In search of the matrix advantage: A reexamination of the fit of matrix structures to transnational strategy

Abstract

Matrix structures are complex and conflict prone, so multinational enterprises (MNEs) would utilize them only if they conferred some advantage over less complex organizational structures. Based upon the information-processing view, a theory of matrix advantage is proposed. It is supported by a secondary analysis of data from a major study of German MNEs. Matrix structures are shown to have an advantage over the elementary structural types. Specifically, the matrix structures fit higher levels of transnational strategy than elementary structures. Transnational strategy is assessed by two concepts: firm internationalization (involvement in foreign sales, manufacturing, and research and development (R&D)) and corporate integration (intracompany transfers). Moreover, three-dimensional matrices are associated with higher levels of transnational strategy than are two-dimensional matrices, confirming the gains from having additional structural dimensions. Matrix structures arise because of the need to simultaneously fit high levels of both firm internationalization and corporate integration. Matrices fit the transnational strategy type of Bartlett and Ghoshal. Implications are drawn for the relationship between the head office and the subsidiary. The matrix often subjects the subsidiary to conflicting expectations from the head office, which it can attempt to manage. Similarly, the head office is challenged by the task of integrating the information that comes from different dimensions of the matrix.

Citation

Donaldson, L. (2009), "In search of the matrix advantage: A reexamination of the fit of matrix structures to transnational strategy", Cheng, J.L.C., Maitland, E. and Nicholas, S. (Ed.) Managing, Subsidiary Dynamics: Headquarters Role, Capability Development, and China Strategy (Advances in International Management, Vol. 22), Emerald Group Publishing Limited, Leeds, pp. 3-26. https://doi.org/10.1108/S1571-5027(2009)0000022005