Matrix Management

Multinational company structures – Matrix Monday

Today’s ‘Matrix Monday’ review of the limited literature available on the matrix is by Kevan Hall – a review of ‘Stopford and Wells were right!: MNC matrix structures do fit a “high-high” strategy – in memorian for Professor John Stopford (1940-2011), pioneer of international strategy-structure research’, by Jane XJ Qiu and Lex Donaldson, Management Review International, Vol 52.2012, 5, pp. 671-689.

In the paper ‘Stopford and Wells were right, MNC matrix structures do fit a high-high strategy’, the authors (Jane Qiu and Lex Donaldson) adapt the Stopford and Wells model for predicting when multinational companies (MNCs) will use a matrix structure.

They adopt two criteria: the degree of integration of the business, and the level of area (geographical) differentiation.

Unsurprisingly, they found that MNCs that were high on both (high-high) tended to adopt a matrix structure. They propose that a matrix allows organizations to pursue dual strategies, and hence dual reporting.

BUT:  we can also ask if the matrix can be found in other quadrants (not high on both).

A fully integrated global matrix may be the top option but we may also experience functional matrices in organizations with low levels of geographic spread, where cross functional projects or complex supply chains are necessary. Global organizations, even those that have relatively low levels of integration, often have a matrix at group level coordinating functional activities, sharing best practice and expertise.

The study acknowledges some limitations. It is based on data from German MNCs only, and it’s proxy for measuring integration is international transfers. This is only one measure, and for many of our clients integration is also about sharing expertise, knowledge and resources.

What IS clear is that organizations need to start with a clear strategy: structure should follow strategy, not the other way around.

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