Organizing International Organizations

Formal Organizational Designs• By role and organizational position

– Complexity• Horizontal vs Vertical• Spatial

– Formalization• Rules & procedures, documentation, discretion

– Centralization of Decision making

• Examples: Mechanistc, Organic

Low horizontal differentiation, low formalization, decentralized decisions

High horizontal differentiation, Higg formalization, Centralized decisions

Types of relationships with units located in other nations

• Collaborative– Informal cooperative

• Limited scope, no contract

– Formal cooperating• Contract, broader involvement

– Joint ventures• Joint ownership

• Non-Collaborative– Mergers & Acquisitions

Mergers & Acquisitions• STEP 1

– Integration processes

• Autonomy vs. absorption

• social integration –implement training, organize teams etc

• STEP 2– Control Systems– Management Practices

Mergers & Acquisitions– Types of Integration processes shapes

attitudes toward new org AND leveraging of different capabilities, learning opportunities etc.

– Control Systems– Management Practices

Mergers & Acquisitions• Culture shapes both acquiring firm’s

approaches and target’s reactions to..– Types of Integration

Understanding designs of Multi National Org (MNO)

• Typical framework– By product, function, location, ‘matrix’ or all

international grouped• similar to design framework organized by role

and org’n position

• Understand Organizational Design Via Strategy

Typical Framework to understand MNO Designs(by hierarchy, product, location)

country1 c2c3

Product 1

Understand Organizational Design Via Strategy

Strategy Multi-national Global Inter-national Trans-national

How are assets & capabilities organized

Decentralized self sufficient within unit

Centralized globally scaled

Core competencies centralized, others not

Dispersed, interdependent, specialized

What is the role of the international operation

Sense and exploit local opportunities

Implement Parent company strategies

Adapt & leverage parent company competencies

Different contributions by units to entire org

How is Knowledge developed & transferred

Knowledge developed & retained within each unit

Knowledge retained at centre

Knowledge retained at centre and transferred to int’l units

Knowledge developed jointly and shared

Discussion Qs re: Aerostar Case

• What is the strategy that the parent takes when establishing a relationship with Aerostar

Organizational Culture (informal design)

• Shared norms and meanings between organizational members,

• guides behavior,

• gives identity,

• differentiates from other org,

• socializes members to do things consistent with goals of org

Types of Org CultureFeatures

Relationship Diffuse, to whole org

Specified via role in org

Specific to tasks/obj

Diffuse, spontaneous

Authority Parental Superiors Contributing members

Achievers

Employees Family Human Resources

Specialists Co creators

Reward Intrinsic Promotion Performance participation

Management Subjective Job description

Objectives Enthusiasm

National Culture & Org Design

Societal Pressure family oriented, gov’t supported vs.inter-firm networks, bank supported

Manager valuese.g., power distance, collectivism etc, AEROSTAR

MANIFESTED Patterns of Organization

LEGITIMATED Patterns of Organization

Organizational Design Size,

Technology, Strategy

Performance of MNO

• Determined both by formal design elements & (informal) Organizational Culture elements– Recruitment, performance appraisal, training

& development• E.g., AEROSTAR CASE

Behavior of Managers in Subsidiaries

Adaptation to Local Environment Consistency to

Parent organization

Imperative forControl

Pressure for Organizational Replication

Cultural Norms

Structure & Practices of Subsidiaries

Managerial Behavior in Subsidiaries

Identification with parent organization vs. subsidiary

MNO Design Strategy

AEROSTAR CASE

Additional un-used slides

Psychological Contracts • Beliefs about what the exchange b/w

individual and org is – Perf requirements, training, compensation,

career development

Psychological Contract

Organizational Structure•Role differentiation, hierarchies within structure

Self Perception•Transactional vs. relational exchange with org•Importance of social cues, •shared with other members, •Violations of contract

•Norm for harmony vs. alternatives to organization