How the Parent Headquarters Adds Value to an MNC

Recent views of the MNC as some kind of differentiated network raise questions about the value of a parent HQ and hierarchical structure in today’s MNCs. This paper attempts to address such questions by identifying and describing three broad tasks where hierarchical structures with a parent HQ should outperform a network structure. The tasks are: developing and implementing tight coupling within MNCs, identifying and defining economies of scale and scope, and identifying and incorporating significant innovation into MNC strategy.The paper uses an information processing perspective to conceptualize the important differences between hierarchical and network structures and to evaluate how well each structure fits the specific task situations. It concludes that hierarchical structures with a parent HQ are still required in today’s MNCs.

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