Academic journal article Management International Review

From Stopford and Wells's Model to Bartlett and Ghoshal's Typology: New Empirical Evidence. (1)

Academic journal article Management International Review

From Stopford and Wells's Model to Bartlett and Ghoshal's Typology: New Empirical Evidence. (1)

Article excerpt

Abstract

* The aim of this paper is to test whether the theoretical models concerning international structures and strategic approaches explain the behaviour of the internationalisation of firms from a newly liberalised Economy.

Key Results

* Using a sample of 117 Spanish MNC, a high correlation between the theoretical models and the development of the international strategy in the sampled firms has been validated.

Introduction

When a company establishes a foreign subsidiary new relationships will appear, forcing that company to adapt its organisational structures. In general, there is no one way to adapt to these new conditions, but there are some patterns of behaviour that have been observed in some cases. The diversification of products is related to product divisions, the diversification of markets is related to area divisions and both types of diversification are associated with matrix or mixed structures. However, it will be insufficient just to change the structure; a set of strategic variables has to be considered. These variables shape the organisational processes that flow along the structures (Bartlett 1986, Bartlett/Ghoshal 1989). Therefore, the research of organisational processes which allow the co-ordination and control of international activities has turned into one of the crucial aspects to be considered in multinational companies (Ghoshal/Nohria 1993, Nohria/Ghoshal 1994). Both the strategic approach and the organisational structure of the company have a decisive influence in these processes.

These initial models were established in the last two decades but recently a new interest in these two fields of study has developed (Egelhoff 1997, Hedlund/ Ridderstrale 1997, Hedlund 1999, Harzing 2000). Following this stream of research, the purpose of this paper is to analyse these "classical" organisational theories in the context of a newly liberalised economy.

The paper attempts to answer the following question: Are existing theories about international structures and international strategic approaches valid for the strategies of foreign investors from a newly integrated/liberalised country like Spain? The paper supports the argument that the basic underlying international strategy-structure fit seems to apply. Therefore, this research: 1) attempts to reconcile some differences in existing theory, and 2) investigates how applicable existing theory is to emerging Spanish MNCs. Moreover, the paper shows the interaction between the formal structures and the Bartlett and Ghoshal's research. This fact also contributes to overcome the problem of the relative lack of empirical work verifying the extent of such models (Harzing 2000).

The article is structured as follows. Section two reviews the main characteristics of the international structures and strategic focuses. It also establishes the hypotheses that test the relationships between those structures, the growth strategy and the strategic focuses adopted by companies. The next section discuses the methodology applied in the research and the operationalisation of the variables whereas section four presents the statistical analysis and a discussion of the results. Finally, the last section reveals the main conclusions.

Literature Review and Hypotheses

International Structures

Companies may adopt a variety of structural forms when they implement an international strategy. These structures have been identified and described in a great number of works (Stopford/Wells 1972, Robock/Simmonds 1973, Franko 1976, Galbraith/Nathanson 1978, Egelhoff 1982, Dunning 1993). In the initial stage of the international expansion, foreign sales are an extension of domestic sales. As long as the firm increases its international presence by creating some sales subsidiary, a mother-daughter structure can be adopted (Franko 1974). A high level of independence from the corporate strategy and the transfer of expatriates, that implies a control strategy based on socialisation, characterise that structure (Edstrom/Galbraith 1977). …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.