Components of Global Network Organizations Emergent internal networks Connections to flexible, dynamic external networks Network linkages governed by mutual trust and shared collective outcomes Sophisticated communication and information technology infrastructure

Strategic Commitment International few countries international operations are neither specialized by country nor standardized across all Multinational facilities and sales in many countries specialized by country Global facilities and sales in many countries standardized approach across countries

Standardization of products across countries (global) Specialization of products by country (multidomestic) International Division Global Geographic Global Product Heterarchy Matrix

International Division “product” structure with separate international division Global Product product divisions handle their own international operations (e.g., Eaton Corporation) product standardization with low country autonomy economies of scale Global Geographic geographic divisions handle all functions and products for a country (e.g., Dow Chemical) product customization by country and high country autonomy Internal Network Designs

Global Matrix balances standardization with some country specialization (e.g., ABB) local country managers have two bosses: country boss and product boss some economies of scale but less than for global product structure “Heterarchy” multiple centers of influence and decision-making rather than central headquarters coordination by shared values and culture many labels: network, adhocracy, technocracy, T-form, cellular, postbureaucratic, spherical, spoder’s web, “blueberry pancake”, etc.

Linakges in N.V. Philips; Source: Ghoshal &Barlett, 1990, p. 605

Spider’s Web Form

Communication Technology and Internal Networks Connectivity: ability of each member of a defined public to communicate with each other Communality: ability of each member of a defined public to contribute to, access and use a jointly held database, e.g., company library

Communication Technology and Internal Networks Emergent, interest-based networks New communication partners More “weak ties” Substitution for hierarchy Community building Dispersion of information/expertise Coordination mechanisms for teams

Interorganizational Networks

External Network Forms Market vs. hierarchy “Mixed mode” network organization National networks, e.g., –keiretsu –chaebol –Taiwanese family business –Regional network: Emilian model Global networks transcend national form

Source: Powell, 1990, p. 300

Communication Technology and External Networks Interorganizational exchange: Value chain linkages Alliances across unrelated industries Jointly valued databases Internet-based exchange Networks to develop infrastructure: Organizations with complementary markets Precompetitive alliances

Network Linkages Knowledge type migratory  embedded  Linkage form product knowledge Knowledge & service is economic output in developed countries. Strategy: : identify “core competencies” : outsource everything else

Communication Technology and Network Linkages Information products support coordination across more dispersed nodes Personal linkages are required for transferring embedded knowledge Technical advances in core knowledge support industry convergence