Organisational Structure
What is the basic tension every MNE faces when designing its organization?
The fundamental tension is the trade-off between global integration and local responsiveness. MNEs must coordinate globally for efficiency and consistency, while also adapting locally to meet host-country market needs.
What is the difference between tacit and explicit knowledge?
Explicit knowledge: Codifiable, transferable via documents, manuals, IT systems.
Tacit knowledge: Embedded in people and social interaction; difficult to codify, requires face-to-face interaction, trust, or team experience.
What is an expatriate?
An expatriate is an employee sent by the company to work in a foreign country. They are typically parent-country nationals representing HQ abroad.
What is HRM in an MNE?
HRM refers to the activities to attract, select, train, develop, and manage employees across multiple countries. It emphasizes that people are key strategic resources.
What is a Global Product Division structure good at?
It groups the organization by product lines and is efficient for globally integrated industries with high pressure for standardization. It leverages economies of scale, centralized R&D, and tight coordination across markets.
Which type of subsidiary usually generates the most valuable knowledge for the MNE?
Strategic Leader subsidiaries—they operate in strong local markets and have world-class capabilities, often creating innovations that the global network can adopt (“reverse knowledge transfers”).
What are the two biggest challenges expatriates typically face?
Cultural adjustment (different norms, communication expectations, daily routines).
Family-related challenges, such as spouse career issues and children’s adaptation.
These are the main reasons expatriate assignments fail.
What is the main advantage of hiring Host-Country Nationals (HCNs) as managers?
HCNs understand the local culture, language, customers, suppliers, and institutions. They offer continuity, stronger local networks, and lower relocation costs compared to expatriates.
What is the main advantage and main weakness of a Geographic (Area) Structure?
Advantage: Strong local responsiveness and adaptation to host-country institutional environments.
Weakness: Risk of duplication, fragmented global learning, and weak cross-border knowledge sharing.
Why do institutional environments matter for knowledge transfer?
Institutional distance (cultural, regulatory, political) increases misunderstandings, slows trust-building, complicates communication, and raises uncertainty. It makes transferring tacit knowledge slower and more expensive
Why do companies invest heavily in pre-departure training for expatriates?
Because pre-departure training improves cultural intelligence (CQ), reduces culture shock, lowers failure rates, and helps expatriates build effective relationships in the host country.
Why is global HRM dominated by the tension between global integration and local responsiveness?
Because HR practices must:
Support global consistency, corporate culture, and strategic control (integration), BUT
Fit local labor laws, cultural norms, motivational systems, and expectations (responsiveness).
This tension shapes staffing, training, compensation, and performance systems across countries.
Why do MNEs find Matrix Structures so difficult to manage?”
Why do MNEs find Matrix Structures so difficult to manage?”
Matrix structures attempt to balance two simultaneous reporting lines (e.g., product & geography), but this creates ambiguity, conflict over decision rights, slow processes, and high coordination costs. Many firms later abandon them.
What is the ‘dual embeddedness’ challenge of subsidiaries?
Subsidiaries must be simultaneously embedded in:
Local networks (customers, suppliers, institutions), and
Global MNE networks (HQ and other subsidiaries).
Balancing these can create conflict: local demands vs HQ strategic direction.
Why do many expatriates struggle upon returning home (repatriation)?
Returning expatriates often face:
Reverse culture shock
Loss of status or fewer responsibilities compared to their foreign posting
Poor career planning by HQ
Weak reintegration into the local organization
This often leads to dissatisfaction or resignations.
What is a Third-Country National (TCN), and why do MNEs use them?
A TCN is a manager who is neither from the home country nor the host country. MNEs use TCNs because they bring:
Neutrality in politically sensitive relationships
Global experience
Lower cost compared to home-country expatriates
(Staffing triad discussion)