven ess of Scale
Multid omestic 3.25 3.71 3.831 3.27
G lobal 4.111
2.211
2.86 3.911
Tran sn ation al 4.021 2.501 3.851
3.711
Ch i-square 23.685, 0.000 59.927, 0.000 45.883, 0.000 9.739, 0.008
NOTE. Mean s covered by th e same lin e are n ot sign if ican tly d if f eren t at a 0.05 level of
sign if ican ce.
ties. Th is red uced our sample size to 208
subsid iaries. Subsequen tly, we per-
f ormed a cluster an alysis on th e f our
question s measurin g h ead quarters strat-
egy, settin g th e n umber of clusters at
th ree. A s Table 4 sh ows, th e results con -
f orm closely to our con ceptual typology.
Th e f irst group, labeled Multid omestic,
combin es h igh scores on n ation al re-
spon siven ess an d d omestic competition
with th e lowest scores on global compe-
tition an d econ omies of scale. Th e sec-
on d group h as an opposite prof ile, h igh
global an d low d omestic competition , a
low level of n ation al respon siven ess an d
a h igh level of econ omies of scale. A ll
d if f eren ces between th e G lobal an d Mul-
tid omestic clusters are sign if ican t at
0.001. Firms in th e Tran sn ation al cluster
combin e a f ocus on n ation al respon sive-
n ess an d econ omies of scale. Th ey d if f er
f rom Multid omestic compan ies in th eir
h igh er f ocus on econ omies of scale (p =
0.03, on e-tailed ) an d f rom G lobal compa-
n ies in th eir h igh er f ocus on n ation al
respon siven ess (p = 0.000). Competition
f or th ese f irms is mostly global alth ough
th ey score sligh tly h igh er on d omestic
competition th an f irms in th e global
cluster (p = 0.0502, on e-tailed ).
Our secon d step was to verif y wh eth er
d if f eren t subsid iaries of th e same MNC
sh ared th e same opin ion on th e type of
corporate strategy th at was f ollowed in
th eir compan y. To th is en d we mad e a
cross-tabulation of th e cluster member-
sh ip f or th e 46 h ead quarters in clud ed in
our sample. In n early h alf of th e cases
(22), th e cluster membersh ip was th e
same f or each of th e subsid iaries. In an -
oth er 15 cases on ly on e of th e subsid iary
man agers h ad a d if f eren t opin ion . In all
cases th e d evian t cluster membersh ip
was in a cluster th at was most similar to
th e cluster id en tif ied by th e oth er sub-
sid iary man agers (i.e. Multid omestic/
Tran sn ation al or global/Tran sn ation al).
Th eref ore th ese cases were accepted as
sh owin g a sh ared perspective on th eir
corporate strategy. In an oth er 9 cases,
h owever, subsid iaries were placed in
th ree d if f eren t clusters. Th ese h ead quar-
ters were th eref ore removed f rom f urth er
an alysis, resultin g in a f in al sample of
166 subsid iaries represen tin g 37 h ead -
quarters.Th ese were subsequen tly com-
pared to th e d ata gath ered at h ead quar-
ters level. Un f ortun ately, we h ad in f or-
mation at th at level f or on ly 8 of th e 37
h ead quarters.However, f or th ese 8 h ead -
quarters, scores on th e 4 strategy vari-
ables were broad ly comparable to sub-
sid iary scores f or each compan y.8 Wh en
subsid iary respon ses were roun d ed to
112 JOURNA LOF INTERNA TIONA LB USINESS STUDIES
A NNE-WIL HA RZING
TA B LE 5
TEST OF TYPOLOG IES OF MULTINA TIONA LCOMPA NIES|
Pairs Dif f .
Exp. Dif f ./ at 0.05
Corporate Strategy Multid omestic G lobal Tran suation al Ch i-Square (1-Tailed )
Corporate organ ization al d esign
Decen tralized f ed eration High Low Low Yes M> T > G
.56 -.35 -.05 24.884,.000
Network structure Low Low High Partly T&M> G
.25 -.44 .40 23.026,.000
In ter-subsid iary f lows Low Low High Yes T > M&G
-.17 -.23 .51 16.249,.000
HQ's pipelin e Low High Low/med ium Yes G > M&T
-.50 .52 -.25 34.324,.000
Cen ter of excellen ce Low Low High Yes T > M&G
-.12 -.19 .40 9.312, 0.10
Local respon siven ess
Local prod uction High Low Med ium Yes M> T > G
.44 -.28 .07 17.506,.000
Local R&D
High
Low Med ium Yes M> G
.30 -.25 .05 7.847,.020
Prod uct mod if ication High Low High Yes M&T > G
.41 -.39 .15 20.524,.000
A d aptation of marketin g High Low/med ium High Yes T&M> G
.09 -.22 .23 6.089,.048
In terd epen d en ce
Total level of in terd epen d en ce Low High High Yes G &T > M
-.47 .23 .13 15.454,.000
Level of HQ d epen d en ce Low High Med ium Yes G > T > M
-.57 .42 -.05 28.401,.000
Level of subsid iary d epen d en ce Low Low High Partly T > G
-.03 -.16 .21 4.342,.114
th e n earest in teger9, a d if f eren ce be-
tween h ead quarters an d subsid iary score
occurred in on ly 7 of th e 32 compari-
son s. Th e d if f eren ce between h ead quar-
ters an d subsid iary scores was n ever
larger th an 1 (on a 5-poin t scale), an d in
n on e of th e compan ies d id th e scores f or
more th an on e variable d if f er between
h ead quarters an d subsid iaries. We th ere-
f ore h ave con f id en ce in th e accuraten ess
of subsid iary scores on th e strategy vari-
ables. A s f or corporate strategy, corpo-
rate organ ization al d esign question s
were also based on ch aracteristics of th e
d if f eren t types of f irms as d escribed in
B artlett an d G h osh al (1989, 1992).
Local respon siven ess was measured
with f our items askin g f or th e percen tage
of local R&Dan d local prod uction in cor-
porated in prod ucts sold by th e subsid -
iary an d th e percen tage of prod ucts an d
marketin g th at was substan tially mod i-
f ied f or th e local markets. A s in d icated
above in terd epen d en ce was operation al-
ized usin g a relatively objective measure:
th e percen tage of in tra-compan y sales
an d purch ases. In ord er to be able to
d istin guish between d epen d en ce an d in -
terd epen d en ce, respon d en ts were to d if -
f eren tiate between th eir purch ases f rom
or sales to h ead quarters an d subsid iaries.
RESULTS
We h ave reprod uced th e th eoretical
pred iction s in Table 5. In ad d ition , th e
table in clud es th e mean levels of th e d if -
f eren t variables f or each of th e th ree
main organ ization al mod els. B ef ore cal-
culatin g th e mean levels, all variables
were stan d ard ized , sin ce d if f eren t scales
h ad been used f or d if f eren t variables.
Column 5 of Table 5 in d icates wh eth er
th e d if f eren ces between th e th ree organ i-
zation al mod els were in th e expected d i-
VOL. 31, No. 1, FIRST QUA RTER, 2000 113
A TYPOLOG YOF MULTINA TIONA LCOMPA NIES
rection . Sin ce th e d istribution of most
variables was f oun d to be n on -n ormal
(K-S Lillef ors test of n ormality), n on -
parametric tests were applied ; Ch i-
square value resultin g f rom a Kruskal-
Wallis A n ova an alysis reveals wh eth er
th ere is an overall d if f eren ce between th e
th ree mod els. Th e sixth column summa-
rizes wh ich of th e pairs are d if f eren t at
an 0.05 level of sign if ican ce (Man n -
Wh itn ey tests).
Organ ization al Design
Th e result f or most of our organ iza-
tion al d esign variables con f ormed to our
pred iction s. Respon d en ts in subsid iaries
of compan ies with a Multid omestic strat-
egy in d icated a sign if ican tly h igh er
agreemen t with th e statemen t th at th eir
compan y could be ch aracterized as a d e-
cen tralized n etwork. A n etwork struc-
ture was seen as most typical f or th e
compan ies with a Tran sn ation al strat-
egy, alth ough th e d if f eren ce was on ly
sign if ican t between Tran sn ation al an d
G lobal compan ies. A s pred icted , in ter-
subsid iary f lows of prod ucts, people,
kn owled ge, an d in f ormation were seen
as most common in Tran sn ation al com-
pan ies, as were subsid iaries takin g on
roles as cen ters of excellen ce. Con f orm-
in g to our h ypoth esis, subsid iaries with a
"pipelin e" role were seen as most likely
by subsid iaries f rom compan ies with a
G lobal strategy.
Local Respon siven ess
Con cern in g local respon siven ess, d if -
f eren ces con f orm to our pred iction s to a
large exten t. Prod uct mod if ication is in -
d eed sign if ican tly more likely in subsid -
iaries of Tran sn ation al an d Multid omes-
tic compan ies. A s was expected , th e
smallest d if f eren ce was f oun d f or ad ap-
tation of marketin g. Con f ormin g to our
expectation s, h owever, ad aptation of
marketin g was h igh er f or subsid iaries of
Tran sn ation al an d Multid omestic com-
pan ies th an f or subsid iaries of G lobal
compan ies. Th e results f or local prod uc-
tion sh ow th at th is is in d eed most likely
in subsid iaries of Multid omestic compa-
n ies an d least likely in subsid iaries of
G lobal compan ies, wh ile subsid iaries of
Tran sn ation al compan ies f all in be-
tween . Th e same is true f or local R&D,
alth ough in th is case subsid iaries of
Tran sn ation al compan ies are n ot sign if -
ican tly d if f eren t f rom eith er subsid iaries
of G lobal (p = 0.058, on e-tailed ) or sub-
sid iaries of Multid omestic compan ies
(p = 0.12, on e-tailed ).
In terd epen d en ce
A s expected , subsid iaries of both
G lobal an d Tran sn ation al compan ies ex-
pose a h igh er total level of in terd epen -
d en ce th an subsid iaries of Multid omes-
tic compan ies. Furth er,as pred icted , th e
level of d epen d en ce, th at is d epen d en ce
on h ead quarters f or purch ases an d sales,
is h igh est f or subsid iaries of G lobal com-
pan ies an d lowest f or subsid iaries of
Multid omestic compan ies, wh ile subsid -
iaries of Tran sn ation al compan ies f all
between th ese two extremes. Th e results
with regard to in terd epen d en ce, th at is
d epen d en ce on oth er subsid iaries f or
purch ases an d sales, are in th e expected
d irection in th at th is is h igh est f or sub-
sid iaries of Tran sn ation al compan ies.
However, d if f eren ces are more mod est
th an f or d epen d en ce, an d th e d if f eren ce
is on ly sign if ican t between subsid iaries
of Tran sn ation al an d G lobal compan ies.
DIscusSION A NDCONCLUSIONS
Overall, th e results of our empirical
an alysis provid ed a h igh level of support
f or our h ypoth esized typologies. Th e
on ly un expected result was th e rela-
tively h igh score of Multid omestic com-
114 JOURNA LOF INTERNA TIONA LB usiNEss STUDIES
A NNE-WILHA RZING
pan ies on th e n etwork structure. Th is
migh t h ave been caused by th e secon d
part of th e statemen t th at was used to
measure th e n etwork structure: "h ead -
quarters d oes n ot a priori play a d omi-
n an t role. " A lth ough th e f irst part of th e
statemen t would n ot apply to Multid o-
mestic compan ies, th e secon d part of th e
statemen t migh t h ave led some respon -
d en ts to agree to somewh at with th e
statemen t as a wh ole. A f urth er an alysis
of th e respon ses f or subsid iaries of Mul-
tid omestic compan ies sh owed th at n on e
of th e respon d en ts eith er stron gly agreed
or stron gly d isagreed with th e statemen t,
in d icatin g th at it migh t h ave been an
ambiguous question f or man y respon -
d en ts. Some oth er d if f eren ces were in
th e expected d irection , but d id n ot d if f er
as stron gly between th e th ree types of
compan ies as expected .
Our stud y was able clearly to d istin -
guish th ree types of MNCs th at d if f ered
systematically on a n umber of importan t
ch aracteristics. G lobal compan ies oper-
ate in in d ustries with relatively stan -
d ard ized con sumer n eed s th at make th e
realization of econ omies of scale impor-
tan t. Sin ce price competition is impor-
tan t, th e d omin an t strategic requiremen t
is ef f icien cy, an d th ese compan ies th ere-
f ore in tegrate an d ration alize th eir pro-
d uction to prod uce stan d ard ized prod -
ucts cost-ef f icien tly. Subsid iaries typi-
cally f ulf ill roles as "pipelin es" f or
h ead quarters an d are usually very d e-
pen d en t on h ead quarters f or th eir sales
an d purch ases. Th ey are n ot supposed to
respon d actively to th e local market d e-
man d s, f or in stan ce in prod uct ad apta-
tion . If th ey are locally respon sive, it is
most likely to be in th e area of marketin g
ad aptation . Local prod uction an d local
R&Dare less common th an in subsid iar-
ies of oth er types of MNCs.
In man y respects Multid omestic com-
pan ies are th e reverse of G lobal compa-
n ies. Prod ucts or services are d if f eren ti-
ated to meet d if f erin g local d eman d s,
an d policies are d if f eren tiated to con -
f orm to govern men tal an d market d e-
man d s. Local d eman d is d etermin ed by
cultural, social, an d political d if f eren ces
amon g coun tries. Th e compan y can be
ch aracterized as a d ecen tralized n et-
work. Subsid iaries are respon sive to th e
local market an d ad apt both prod ucts
an d marketin g to local circumstan ces.
Th is ad aptation is mad e easier because
prod ucts of ten are prod uced locally an d
con tain a large proportion of local R&D.
Subsid iaries operate relatively in d epen -
d en tly f rom oth er subsid iaries an d espe-
cially f rom h ead quarters,in a sen se th at
th ey buy/sell a very low proportion of
th eir in put/output f rom h ead quarters or
oth er subsid iaries.
In a sen se, a Tran sn ation al compan y
combin es ch aracteristics of both G lobal
an d Multid omestic compan ies; it tries to
respon d simultan eously to th e some-
times-con f lictin g strategic n eed s of
global ef f icien cy an d n ation al respon -
siven ess. Th e compan y can be ch aracter-
ized as an in terd epen d en t n etwork. Ex-
pertise is spread th rough out th e organ i-
zation with large f lows of people,
prod ucts, an d kn owled ge between sub-
sid iaries; subsid iaries can serve as stra-
tegic cen ters f or a particular prod uct-
market combin ation . Subsid iaries usu-
ally also are respon sive to th e local
market. Prod ucts an d marketin g are
ad apted f or local markets an d th ere is a
h igh er proportion of local prod uction
an d R&Dth an in subsid iaries of G lobal
compan ies. Subsid iaries in th is type of
compan y are more d epen d en t on oth er
subsid iaries f or th eir in puts an d outputs
th an on h ead quarters; th is ten d en cy con -
f irms th e n etwork type of organ ization al
VOL. 31, No. 1, FIRST QUA RTER, 2000 115
A TYPOLOG YOF MULTINA TIONA LCOMPA NIES
structure th at is typical f or Tran sn ation al
compan ies.
Our results sh ow th at B artlett an d
G h osh al's typology, based on in -d epth
case stud ies of n in e MNCs, can be con -
f irmed in a large-scale empirical settin g.
Th ey also f urth er exten d our kn owled ge
about th e relation sh ip between MNC
strategy, organ ization al d esign an d sub-
sid iary ch aracteristics. It would be too
early, h owever, to con sid er th ese th ree
MNCtypes as id eal-type con f iguration s
with th e associated positive perf orman ce
ef f ects of a f it between th e various con -
f iguration al elemen ts. In ord er to be able
to d o so, f uture research ers would n eed
to ch oose caref ully variables to be in -
clud ed in th e con f iguration s an d mea-
sure th em in a more soph isticated way
th an we h ave been able to d o in th is
stud y. Th ey would also n eed to d evise
objective perf orman ce measures th at are
comparable across coun tries. We h ope
th at by provid in g evid en ce of th e f easi-
bility of an an alysis of MNCtypologies
on a larger scale, we h ave mad e th e f u-
ture task of a more complex con f igura-
tion type of an alysis a less d aun tin g on e.
NOTES
1. In ad d ition to th e stud ies summa-
rized in Table 2, th ere h ave been several
stud ies th at looked specif ically at th e
subsid iary roles. Th ese stud ies, h ow-
ever, used a termin ology th at is n ot easy
to compare with th e stud ies d escribed
above an d moreover are n ot easily com-
parable amon g th emselves. B irkin sh aw
an d Morrison 's (1995) presen t an in te-
gration of six d if f eren t subsid iary strat-
egy typologies. Th eir local implemen ter
category, h owever, in clud es both stan d -
alon e subsid iaries with a f ull ran ge of
value ch ain activities reprod uced in th e
h ost coun try an d closely in tegrated sub-
sid iaries. Th e stud y by Martin ezan d Ja-
rillo (1991) is more easily related to th e
typologies d iscussed above in th at it d is-
tin guish es th ree d if f eren t types of sub-
sid iaries: auton omous, receptive an d ac-
tive. Th ese subsid iaries are d if f eren ti-
ated with regard to th eir d egree of
in tegration with th e group an d th eir d e-
gree of localization . Th e stud y subse-
quen tly sh ows th at a h igh level of in te-
gration is related to a h igh in ten sity of
coord in ation or con trol. Sin ce n on e of
th e oth er stud ies (in clud in g th e on e by
B irkin sh aw an d Morrison ) resulted in
clear empirically verif ied d if f eren ces be-
tween subsid iaries f ollowin g d if f eren t
strategies an d th ey are n ot easily related
to th e con cepts used in our own stud y,
we will n ot d iscuss th ese stud ies an y
f urth er an d will f ocus on th e stud ies
summarized in Table 2.
2. Sin ce we pref er to use th e term mul-
tin ation al as a gen eral terms f or compa-
n ies operatin g in tern ation ally, we h ave
substituted B artlett an d G h osh al's "mul-
tin ation al" with th e comparable term
"multid omestic".
3. Roth , Sch weiger an d Morisson d id
assess in ter-rater reliability in a pre-test
with 17 respon d en ts f rom 6 compan ies.
Th ey d o n ot, h owever, report th e results
of th is test an d in d icate th at it was based
on a con ven ien ce sample with a limited
n umber of respon d en ts (2-3 f or each
busin ess un it).
4. A n earlier version of th e article also
in clud ed two ad d ition al variables: con -
trol mech an isms an d h uman resource
practices (more in particular expatriate
presen ce). However, d ue limitation s in
terms of th e len gth of th e article, th ese
variables h ad to be removed f rom th e
f in al version of th e article. Th e auth or
would be h appy to supply read ers th at
are in terested in th e results f or th ese
variables with an exten d ed version of th e
article.
116 JOURNA LOF INTERNA TIONA LB USINESS STUDIES
A NNE-WIL HA RZING
5. A pilot mailin g was sen t to 96 sub-
sid iaries in 12 d if f eren t coun tries at th e
begin n in g of Jun e 1995. In th e pilot mail-
in g respon d en ts were in vited to n ote
d own an y d if f iculties th ey h ad in an -
swerin g th e question s. Most remarks in -
volved question s th at were n ot com-
pletely clear. Th ese question s were ad -
justed . Th e question n aire was also sen t
to all members of th e committee of rec-
ommen d ation , acad emics in 20 d if f eren t
coun tries. In gen eral, th e question n aire
was very well received . However, quite a
n umber of recommen d ation s were mad e
con cern in g th e word in g of question s an d
scale markers. In ad d ition , some ques-
tion s were th ough t to be too d if f icult to
an swer f or subsid iary man agers. Most of
th e recommen d ation s were in clud ed in
th e f in al version of th e question n aire an d
a n umber of question s were d eleted .
6. Th e f in al committee con sisted of th e
f ollowin g members (in alph abetical or-
d er). Prof . d r. Joh n Dun n in g, Rutgers
Un iversity, USA ; Prof . d r. Paul Evan s,
INSEA D, Fran ce; Dr. A n th on y Fern er,
Un iversity of Warwick, Un ited Kin g-
d om; Dr. Carlos G arcia Pon t, IESE,
Spain ; Prof . d r. G un n ar Hed lun d , Stock-
h olm Sch ool of Econ omics, Swed en ;
Prof . d r. Martin Hilb, Hoch sch ule St.
G allen , Switzerlan d ; Prof . d r. G eert Hof -
sted e, IRIC, Th e Neth erlan d s; Dr. Jorma
Larimo, Un iversity of Vaasa, Fin lan d ;
Prof . d r. Ch ristian Maroy, Un iversite
Cath olique d e Louvain , B elgium; Dr.
A ah ad Osman -G an i, Nan yan g B usin ess
Sch ool, Sin gapore; Prof . d r. Jaap
Paauwe, Erasmus Un iversity, Th e Neth -
erlan d s; Prof . d r. Victor Proch n ik, Fed -
eral Un iversity of Rio d e Jan eiro, B razil;
Prof . d r. G ord on Red d in g, Un iversity of
Hon g Kon g, Hon g Kon g; Prof . d r. Marin o
Regin i, IRES Lombard ia, Italy; Dr. Oscar
Risso Patron , Un iversid ad A rgen tin a
Joh n F. Ken n ed y, A rgen tin a; Prof . d r.
A rn d t Sorge, Humbold t Un iversitat, G er-
man y; Prof . d r. B ill Roch e, Un iversity
College Dublin , Irelan d ; Prof . d r. Dan n y
Van Den B ulcke, Un iversiteit A n twer-
pen , B elgium; Prof . d r. Yoko San o, Keio
Un iversity, Japan ; Prof . d r. Ud o Wagn er,
Un iversitait Wien , A ustria; Dr. Steen
Sch euer, Copen h agen B usin ess Sch ool,
Den mark; Dr. Den ice Welch , Norwegian
Sch ool of Man agemen t, Norway.
7. Th e items used to operation alize
each of th e variables can be f oun d in th e
appen d ix.
8. B ecause of th e small size of th e CEO
sample, we d ecid ed n ot to perf orm a
cluster an alysis on th e f our variables,
an d we compare actual scores on th e
f our strategy variables between h ead -
quarters an d subsid iaries in stead .
9. Wh ere scores f or th e in d ivid ual
question s were n ot id en tical f or th e d if -
f eren t subsid iary an swers, th e average
score resulted in a n on -in teger value.
Th is th en subsequen tly h ad to be
roun d ed to th e n earest in teger in ord er to
compare it with th e sin gle h ead quarters
an swer.
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119
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A PPENDIX
Con struct: corporate strategy (Likert scale 1-5, scale an ch ors: stron gly d isagree-stron gly agree)
* Our compan y's strategy is f ocused on ach ievin g econ omies of scale by con cen tratin g its
importan t activities at a limited n umber of location s.
* Our compan y's competitive position is d ef in ed in world -wid e terms. Dif f eren t n ation al
prod uct markets are closely lin ked an d in tercon n ected . Competition takes place on a global
basis.
* Our compan y's competitive strategy is to let each subsid iary compete on a d omestic level as
n ation al prod uct markets are jud ged too d if f eren t to make competition on a global level
possible.
* Our compan y n ot on ly recogn izes n ation al d if f eren ces in taste an d values, but actually tries
to respon d to th ese n ation al d if f eren ces by con sciously ad aptin g prod ucts an d policies to th e
local market.
Con struct: organ ization al d esign (Likert scale 1-5, scale an ch ors: stron gly d isagree-stron gly
agree)
* In our compan y, a typical subsid iary's main f un ction is to d eliver compan y prod ucts an d
carry out h ead quarters' strategies. In our compan y subsid iaries regularly act as a strategic
cen terf or a particular prod uct orprocess, in oth er word s subsid iaries regularlyperf orm a role
as 'cen ter of excellen ce'.
* Our compan y can be ad equately d escribed as a very loosely coupled an d d ecen tralized
f ed eration of rath er in d epen d en t n ation al subun its.
* Our compan y can be ad equately d escribed as an in tegrated an d in terd epen d en t n etwork of
d if f eren t but equivalen t subun its, in wh ich h ead quarters d oes n ot a priori plays a d omin an t
role.
* In our compan y, th ere are n ot on ly large f lows of compon en ts an d prod ucts, but also of
resources, people an d in f ormation amon g compan y's subsid iaries.
Con struct: in terd epen d en ce (Six poin t scale 0%, 1-25%, 26-50%, 51-75%, 76-99%, 100%)
* Please give your best estimate of th e percen tage of purch ases (in cl. parts/semi-man uf actured
articles) f rom h ead quarters in relation to th e total amoun t of purch ases of th is subsid iary.
* Please give your best estimate of th e percen tage of purch ases (in cl. parts/semi-man uf actured
articles) f rom oth er subsid iaries of th e group in relation to th e total amoun t of purch ases of
th is subsid iary.
* Please give your best estimate of th e percen tage of th e yearly output (in cl. parts/semi-
man uf actured articles) of th is subsid iary th at is sold or d elivered to h ead quarters.
* Please give your best estimate of th e percen tage of th e yearly output (in cl. parts/semi-
man uf actured articles) of th is subsid iary th at is sold or d elivered to oth er subsid iaries of th e
group.
Con struct: local respon siven ess (Six poin t scale 0%, 1-25%, 26-50%, 51-75%, 76-99%, 100%)
* Please give your best estimate of th e % of R&Din corporated in to prod ucts sold by th is
subsid iary th at is actually perf ormed by th is subsid iary.
* Please give your best estimate of th e % of compan yprod ucts sold by th is subsid iary th at h ave
been man uf actured (to an y d egree) by th is subsid iary.
* Please give your best estimate of th e % of compan y prod ucts sold by th is subsid iary th at h ave
been created or substan tially mod if ied f or th is market.
* Please give your best estimate of th e % of marketin g f or compan y prod ucts sold by th is
subsid iary th at is con sciously ad apted to local circumstan ces.
12 0 JOURNA LOF INTERNA TIONA LB USINESS STUDIES