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Horses for courses: organizational forms for multinational corporations

Author: Ghoshal, Sumantra ; Nohria, NitinINSEAD Area: StrategyIn: Sloan Management Review, winter 1993 Language: EnglishDescription: p.23-35.Type of document: INSEAD ArticleNote: Please ask the Library for this articleAbstract: One of the most enduring ideas of organization theory is that an organization's structure and management process must "fit" its environment, in the same way that a particular horse might be more suited to one course than another. Ghoshal and Nohria show the continued relevance of this classic insight for the orgnization of multinational corporations. They offer a simple scheme to classify the environment structure of MNCs. Then, based on data on forty-one large MNCs, they show how some combinations, of environment and structure fit better than others. What drives fit the principle of requisite complexity -the complexity of a firm's structure must match the complexity of its environment. Though developed for MNCs, their argument can also apply to multidivisional firms that operate in different markets or business segments.
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One of the most enduring ideas of organization theory is that an organization's structure and management process must "fit" its environment, in the same way that a particular horse might be more suited to one course than another. Ghoshal and Nohria show the continued relevance of this classic insight for the orgnization of multinational corporations. They offer a simple scheme to classify the environment structure of MNCs. Then, based on data on forty-one large MNCs, they show how some combinations, of environment and structure fit better than others. What drives fit the principle of requisite complexity -the complexity of a firm's structure must match the complexity of its environment. Though developed for MNCs, their argument can also apply to multidivisional firms that operate in different markets or business segments.

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