Prelims

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MULTINATIONAL CORPORATIONS AND ORGANIZATION THEORY: POST MILLENNIUM PERSPECTIVES

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RESEARCH IN THE SOCIOLOGY OF ORGANIZATIONS

Series Editor: Michael Lounsbury

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RESEARCH IN THE SOCIOLOGY OF ORGANIZATIONS VOLUME 49

MULTINATIONAL CORPORATIONS AND ORGANIZATION THEORY: POST MILLENNIUM PERSPECTIVES

EDITED BY

CHRISTOPH DÖRRENBÄCHER

Berlin School of Economics and Law, Germany

MIKE GEPPERT

School of Economics and Business Administration, Friedrich Schiller University Jena, Germany

United Kingdom – North America – Japan India – Malaysia – China

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Emerald Publishing Limited

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First edition 2017

Copyright © 2017 Emerald Publishing Limited

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ISBN: 978-1-78635-386-3

ISSN: 0733-558X (Series)

List of Figures

List of Tables

List of Contributors

Editorial Advisory Board

SERIES EDITOR

Michael Lounsbury

Canada Research Chair in Entrepreneurship & Innovation, University of Alberta School of Business, Alberta, Canada

ADVISORY BOARD MEMBERS

• Howard E. Aldrich

  University of North Carolina, USA

• Christine Beckman

  University of Maryland, USA

• Jeannette Colyvas

  Northwestern University, USA

• Barbara Czarniawska

  Göteborg University, Sweden

• Gerald F. Davis

  University of Michigan, USA

• Marie-Laure Djelic

  ESSEC Business School, France

• Frank R. Dobbin

  Harvard University, USA

• Royston Greenwood

  University of Alberta, Canada

• Mauro Guillen

  The Wharton School, University of Pennsylvania, USA

• Paul M. Hirsch

  Northwestern University, USA

• Candace Jones

  University of Edinburgh, UK

• Brayden King

  Northwestern University, USA

• Ann Langley

  HEC Montreal, Canada

• Renate Meyer

  Vienna University of Economics and Business Administration, Austria

• Mark Mizruchi

  University of Michigan, USA

• Nelson Phillips

  Imperial College London, UK

• Walter W. Powell

  Stanford University, USA

• Marc Schneiberg

  Reed College, USA

• W. Richard Scott

  Stanford University, USA

• Sarah Soule

  Stanford University, USA

• Haridimos Tsoukas

  ALBA, Greece

• Eero Vaara

  Aalto, Finland

Acknowledgments

We would like to thank all authors and the participants of the paper development workshop (PDW) ‘Multinational Corporations and Organization Theory: Post Millennium Perspectives’ (funded by the Ernst Abbe Foundation) which has been held at the Friedrich Schiller University Jena, 19–20 November 2015, for their inspiring insights and the disciplined work on their articles that made this volume possible. Special thanks go to D. Eleanor Westney in particular who has done some truly pioneering work more than 25 years ago, for strongly encouraging and supporting us in taking stock of the post-millennium developments in interdisciplinary OT/IB research on MNCs in this volume. We are also grateful to the series editor Michael Lounsbury, who invited us to be the editors of this volume, Zoe Morris at Emerald, who supported us throughout the editorial process, and to Annika Semper and Kristin Pillmayr, who helped us with the nitty-gritty things of finally putting this volume together and formatting it. Finally, we would like to thank Gerlinde Steinborn and Eva Schlindwein for their support in organising the PDW in 2015.

Preface

Christoph Dörrenbächer and Mike Geppert are to be congratulated in bringing together this new collection of important papers which consider how insights from organization theory (OT) and international business (IB) enrich our understanding of multinational corporations (MNCs). As they rightly recognize in their introductory article, the editors regard this book as updating and taking stock of the OT/IB relationship in a field that has developed considerably following publication in 1993 of the major pioneering volume on the subject, edited by Sumantra Ghoshal and D. Eleanor Westney (1993). Since then, the nature of and scope of MNCs has changed dramatically with the internet, the emergence of “platform” businesses, the spread of global value chains, and the rise of emerging economy multinationals. Relevant theorizing within OT has advanced with awareness of the role within MNCs of identity and understanding in terms of language, discourse and sensemaking, the significance of power relations and conflict, and the influence of the cultural and institutional contexts within which MNCs operate. The field of IB has also broadened its theoretical frameworks beyond a previously heavy reliance on applied economics and, for example, it now recognizes the significance of headquarters-subsidiary relations (not least for effective innovation) and country-of-origin embeddedness. This book ably identifies and discusses these emergent issues and perspectives.

The increasingly critical view many are taking of MNCs today is also reflected in several of the articles in this book. There is considerable disquiet over the negative impact of MNCs on a range of social issues concerning diversity, gender, inequality and the environment. The crisis of confidence in MNCs following the major corporate scandals at the beginning of the millennium has continued to deepen. It raises fundamental questions concerning their appropriate role in contemporary society and the accountability of their leaders. While MNCs have been instrumental throughout the world in raising living standards and satisfying consumer wants (which they have also cleverly stimulated), their leverage in determining how rewards, opportunities, and quality of life are distributed in society has at the same time had negative consequences. The power enjoyed by MNCs is two-edged and not necessarily benign. Critical organization theory recognizes that the multinational corporation encompasses a massive concentration of power, and that this concentration is maintained through organizational structures and processes.

Evidence of the misuse of corporate power undermines the social legitimacy of MNCs as social institutions. It belies the claim that MNCs operate like other institutions for the general good rather than for private sectional interest, and it places on the political agenda questions concerning their governance and the accountability of their leaders. Chomsky (2000), for example, has called corporations “amoral unaccountable, private tyrannies.” The problem of MNCs’ accountability has to be understood with reference to their structure and governance, how they behave in their markets and wider societies, and how these two aspects are related. This book demonstrates that organization theory can offer significant insights into these issues.

Seen from the outside, MNCs may at first sight appear to be tightly controlled monolithic organizations. Research is showing that this is often far from the case. For example, it has raised questions as to how much power MNC corporate HQs and CEOs actually have (and should have) over their subsidiaries. It has become recognized that a degree of subsidiary autonomy is often necessary to enable responsiveness to local conditions and to encourage dispersed sources of innovation. The emergence of MNC global value chains and applications of the “transnational” model (Bartlett & Ghoshal, 2002) have seen a shift towards networked forms of internal MNC organization with varying degrees and forms of coupling between different units (McKern, 2003). Several contributions to this book consider organizational differentiation within MNCs, analyzing in depth how their internal dynamics tend to be characterized by multiple internal discourses, divergent goals, internal tensions, and contrasting identities. MNCs are arenas for lively organizational politics, as was also well demonstrated by a previous contribution of the editors (Dörrenbächer & Geppert, 2011).

Concern about the power wielded by MNCs in contemporary society, and their accountability to governments and stakeholders, highlights the organization of their external relations. Many of their senior executives would claim that the conduct of MNCs is constrained by market forces, government regulation and their own corporate conscience (CSR). This is at odds with the reality as perceived by many observers, including some contributors to this book. In fact, the organization of MNCs’ external relations is informed by a desire to be free of constraints. Typically MNCs endeavor to exercise market power as well as pursuing various non-market strategies of a political nature. Non-market strategies include lobbying and PR, often coupled with an attempt to impose corporate definitions of CSR rather than ones reflecting wider stakeholder interests. As Stewart Clegg observes in his article, “the central business of MNCs is politics by other means.” The relevance of organization theory for an understanding of MNCs’ external relations lies in the fact that these are normally highly organized. Executives take initiatives to construct their MNC’s inter-organizational relations with other firms and with relevant institutions. Thus alliances between MNCs can enhance their market power, while MNCs shape institutional policies to their advantage through consciously managed “relational frameworks” (Child, Tse, & Rodrigues, 2013).

It has been a privilege to read this revealing book. In this short Preface I have been able to touch upon only some of the insights it offers. I can recommend Multinational Corporations and Organization Theory not only to scholars and students working in OT, IB and related fields, but also to anyone wishing to have a better understanding of the MNC as the dominant institution of our time (Bakan, 2004).

John Child

University of Birmingham, Birmingham, UK