Transnational Organization - Solution for the Multi National Cooperation‪?‬

1.1. Problem Background
International companies are confronted with major organizational problems as they often
have to manage a complex system of subsidiaries and at the same time need to respond to
the demands of economic and political forces.
The organizational structure of companies get more and more complex. In times of
falling national growth rates and globalisation1, many companies expand into new
markets. This global expansion trend can be seen by the intensive growth of foreign
direct investment outflows in the last ten years.2 Philips, for example, has build up a
huge network of subsidiaries in 60 countries.3 As companies expand, the flow of goods,
resources and information among organizational units rapidly increases4, and it becomes
more and more complicated to manage, control and learn from subsidiaries.
Demands on companies have also changed as “economic and political imperatives are
rising simultaneously in opposite directions“5. Economic forces lead towards
globalisation demanding minimized unit costs while political forces ask for national
responsiveness as a result of protectionism for local economies.6 Today, companies are
confronted with the demands of efficiency and responsiveness at the same time.7
1.2. Aim of the paper
In the following paper, I will analyse Bartlett and Ghoshals’ transnational solution as a
means to cope with the complex organization and conflicting demands on Multinational
Cooperation (MNC), and focus my discussion on advantages and problems from a
control perspective.
1 Donaldson (2002), p.13.
2 Hill (2001), p. 183.
3 Goshal/Bartlett (1990), p. 77 [Art. 22].
4 Bartlett/Ghoshal (1987). p.47 [Article 12].
5 Martinez/Jarillo (1989), p. 500 [Article 23].
6 Hill (2001), p. 386. and Bartlett/Ghoshal (1987). p.9 [Article 11].
7 Bartlett/Ghoshal (1987). p.10 [Article 11].