Academic journal article International Management Review

Towards a Paradigm of Strategic Cell Networks for Corporate Configuration and Coordination Amidst Conflict, Instability and Risk

Academic journal article International Management Review

Towards a Paradigm of Strategic Cell Networks for Corporate Configuration and Coordination Amidst Conflict, Instability and Risk

Article excerpt

[Abstract] Conflict, instability, and risk in the business environment have been experienced throughout the ages. The configuration and coordination of institutions or corporations that survived and grew, show common factors, such as networks of cells, that could provide us with a model for sustainable organization of business transactions towards a specified vision, mission, and goal. The contribution of this paper is that it combines these common factors to give a structure that is resilient through strife, and this structural model is drawn from an institution that is also a transnational corporation, the Catholic Church, as well as a powerful economy- the Chinese worldwide network of cells and firms. The Corporate Structure proposed in this paper can be implemented by Corporations to support strategy and ensure stability of operations amidst environmental turbulence.

[Keywords] networks; cells, international management; corporate structure for stability

Introduction

Chandler (1962) emphasized that strategy has to be supported by the appropriate corporate structure for success. A review of Configurations and Coordination in Transnational Corporations (TNC) would help to arrive at factors for a structure that helps sustain a corporation through conflict, instability, and risk. A structural model can be suggested based on these factors. Corporations that resemble this model can be identified to confirm this model.

Paradigms by Porter, Ohmae, Bartlett-Ghoshal/Reich, Rugman-D'Cruz, provide structures for international businesses and for environments with conflict, instability, and high risk. An evaluation of these structures could lead us to a sustainable model for international business. The high costs of markets, hierarchies, and R&D, exacerbated by conflicts internationally, coupled with developments in communications technologies, would facilitate a flexible network organization of strategic cells (SC). This paper argues that the different configurations provided by the mentioned paradigms have served different strategies and conformed to the different theories of advantage, while Strategic Cell Networks can embrace all configurations for the different types of strategies and their theoretical bases. Each firm has to choose a network configuration according to its competencies, resources, and partners available in order to buffer the effects of conflict and instability and to have the necessary flexibility in business operations. Corporate success can be attained through one or more structures, and these structures will enable respective strategies (Chandler, 1962). Extant theories for each structure-strategy coupling frame and explain the effects of the coupling.

Network Advantage

A network advantage is through interpersonal connections that are sustained to benefit the whole. Much of network research investigates social and business ties. Economic transactions are embedded in social relations, though economists choose to ignore these (Granovetter, 1973, 1985). Historically business transactions have been effected through the alternative means of the firm or markets (Coase, 1937). Transactions with uncertain outcomes that recur frequently and bear a significant investment of time, money, and energy may not be transferred to the markets and, therefore, find their place in a hierarchically structured firm (Williamson, 1975). Therefore, organizational form is important. The dichotomous view of markets and hierarchies (Williamson, 1975) sees the firm as planned coordination in markets (Richardson, 1972). This view from transaction cost economics separates entities and economic transactions from their social context. Historical and anthropological evidence does not support the view that markets are starting points of exchange from which all other methods evolve, since there was no market in the modern sense of the word in the classical world (Finley, 1973) nor were there hierarchies as end points evidenced by business history. …

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