Organisational structure of MNE

As there were indications in the literature review (see, i.e., Mees-Buss 2019), evidently, the organisational structure of the MNEs seem to have changed in past decades. The findings of the case study support it. Therefore, the research and findings of the HQ-subsidiary relationship are not anymore necessarily applicable. In figure 3, I present the difference in the organisational structure of Hedlund’s study in 1980 and the results of this study. Of course, the organisational structure of the case company in figure 3 is not identical as in the case company to respect the anonymity of the case company, but it follows the same pattern.

Figure 3: The organisational change between Hedlund 1980 study and the case company in this study.

There is at least one aspect that seems to have remained mainly the same since Hedlund’s study.

The HQ still tends to be the leader of the MNE. From the legal perspective, the leader responsibility is in the HQ country and still commonly, at least some of the key positions such as the board, the executive team or other key decision-makers are from or located in the HQ country. Baaj and Slangen (2013) presented in their study the idea of disaggregated headquarters, which in other words means the delegation of the headquarter responsibilities for few subsidiaries, which may be

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called, for example, as regional headquarters. In addition, the HQ still tend to have power over the company, and the corporation is often handled from the HQ. For example, in the case company, a significant number of critical decision-makers were located in the HQ. In conclusion, it can be said that HQ seem to keep its dominant position over the corporation and works as a superior unit.

Meanwhile, the organisation below the HQ can be divided in various ways. For instance, by functions and geography and the teams can often be even a combination of many locations.

On the contrary, below the very top-level of organisation which still tend to be HQ, the organisational structure seems to be today anything suitable for the business. For example, typical ways to organise are regional units, product divisions or some customer-based organisation. One option that the case company uses is the genuinely global organisation where the functions are not principally organised country by country. The legal subsidiary entities are unequal in size, headcounts, and functions. Some of the operations, such as the sales, tend to be somewhat regional.

Hedlund did not question much the organisational structure of MNE in his study 1980. It seemed to be just as given, and all the case companies seemed to have a similar structure, at least to some extent. Although, the paper of Hedlund (1980) seemed to present why it is vital that the subsidiaries would be more active and included in the strategic decision-making, which could indicate the evolution of the organisational structure. However, later in the MNE literature, the traditional organisational structure has been criticised and challenged remarkably. For example, Hedlund himself presented in his study in 1986 the idea of hypermodern MNE that questioned the traditional model of MNE. The same discussion continued in the article of Mees-Buss et al. (2019), who described in their study how the organisational structure has developed during the decades from the transnational to something that can be called neo-global. Thus it seems that the findings of this study follow a similar pattern as the former literature where the traditional MNE organisational structure does not anymore apply, and there is no strict mother-daughter company structure.

However, it is still essential to underline that there are various MNEs today with different organisational structures, and there are also companies that use more traditional parent-daughter structure, such as Alfoldi and her colleagues presented in their study (2010). In addition, many MNEs have different size of organisational units and functions in different countries. For example, the case company of this study had half of the headcount in one Central European country and a quarter of the headcount in one Asian country, even if they operate in many countries too. To

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conclude, even if the organisational structure has changed, that does not mean that there would not be any kind of international subsidiaries or that the business units would be homogenous.

There are various reasons for the more complex and more genuinely global organisation. One of the most apparent reasons is the constantly more global environment and the overall globalisation of the modern world. Mees-Buss and her colleagues (2019) argue that the reason for the change is in the MNEs attempt to be as efficient globally as possible. The organisational structure should support it, even if it meant that the teams or units are not anymore tied to a specific location. When Hedlund (1980) made his study, the company's value, which it was selling, was mainly created in the HQ location and commonly with domestic or geographically close located materials and mainly selling happened abroad. Then, when the capacity needed to be added, the organisational structure was often copied and started as a very identical operation in the international location.

Another relevant point may be related to Pisoni et al. (2010) argument that the subsidiaries get more knowledge and responsibility when they mature. Hence, the mature subsidiaries can disperse their processes widely. When the whole corporate identifies the knowledge and starts fully corporate, the new genuinely international or global organisational structures are formed. In the case of the studied company, one crucial aspect that dispersed the organisation geographically was the acquisitions. In narrow markets, the competition tends to be international, and therefore the acquired companies can be located almost anywhere in the world. Acquired companies can also have their own sites, for example, factories, headquarter, research and development centres all over the world, and when these are merged to the buyer company, it disperses the organisation again.

5.1.1 The decision-making autonomy

As strongly linked to the organisational structure, one important perspective is the influence of autonomy in strategic decision-making. In the MNE, which has relatively independent organisational units such as business units, the decision-making seems to be more delegated. The consequence of this is that a larger group of individuals participate in the strategic decision-making. In addition, the decision-making can be more geographically spread, and thus the foreign units and individuals are more widely represented in the decision-making.

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Another important finding supporting former Hedlund’s several studies is that the Nordic MNEs have a significant level of subsidiary autonomy. Hedlund (see, i.e., 1980 and 1986) argues it to be a cultural aspect as is expected on different Nordic MNEs in different industries. As against, Pisoni et al. (2010) and Garnier (1982) argue on a general level that the subsidiary independence to decide about the strategic questions is related to the environment and the maturity of the subsidiary.

However, this can be today criticised as there are many MNEs without a parent-daughter structure;

thus, geography is not the primary dimension to define an organisation. Therefore, the cultural influence could explain better the findings also in this study. The culture can impact, for example in the trust in the organisation. Thanetsunthorn and Wuthisatian (2019) argued in their study that national culture has a link with trust in the business organisation. They also argued that high individualism and high long-term orientation support the environment with trust among people. In contrast, countries with high power-distance and high uncertainty avoidance appear less exhibit of trust. According to the Hofstede insights country comparison, both Finland and Sweden are countries with high individualism and low power distance. Sweden also has relatively low uncertainty avoidance and a higher long-term orientation, which would indicate high support for trusting national culture. However, Finland does not seem to have a strong indication, but that could have at least a partial explanation. To conclude, the culture may have a role through trust why some companies, especially in some countries, tend to have more autonomous subsidiaries, and it may be explained by the level of trust in the country, at least partially.