The Hypermodern MNC—A Heterarchy?

Knowledge management capabilities of lead firms in innovation ecosystems

“…In a heterarchical system, authority is determined by knowledge and function that is specific to the decision that needs to be made rather than pre-determined in advance (McCulloh 1945). Hence, a heterarchical system has many centers whereby firms within the ecosystem are unranked (non-hierarchical) or where they have the potential to be ranked a number of different ways depending on the skills required to make a decision (Hedlund 1986). The combination of assets based on which group of partner firms might have the appropriate expertise enables new business models to emerge that would be required to commercialize the new product or service offering.…”

MNC structure, complexity, and performance: Insights from NK methodology

“…We provide quantitative support that goes beyond the longstanding theoretical debate in the IB literature on matrix or other hierarchical structures versus network structures (Hedlund, 1986;Wolf and Egelhoff, 2012). The results show a network structure -relative to other structures -performs best at a high level of complexity than low or medium complexity.…”

“…Rather, researchers point to the advantages/disadvantages of specific structures. Network structures have been promoted as the ideal way to handle MNC's heterogeneity, while regional or matrix structures as being too simple and inflexible (Bartlett and Ghoshal, 1989;Hedlund, 1986). However, the value of network organizations as platforms for intensive knowledge transfer is based on the assumptions that the network's components both able and willing to share information (Miles and Snow, 1992), which do not always hold (Wolf and Egelhoff, 2010).…”

“…Both the regional and matrix organizational forms can be characterized as formal structures. In response to the rigidities that are associated with such forms, research proposed other, less structured network organizational designs, such as heterarchy (Egelhoff, (a) P&G's regional structure (b) ABB matrix structure (c) Philips network structure (excerpted from Ghoshal and Barlett (1990) 1999; Hedlund, 1986), transnational firm (Bartlett and Ghoshal, 1989), inter-organizational network (Ghoshal and Bartlett, 1990), network-based structure (Malnight, 1996), or differentiated networks (Ghoshal and Nohria, 1997). Despite the difficulty of defining network-organizations, what all these designs have in common is an emphasis on non-hierarchical coordination within the MNCs, non-dominant vertical relationships, informal communication, and relatively loose interconnectedness of the organizational subunits (Wolf and Egelhoff, 2010).…”

“…Stopford and Wells (1972) proposed that in the first stages of internationalization firms tend to bundle their foreign activities into a separate international division and then with increased international expansion move to a geographic or product division model, or to the more advanced matrix. Perlmutter (1969) distinguished among ethnocentric or home-country oriented, polycentric or host-country oriented, and geocentric or world-oriented designs, the latter being the starting point for an extensive discussion of network-based MNC designs (Bartlett and Ghoshal, 1989;Hedlund, 1986;Prahalad and Doz, 1987). Broadly speaking, the previous literature has identified formal organizational structures (regional, product, or matrix) and networks as two fundamentally different coordination alternatives found in all MNCs and has also discussed the performance implications.…”