Assumptions of Hierarchy and Heterarchy, with Applications to the Management of the Multinational Corporation

Abstract

The virtues of hierarchical organization — of matter, of life, of information, of human institutions — are mostly taken for granted. Analysts invoke the supposed virtues of hierarchy without much specification. An example is Galbraith’s (1973) synthesis of the information-processing theory of organization design: the discussion is very detailed on most aspects of design dimensions, but hierarchy is left curiously anonymous. Hierarchical structuring is introduced as one of the first and most fundamental ways of improving the handling of information, but why it is among the first and fundamental is left unexplained.

An earlier version of this paper was presented at the workshop on Organizational Theory and the Multinational Corporation at INSEAD on 1–2 September 1989. The author wishes to thank W. Richard Scott, David Hawk, Bruce Kogut and colleagues at IIB, particularly Maria Bolte, Peter Hagstrom, Lars Hakanson, Dag Rolander and Karl Ahlandcr, for constructive criticism of earlier drafts.