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) country1c2 c3 Product 1

Understand Organizational Design Via Strategy StrategyMulti-nationalGlobalInter-nationalTrans-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 Culture Features RelationshipDiffuse, to whole org Specified via role in org Specific to tasks/obj Diffuse, spontaneous AuthorityParentalSuperiorsContributing members Achievers EmployeesFamilyHuman Resources SpecialistsCo creators RewardIntrinsicPromotionPerformanceparticipation ManagementSubjectiveJob description ObjectivesEnthusiasm

National Culture & Org Design Societal Pressure family oriented, gov’t supported vs. inter-firm networks, bank supported Manager values e.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 for Control 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

Model of MNO employee behavior Employee Values Organizational Values Cultural Norms Employee Behaviour Perceptions of Organization Organizational Structure