Managing the Embedded Multinational: A Business Network View

Dhanaraj, Charles

doi:10.1057/palgrave.jibs.8400321

Managing the Embedded Multinational: A Business Network View

Book Review
Published: 05 November 2007

Volume 38, pages 1231–1233, (2007)
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Charles Dhanaraj¹

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Kelley School of Business, Indiana University, IN, USA
Charles Dhanaraj (Reviewed by)

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Dhanaraj, C. Managing the Embedded Multinational: A Business Network View. J Int Bus Stud 38, 1231–1233 (2007). https://doi.org/10.1057/palgrave.jibs.8400321

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Published: 05 November 2007
Issue Date: 01 December 2007
DOI: https://doi.org/10.1057/palgrave.jibs.8400321

Editorial Summary

Abstract

It has long been recognized that controlling complex organizations like multinational enterprises (MNEs) is a multi-dimensional problem. Efficient organizational structures based on Coasian transaction costs often run afoul of individual or sub-unit goals, resulting in vertical conflicts between headquarters and subsidiaries (Nohria and Ghoshal, 1994). Further, horizontal competition among subsidiaries intent on promoting their own strategic agendas within the MNE results in internecine competition over resources and consequent rents (Mudambi and Navarra, 2004). Thus, the resulting organization and control structures of MNEs are the outcome of political processes where ‘power explains results when the organization sacrifices efficiency to serve special interests’ (Williamson and Ouchi, 1981).

The network view of the MNE, built up over the years by the Uppsala school, is based on the essential recognition of the political aspects of the MNE, that is, ‘the political perspective stresses the fact that a great deal of the market knowledge … so important in explaining the internationalization process is controlled by subsidiaries rather than by the parent company’ (Forsgren, 1989). The current book sheds further light on the politics of the MNE by developing and extending the notion of embeddedness. It demonstrates that the Uppsala school remains fecund – a continuing source of new ideas on the cutting edge of IB research. Charles Dhanaraj's critical review provides an excellent dissection of the book, highlighting its pioneering aspects and linking it to methodologically rigorous mainstream research in management and sociology.

Ram Mudambi

JIBS Book Review Editor

References

Forsgren, M. (1989) Managing the Internationalization Process: The Swedish Case, Routledge: London.

Mudambi, R. and Navarra, P. (2004) ‘Is knowledge power? Knowledge flows, subsidiary power and rent-seeking within MNCs’, Journal of International Business Studies 35(5): 385–406.

Nohria, N. and Ghoshal, S. (1994) ‘Differentiated fit and shared values: alternatives for managing headquarters-subsidiary relations’, Strategic Management Journal 15(6): 491–502.

Williamson, O.E. and Ouchi, W.G. (1981) ‘The markets and hierarchies program of research: origins, implications, prospects’, in A.E. Van de Ven and W.F. Joyce (eds.) Perspectives on Organization Design and Behavior, John Wiley: New York.

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