Unit 6.2 International organisational structures

6.2 International organisational structures

The main organisational forms explored and compared in that literature tend to be:

•        centralised, hierarchical modes with direct control

•        polycentric modes (multiple centres of authority)

•        network modes.

These choices often interlock with a series of staffing choices concerning host-country nationals (HCNs) and parent-country nationals (PCNs) in the international HR field (for example, Dowling and Welch, 2007). These, in turn, lead to HR choices about international deployment and assignments, the management of expatriates and other international postings (Scullion and Collings, 2007). The underlying managerial problem is how to manage global coordination in international organisations. Additionally, and prior to that choice, is another – namely, how to design the most effective organisational structure for the variety of international circumstances. Many of the issues facing international business are HRM issues. These relate, most especially, to gaining competitive advantage through the acquisition and deployment of skilled and interlinked workforces.

A number of analysts, such as Bartlett and Ghoshal (1995), have suggested that there are observable stages in the ‘evolution’ of the internationalisation of firms. These include, for example, a domestic firm with an international division. A second step might be the creation of a series of offices and operations in a range of countries, perhaps in the form of relatively self-standing subsidiaries. A step beyond could be to a ‘regionalisation’ form, which gathers together a number of country offices and operations into semi-autonomous territories such as Europe, Asia–Pacific, and so on. A ‘global firm’ means that a stage is reached where national borders become even less relevant and the world is viewed in effect as one market. Each of these stages and organisational forms carries different strategic HR implications. In the global form, for example, the firm will conduct its R&D and locate its marketing and production functions wherever in the world it judges optimal in terms of access to talent, resources and markets. Although human resources can be hired from anywhere, according to this model, there is likely to be a strong emphasis on, and commitment to, building corporate identity. This will require provision of cross-postings and management development events, and possibly a corporate university.

The final stage proposed by Bartlett and Ghoshal is the idea of a ‘transnational firm’. This is similar in many ways to the global firm stage, but is distinct in that although such firms may develop global products, services and brands, they also work very hard to ‘localise’. Localisation and adaptation to local circumstances and opportunities is a hallmark of such an organising and marketing strategy. Simultaneously, these firms emphasise knowledge sharing and global integration but also local responsiveness.