UNIVERSITY OF EASTERN FINLAND Faculty of Social Science and Business studies Business School
THE STRATEGIC DECISION-MAKING PROCESS IN THE MNES: THE ROLE OF INTERNATIONAL SUBSIDIARIES IN THE DECISION-MAKING
Master’s Thesis, International Business and Sales Management Liina Penttinen (276115) 28.06.2021
2 ABSTRACT
University of Eastern Finland, Faculty of Social Science and Business studies Business School
International Business and Sales Management
PENTTINEN LIINA, E., L.: The Strategic Decision-making in the MNEs: The Role of International Subsidiaries in the Decision-making
Master’s thesis, 64 pages, (71 pages) Thesis instructor: Professor Sylvie Chetty June 2021
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Multinational enterprises (MNEs) have been researched already for decades. Former literature presents that the MNE consists of the HQ and international subsidiaries. Traditional international business literature suggests that the strategic decisions of MNEs are made by HQ. On the contrary, it has been identified that the subsidiaries have particular knowledge, for example, about the markets, which supports their role as experts of some strategic questions. Thus, this study researches the strategic decision-making process of MNE and how the international subsidiaries participate in it. The study replicates Hedlund’s study of “The Role of Foreign subsidiaries in Strategic Decision-Making in Swedish Multinational Corporations” (1980). It compares the results and how the topic has developed in 40 years.
The literature review discusses both MNEs as an organisation and strategic decision-making as a phenomenon. The study is a qualitative case study. The primary data collection consists of eight in-depth interviews in a Finnish MNE. The participants were both from the HQ of the case company and different international locations to ensure the comparison between the sides. The secondary data collection consists of two parts: internet sources and consulting company articles about strategic decision-making.
The results of the data collection were divided into five dimensions of strategic decision-making in MNEs. The dimensions are the organisation, decision, decision-making process, decision- makers, and the internationality of the organisation. Based on the analysis of these dimensions, the strategic decision-making process and the subsidiary participation were identified.
The findings of this study capture changes in MNEs and strategic decision-making. The organisational structure of MNEs seems to have changed from the traditional mother-daughter structure to globally dispersed teams that operate different functions of the company. The participation of the subsidiaries has increased during the four decades. This study's other key findings are that the subsidiaries’ participation in the decision-making can depend on the organisational structure. When the structure gives more responsibility to the subsidiaries, they tend to decide on a broader scope of the tasks and strategic questions. Lastly, the participation of the subsidiaries or other stakeholders that are not the decision-makers is called politics. The participants aim to influence the decisions, usually in the most beneficial ways to them.
Keywords: strategic decision-making, MNE, international subsidiary
3 TIIVISTELMÄ
Itä-Suomen yliopisto, Kauppatieteiden ja yhteiskuntatieteiden tiedekunta Kauppatieteiden laitos
Kansainvälinen liiketoiminta ja myynnin johtaminen
PENTTINEN, LIINA, E., L.: Strateginen päätöksenteko monikansallisissa yhtiöissä:
Kansainvälisten tytäryhtiöiden rooli päätöksenteossa Pro Gradu -tutkielma, 64 sivua, (71 sivua)
Ohjaaja: Professori Sylvie Chetty Kesäkuu 2021
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Monikansallisia yrityksiä on tutkittu viimeisten vuosikymmenten aikana paljon. Aiempi kirjallisuus esittää monikansallisen yrityksen koostuvan pääkonttorista ja kansainvälisistä tytäryhtiöistä. Perinteisesti on ajateltu, että pääkonttori on vastuussa strategisista päätöksistä.
Toisaalta on tunnistettu tytäryhtiöiden asiantuntijuus esimerkiksi markkina-alueisiin liittyen, mikä puoltaisi osallistumista päätöksentekoon. Näin ollen tässä tutkimuksessa keskityttiin monikansallisten yritysten strategista päätöksentekoprosessiin ja kuinka kansainväliset tytäryhtiöt osallistuvat siihen. Tutkielmassa jäljiteltiin Hedlundin (1980) tutkimusta “The Role of Foreign subsidiaries in Strategic Decision-Making in Swedish Multinational Corporations”. Tutkielman tuloksia verrattiin keskenään ja erilaisia muutoksia analysoitiin.
Kirjallisuuskatsauksessa kuvataan sekä monikansallisia yrityksiä organisaatioina, että strategista päätöksentekoa ilmiönä. Tutkimus on toteutettu laadullisena tapaustutkimuksena. Ensisijainen aineistonkeruumenetelmä käsittää kahdeksan perusteellista haastattelua suomalaisessa monikansallisessa yhtiössä. Haastateltavat olivat sekä pääkonttorista, että yrityksen kansainvälisistä tytäryhtiöistä, jotta olisi mahdollista toteuttaa vertailu molempien tahojen välillä.
Sekundäärinen aineisto on kaksiosainen. Se käsittää internet-lähteitä ja konsulttiyritysten julkaisemia artikkeleita strategisesta päätöksenteosta.
Aineiston keruun tulokset on jaoteltu strategisen päätöksen teon viiden eri ulottuvuuden mukaan:
organisaatio, päätökset, päätöksentekoprosessi, päätöksen tekijät ja kansainvälisyys. Näiden ulottuvuuksien pohjalta johdettiin prosessi monikansallisten strategisille päätöksille ja malli sille, kuinka kansainväliset tytäryhtiöt osallistuvat päätöksentekoon.
Tulosten perusteella voidaan havaita joitakin muutoksia monikansallisten yritysten päätöksenteossa verrattuna Hedlundin tuloksiin. Yritysten organisaatiorakenne näyttää muuttuneen perinteisestä emo-tytär -mallista kohti globaalisti levinneitä tiimejä, jotka on järjestetty eri toimintojen perusteella. Tämän lisäksi, tytäryhtiöiden osallistuminen on lisääntynyt vuosikymmenten aikana. Näiden lisäksi tulosten pohjalta voidaan huomata, että organisaatiorakenteella on vaikutusta tytäryhtiöiden osallistumiseen, sillä mikäli organisaatiorakenne mahdollistaa tytäryhtiöiden itsenäisyyden, he voivat itse omia päätöksiä.
Viimeisenä voidaan todeta, että tytäryhtiöiden jäsenten osallistuminen on usein poliittista vaikuttamista, sillä he yrittävät vaikuttaa päätöksentekijöihin, usein heille suotuisalla tavalla.
Avainsanat: strateginen päätöksenteko, monikansalliset yritykset, kansainväliset tytäryhtiöt
4 TABLE OF CONTENTS
1. INTRODUCTION ... 6
1.1 Background ... 6
1.2 Purpose of the study ... 7
1.3 The case company ... 9
1.4. Structure of the thesis ... 10
1.5 Key terminology ... 10
2. LITERATURE REVIEW ... 13
2.1 The general literature of the MNEs strategic management ... 13
2.1.1 The definition of MNE and motives for subsidiaries ... 14
2.1.2 The nature of Finnish MNEs ... 15
2.1.3 The parent-subsidiary relationship, the responsibilities of HQ and subsidiary, and the autonomy of subsidiaries ... 16
2.1.4 The strategic decision-making in MNEs and the strategic decision-making process ... 18
2.2 Hedlund’s study ... 22
2.3 The research of the theme after Hedlund’s study in the 1980s ... 25
2.4 The summary of the literature review ... 26
3. METHODOLOGY ... 29
3.1 The methodology of the study by Hedlund ... 29
3.2 The research approach of this paper ... 29
3.3 Data Collection ... 30
3.3.1 Secondary data ... 32
3.4 Data analysis methods ... 35
4. RESULTS OF DATA COLLECTION ... 37
4.1 Organisational structure ... 37
4.2 The strategic decisions ... 39
4.3 The decision-making process ... 41
4.4 The decision-makers ... 43
4.5 The internationality ... 44
4.6 Analysis of the secondary data... 45
4.7 The dimensions of the decision-making process ... 48
4.7.1 The phases of the decision-making process ... 49
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4.7.2. The participation ... 52
4.7.3 The internationality ... 53
5. FINDINGS AND DISCUSSION ... 55
5.1 Organisational structure of MNE ... 56
5.1.1 The decision-making autonomy ... 58
5.2 Participation ... 59
6. CONCLUSION ... 62
6.1 Limitations of the study ... 63
6.2. Managerial implications ... 64
6.3 Suggestions for the future research ... 65
REFERENCES ... 66
APPENDIX 1: CASE INTERVIEW QUESTIONS ... 71
LIST OF FIGURES Figure 1: A general model of the strategic decision process (Paraphrasing Mintzberg et al., 1976). . 21
Figure 2: The organisational structure of the company. ... 38
Figure 3: The organisational change between Hedlund 1980 study and the case company in this study. .. 56
LIST OF TABLES Table 1: The participants. ... 32
Table 2 The secondary data resources. ... 33
Table 3: The different types of decisions (paraphrasing De Smet et al. 2017). ... 46
Table 4: The summary of the key data results categorised as dimensions. ... 50
Table 5: The summary of key findings. ... 55
6 1. INTRODUCTION
1.1 Background
During the past decades, the world of business has become more global and international, and most industries face global competition. Meanwhile, the number of multinational enterprises has increased rapidly in the past few decades (World Investment Report 2020, 123-125). A multinational enterprise or corporation (MNE or MNC) is commonly defined as an entity with business operations such as sales or production outside the country where the headquarter is located. From the legal perspective, the organisational structure of MNE is often a group where are parental and subsidiary companies. Depending on the company, the foreign subsidiaries can have various reasons and responsibilities such as production, sales operations, or research and development. (Muchlinski 2007, 5-8) The mode of MNE foreign operations is called a foreign direct investment (FDI) as the foreign operations are usually invested by buying a local company or starting a new one (Welch et al., 2018, 336-337). Especially in Swedish companies, the traditional way to invest in foreign markets has been founding a new local firm, in other words, having a greenfield investment (Hedlund 1986).
Traditionally the responsibility between subsidiaries and headquarters has been divided into strategical and tactic/operational aspects. The headquarter (HQ) responds to the long-term plans, vision, and decisions that apply for the whole MNE, whereas the subsidiaries respond to local matters and operational questions. (Balogun et al., 2011; Dzikowska, 2019) However, it is identified that most innovations are made in the subsidiaries (Rugman & Verbeke, 2001), not in the headquarters. Apart from that, it is natural that foreign subsidiaries know the local conditions such as language, culture, and legislation. These impact the sales and customers, which should be taken into account, especially if they differ from the domestic characteristics (Jobber & Lancaster, 2009, 165-181). Therefore, it can be considered that the subsidiaries have specific knowledge that the HQ does not necessarily have, which may be necessary also in the strategical decisions, not just in the operational decisions.
The companies tend to have a vision of what they would like to achieve in the future. The strategy is considered as a guideline to reach this. The strategy includes different ways how the company
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is going to reach its vision. These "hows" include decisions that the companies have to make to follow the strategy. The strategic decisions are often complex and irregular, and usually, there is no certainty for the succession of the results. In addition, there is no consensus on what strategic decisions are and what are tactical; some tactic decisions can also have strategic importance.
(Elbanna 2006). Usually, there is no identified process for the decisions. The decisions are more commonly made informally after discussions or going through some information such as financial reports. Strategic decisions can be made everywhere in the organisation, but primarily those tend to happen in the HQ (Aharoni et al., 2011). As discussed above, the foreign subsidiaries can have the essential information to support the strategic decisions, and therefore, their participation could lead to better results of strategic decisions.
There is very little research about the current strategic decision-making processes in the Nordic MNEs and especially how the organisations make the decisions. The most present study of the field based on my analysis is from the 1980s when Hedlund (1980) researched the Swedish multinational organisations and their strategic decision-making and the role of the foreign subsidiaries in the strategic decisions. However, the world has changed in 40 years, and the environment of international business even more. Therefore, potentially the former findings of the strategic decision-making of MNEs are not anymore applying due to the dramatic changes. In the most dramatic scenario, the decision-making process is today significantly different than in the past, but the interpretation of the decision-making relies on outdated research. As a result, the wrong interpretations can mislead or even cause harmful decisions. So, it seems evident that there is a demand for updated and developed research in the field.
1.2 Purpose of the study
This paper focuses on how the MNEs make their strategic decisions to apply to all their sites, including international subsidiaries. The purpose is to identify how the responsibility is shared in the MNEs. Traditionally the responsibility of the strategic decisions has been on the corporate headquarter (Birkinshaw & Hood 1998; Balogun et al., 2011; Dellenstrand & Kappen 2012).
However, the international subsidiaries tend to carry out the innovation processes of the MNE (Rugman & Verbeke 2001). In addition, if there is a long cultural distance between HQ and some
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market, the local subsidiary likely understands the market characteristics better (Jobber &
Lancaster, 2009, 165-181). Also, Gaur and Lu (2007) argue that the companies tend to know best the institutional requirement of their domestic market, which supports the use of local subsidiaries.
Therefore, it may be helpful for the HQ to collaborate with subsidiaries one way or another to make successful strategic decisions. Thus, the research question of this study is:
"What kind of role do foreign subsidiaries play in strategic decision-making in MNEs?"
The study aims to understand if the foreign operations participate in the strategic decision-making, on what level, and how. With the measures of qualitative case study, I try to understand if there are informal or formal processes for the participation and in what kind of questions. To answer the research question of this study, I aim to carefully identify the organisation's strategic decision- making process as a whole. Participation in the decision-making is complex and highly versatile, and it depends on the strategic questions and, for example, the company's organisational structure.
The themes around the research questions that have to be undertaken are the parent-subsidiary relationship and the responsibilities, the strategic decision-making in general in the MNEs, and the nature of participation in strategic decision-making. Furthermore, as the MNE organisational structure tends to be rather complex, it is crucial to identify which part of the organisation responds to making the final decisions in which strategic decision. Therefore, the study also touches on the topic of what kind of strategic decisions there can be in the MNE.
In this paper, I replicate Hedlund's (1980) study "The Role of Foreign Subsidiaries in Strategic Decision-making in Swedish Multinational Corporations" in the Finnish MNE context. As the original study was made over 40 years ago, new aspects have likely risen around the phenomenon.
The world has become more global, and the way of doing international business has changed during this period (Dunning, 2009), so there may be some differences in the results. However, this study's focus is not to identify changes in the business world in the past 40 years, although some of the influencing aspects are discussed. The development and changes inevitably impact the ways to do business. Still, the aim is instead to describe and identify the ways subsidiaries participate and how the strategic decisions are made in 2021 in the Finnish context. According to the country comparison of Hofstede based on the 6-model, Finland and Sweden are culturally relatively alike.
Therefore there do not tend to be many cultural differences that would influence the results. I replicate the study by using a Finnish company as the qualitative case similar to the original case.
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The case company is a Finnish MNE working with industrial B2B customers, and I focus on one of the firm's business areas. To ensure the sufficient similarity of the environment and circumstances, the case company of this study is similar in its business as the case companies of the original study in Sweden.
1.3 The case company
The case company is a Finnish company that is listed in the Nasdaq Helsinki. It was in the top 30 largest companies in Finland by its net sales in 2020. The company operates in the industry, and it sells its products in the B2B field. The company has business globally: about a half of its sales come from Europe, the Middle East, and Africa (EMEA region), although its other regions are also significant. The headquarter of the company is in Finland where is also a significant part of its production. However, it has production sites and other operations in other locations, especially in Asia and North America. The company was founded over 20 years ago when it was separated as an individual company.
The case company has grown through the years, both organically and through different acquisitions. There have been different strategical reasons for acquisitions, such as strengthen the possibilities in specific geographical markets or expand the product portfolio. The company is divided into few different business areas, and the data collection focuses on one of them to ensure the coherency of the answers. Business areas have some functions together, mainly functions considered corporate-level responsibility such as a legal department. In addition, business areas co-operate in specific parts and use the same network to operate some business functions.
However, business areas are considered relatively independent as their business differs among each other. The target business area has over 600 employees, and around 25% are located in Finland's headquarter. The rest of the employees are divided globally, although few countries have a significant part of the headcount. The business area organisation is divided into business units and support functions such as sales and supply. Therefore, the organisational model is a customised version of some more typical organisational models such as matrix organisation. People are working in business units and supply functions both outside and inside Finland, so in other words, the company does not have clear region-organisation but rather global collaboration. However, the
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research question is still very valid in the organisation as the headquarter has a decisive role in the organisation. Therefore, the results can be compared between managers located in the HQ and outside of it.
1.4. Structure of the thesis
First, the paper presents the review of the former literature around the international business, moreover, MNEs, focusing on the MNE parent-subsidiary relationship. The literature review observes especially the organisational structure of the MNEs, the typical responsibilities of the HQ and the foreign subsidiaries, and their evolution. The other important part of the literature review is analysing MNE strategic decisions and decision-making, how they commonly do, and the strategic decisions. Then the original study by Hedlund (1980) is presented. In this part, I present how the discussion around the study has evolved in the past 40 years. The last part of the literature review evaluates the development of the discussion around the topic after Hedlund's study (1980).
First, the key themes according to the literature review are created and presented. After the literature review, the methodology, the scope of the data collection and the secondary data are presented and explained. Chapter three also justifies the use of chosen methods and acknowledges the limitations of the study. The last part of the paper consists of the data analysis and presenting the results in chapter 4, followed by a discussion and critical findings of the study compared to the literature review. The final part of the paper is the study's conclusion, including the suggestions for future research and the limitations of the study.
1.5 Key terminology
International business studies have developed significantly during the past few decades. Hence, the terminology has also developed over the years. My study, especially the literature review, is composed of articles from the past five decades, which means that few key terms should be clarified for better understanding when reading this paper. There is more consensus behind some of the terms, whereas others are more argued. However, the aim is to explain a rather very complex
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theme with precise terminology. The terms may have different use or synonyms in other studies.
However, the explanations are collected from the academic literature and follow international business studies' fundamental theories and paradigms.
Strategic decision
A strategic decision is a choice or compromise that would help the organisation achieve its vision or targets. Usually, strategic decisions are related to the resources of the company. The strategic decisions are excessively heterogeneous, those tend to be non-repetitive, and they do not occur frequently. The importance of the influence of strategic decisions value varies significantly; some strategic decisions are considered more tactic such as product-related decisions, whereas the other strategic decisions have a remarkable impact on the company's daily business, such as mergers and acquisitions. Furthermore, the concept of strategic decision is different in different industries and even between individual companies; some of the decisions have very little strategic importance in some industries, whereas the decisions can be fundamental in the strategic context in the other industries.
A multinational enterprise (MNE)
MNE (sometimes MNC) is typically a group of companies that operates in several geographical markets. The MNEs tend to be larger in headcount, and many of the most prominent enterprises in the world are indeed MNEs. The key definitive for MNE is that it operates its non-domestic business through foreign subsidiaries either globally, internationally, or transnationally. Therefore, from the legislative perspective, MNEs are usually groups of companies. The business of MNEs can be operated directly from the headquarter to the subsidiary in the end-customer's market, or it can stream through several subsidiaries depending on the organisational structure of the MNE.
MNE can have organised its structure, for example, by regions, product divisions or types of customers.
12 Subsidiary
In the MNE literature, a subsidiary is a part of the MNE that handles the business in the non- domestic market. In international business and MNE literature, the subsidiary can be identical to the legislative subsidiary. However, today, it is more common that the organisational structure and the legislative structure of the company are not identical. In the MNE jargon, the subsidiaries are often called functions or business units. The subsidiaries tend to have various purposes and responsibilities, which all depend on the organisation's organisational structure. It is also shared that the subsidiaries are unidentical and even unequal with each other. The counterpart of the subsidiaries is the headquarter (HQ). It is typically responsible for the corporative decisions that apply for all the functions in the MNE, and the HQ is considered superior to the subsidiaries.
However, sometimes the HQ responsibilities can be divided. For instance, some foreign subsidiaries can be considered a regional headquarters in charge of regional collaboration and decisions.
13 2. LITERATURE REVIEW
In this part, I am going to evaluate the former literature around the topic. First, I will evaluate the general literature around the topic from a broader perspective to a narrower one. I will explain the basis of the MNE literature inside the international business literature; how it has developed and evolved, I will narrow it towards MNEs strategic management and subsidiary participation by defining some concepts. Second, I present Hedlund’s study in-depth about the MNE strategic decision-making and the role of subsidiaries in it and his suggestions for the future. Third, I will evaluate the discussion around the theme after Hedlund’s 1980 study and reflect possible changes and development in 40 years based on the citations of the study. In the last part, I summarise all the literature review sections in the discussion of its reflections. I use that summary as the background for the theoretical framework to analyse the collected data of the study.
2.1 The general literature of the MNEs strategic management
The academic research of multinational enterprises lies naturally under international business research. International business has been a widely studied topic since the 1960s. The aspect of internationality in business literature has focused principally on the internationalisation of the companies, and today there are few fundamental theories of how companies become international such as the so-called Uppsala model (Johanson & Vahlne 1977), which argues that the companies first gain their experience on the domestic market and then expand to the foreign markets that are culturally or geographically close. It is essential to understand that the companies have various motives to internationalise, and there are numerous ways to organise international operations.
MNE is one of the organisational models.
MNEs, on the other hand, have been researched actively since the 1980s (Dunning 2009, Ambos
& Birkinshaw, 2010). There are various directions of the studies and practically speaking, nearly all the aspects of MNEs have been researched one way or another. However, modern MNEs is tracked to the industrial revolution in western societies in the late 19th century. (Bartlett et al. 2013, 2-4.) Especially in the first decades of the field, the focus was mainly on foreign direct investments
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(FDIs) and their decisions. Nonetheless, since the 1980s the scholars have observed the MNEs and the strategic decision-making constantly more versatilely. (Aharoni et al. 2011) Due to historical reasons, MNE research focuses on MNEs operating from Europe or North America and traditionally emerging markets and their unique characteristics have been their own direction of studies. However, since the beginning of the 21st century, the traditional pattern has been challenged. There have been recent studies about MNEs in or from developing markets (See, i.e., Chen et al., 2012).
The subsidiaries have been researched since the end of the 70s (Birkinshaw & Hood 1998). Thus Hedlund’s studies about MNEs and subsidiaries in the early ’80s have been one of the first ones.
Subsidiary as of the focus of the research usually is linked with the MNE subsidiary management (Pisoni et al. 2010), in other words, from the perspective of the headquarter. Thus, the three main streams of the subsidiary studies have been the headquarter-subsidiary relationship, the subsidiary role and the subsidiary development (Birkinshaw & Hood 1998; Pisoni et al. 2010).
2.1.1 The definition of MNE and motives for subsidiaries
Commonly, MNE is considered a group of companies with different business functions in several countries, and it controls its international operations through its subsidiaries. In international business literature, the non-domestic operations of the company are called subsidiaries. It refers to their role as a business unit, even though the company's legal structure would be more complex than a clear parent-subsidiary model where HQ is the parent, and a subsidiary is a foreign company.
Thus, a subsidiary can refer to many aspects, and it can have different functions from holdings to manufacturing. The core motive for the existence of a subsidiary is to add value for the parent company. Therefore one host country may have several legal subsidiaries for different motives.
(Rugman & Brewere 2001: 187-188, 388-390; Birkinshaw & Hood, 1998; Dellestrand & Kappen 2012) The subsidiary can be owned wholly by its parent company or partially. In other forms of international business, such as joint ventures, the responsibility and control are shared in the agreed way. However, it is important to underline that there are no strict limitations for the MNEs. For example, many well-known global brands, such as Nike, are considered MNEs, but they do not manufacture their products themselves but use contract manufacturing (Nike, 2021). On the other
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hand, other essential functions like marketing and research and development are operated inside the company. Thus, MNEs can have several motives for subsidiaries.
Further, the location of an international subsidiary depends on a handful of aspects. Undoubtedly, the foreign subsidiaries are operating close to the potential customers, especially in sales and marketing. Nonetheless, there are other motives too. Some of the locations are attractive for the companies as they are closer to the materials or the costs, such as labour costs are lower than in the domestic market. Moreover, Gaur and Lu (2007) explain that institutional aspects of the host country can matter in their study. For instance, it is noticed that often MNEs set their research and development to the United States as the legislation and regulatory regime is more advanced for copyright protection than in other countries (Gaur & Lu 2007). It is also essential to bring up the evidence that the subsidiaries evolve. During the time, the significance of foreign sales tends to grow, hence the importance of foreign operations, which can have organisational or strategic effects (Prahalad & Doz 1981; Hedlund 1986). For instance, a subsidiary can be founded originally to manufacture only a specific component of a complex product because of lower productions costs. However, after some years of experience, a subsidiary can also be able to do some product development for the component and therefore ask more responsibility from the HQ (see, i.e.
Balogun et al. 2011; Dellestrand & Kappen 2012). The headquarter's role can be considered the central unit that orchestrates all the operations, allocates the resources, and creates the value of MNE as a whole. Hence it gathers all the operations together and ensures that they work as a corporation (Dellenstrand & Kappen 2012). Undoubtedly the role of HQ depends on the organisational model (Hedlund 1986).
2.1.2 The nature of Finnish MNEs
Multinational enterprises tend to have their own general key characteristics. However, sometimes the MNE home market's culture and environment can influence the nature of the MNE. For example, it has been identified that in Finland, there are clusters, especially in ICT, forestry, metal and chemical industries, and those seem to have an impact significantly on the national MNEs (Hilvo & Scott-Kennel 2011). Hedlund (1984) has stated some contextual factors that historically have had an impact on Swedish MNCs. Some of these factors also apply to Finnish MNEs as it is
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argued that at least in the 1970s and the 1980s, the development of Finnish MNEs was parallel with the Swedish MNEs, but over ten years behind (MacDonald 1989). It is important to point out that some presented assumptions may be outdated, whereas some historical or cultural explanations still tend to apply. For instance, MacDonald (1989) presented, over 30 years ago, the internationalisation of Finnish firms was still in progress, but naturally, in 30 years, it has increased.
For example, Finnish MNEs, especially the older companies, operate in industries where the customers are typically other companies or public organisations. The business in these industries has typically been very product or technology-oriented. Therefore there has not been a strong need for local adaptation, and the B2B customers have been somewhat alike globally. As Hedlund mentions (1984), the Swedish companies in these fields have commonly held high prices from their customers and differentiated with the products. The same pattern is visible also when observing Finnish industrial MNEs. Another aspect that Hedlund pointed out (1984) with Swedish MNEs that also applies in Finland is their relatively small domestic markets, so there is a push to internationalise in a relatively early stage. That is even more obvious in Finland as the population and GDP are even smaller in Finland than in Sweden.
2.1.3 The parent-subsidiary relationship, the responsibilities of HQ and subsidiary, and the autonomy of subsidiaries
The parent-subsidiary relationship in MNEs and especially the division has been changing during the decades. Traditionally, the MNE has had a mother-daughter organisation where the HQ presents the mother and the international subsidiaries the daughters. In the traditional perspective, the role of HQ has been very dominant as the assumption was that MNE develops its competitive advantage in the home country and exploits this advantage in other markets (see Dellestrand &
Kappen 2012). In the 1950s the subsidiaries commonly were “miniature replicas”, but since the 1970s and 1980s, the subsidiaries have had a more substantial role as product specialist (Birkinshaw & Hood 1998). However, in the traditional concept of MNE, the subsidiaries are considered one-way dependent on their parent company; thus, HQ has strong control over the subsidiary (Prahalad & Doz 1981). One defining aspect can be the nature of used
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internationalisation models. Internationalisation has often happened with foreign direct investments such as greenfield investments, especially in Europe (Hedlund 1984). The scholars have described the traditional role of a subsidiary as a function that executes the decisions made by HQ. Therefore, HQ has commonly been identified as the responsible for strategic decisions.
HQ also has a holistic responsibility for all operations of MNE. In other words, it has the overall responsibility of the corporation as a whole. HQ also allocates the resources for the operations.
(Dellestrand & Kappen 2012) Consistently the HQ has also created the strategy, and the role of subsidiaries has been to implement the strategy in the local context (Balogun et al. 2011).
However, the traditional idea of MNE organisational structure can be described as rather outdated.
Hedlund and other scholars have stated already in the 1980s that the MNEs are going towards a more “heterarchical”, diverse structure instead of traditional mother-daughter structure where the foreign “daughters” in other words, subsidiaries are only in response to the local operations (See Hedlund 1986; Hedlund & Rolander 2013, 25-27). Since the 1980s, the development of more and more diverse and complex organisational structure has been extensive. It has been identified that the MNEs disaggregate their responsibility globally. In other words, they divide the strategic decision-making responsibility to outside the HQ. The subsidiaries can, for example, take responsibility for strategic decisions related to products or sales. (Baaij & Slangen 2013). The division can be generated through management teams, regional headquarters, or regional management mandates (Baaij & Slangen 2013; Alfoldi et al. 2017). This trend has emphasised the differentiation of the foreign subsidiaries: they may have different goals. Nonetheless, the basic assumption that the corporate HQ makes the strategic decisions and the subsidiaries or business units execute them locally still lies in the background of today’s international business literature.
Hedlund (1980) argues that their international subsidiaries have traditionally been very autonomous in the Nordic companies: the international business units have decided about the local questions relatively independently. Pisoni et al. (2010) have found that the subsidiary autonomy depends on several factors such as the size of the company and the subsidiary, age of the subsidiary, development level of the host country and the internationalisation strategy. If the MNE aims to grow on local markets, the autonomy tends to increase, and if the aim is to focus on lower- cost-seeking, the autonomy tends to decrease. Pisoni et al. findings are similar to Garnier 1982.
He has highlighted the importance of the foreign market for its revenue, differences and variability
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(or unpredictability) of the environment, compared to the home environment. So, there are different factors, both external and internal, that impact the subsidiary autonomy (Garnier 1982).
The given autonomy indicates that the HQ trusts the foreign subsidiaries that the decisions follow the corporate strategy and goals; hence the host-country organisation has enough knowledge to make the decisions. One part of the reason could be the use of expatriates in foreign operations.
However, the HQ still has at least partly limited knowledge about the daily operations and the environment around the foreign subsidiary, so the level of control and participation in the subsidiary’s decisions must be linked to the headquarters understanding (Ciabuschi et al. 2011).
2.1.4 The strategic decision-making in MNEs and the strategic decision-making process
The strategic decision is a choice that follows the strategy that the company has set for it to achieve its vision. Strategic decisions can be actions that are part of the strategy implication process or decisions in general that have strategic importance. Strategic decisions can be related to the company's resources, such as organisation and manufacturing processes or intangible aspects, such as culture. (Johnson et al. 2016) Mintzberg and other scholars (see Mintzberg et al., 1976; Elbanna 2006) describe strategic decisions as “ill-structured, non-routine and complex, " indicating that strategic decisions are not usually very repetitive and systematic. It is also important to point out that MNEs tend to have several different strategies such as corporate strategy, business-level strategy, and sales strategy and all of these usually include strategic decisions.
The strategic decisions are made on different levels of organisations, such as in organisational units and HQ (Aharoni et al., 2011). As discussed before, traditionally, HQ is responsible for corporate-level decisions, so naturally, they also make the decisions, especially if those are important for the whole company. The subsidiary participation depends on the organisational model and their independence; if subsidiaries are operationally independent, they can make strategic decisions related to their operations and the local markets (Garnier 1982; Hedlund 1986).
Elbanna (2006) also argues that it is essential to point out that a particular strategic decision is not necessarily considered a strategic decision in all industries. For instance, the product launch can be a very strategic decision in some industries, and in others, it can be considered a very repetitive regular business decision. To conclude, strategic decisions are very versatile. They have a different
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level of strategic importance and influence, and therefore they are also made in different parts of the organisation. As Pisoni et al. (2010) emphasised, the decision-making responsibility is very heterogenous among the MNEs and even among subsidiaries inside one MNE. If the subsidiaries are autonomous, they can independently decide about questions specifically related to their market and functions. However, in situations where the subsidiary is less independent or, for example, where the business processes are complex and connected with various business units or subsidiaries, the level of autonomy is likely lower, and the HQ makes the decisions. In general, the HQ is responsible for the corporate-level decisions that apply to all of the company's units.
The former scholars have identified that strategic decisions usually have a sequence of different steps. The process starts from identifying a need for specific actions, either an opportunity, crisis or problem (Mintzberg et al., 1976). It is concluded with an agreed commitment to the action or action. (Dimitratos et al., 2011). Between identification and conclusion, the decision-makers gather information to support their decision (see, i.e., Aharoni 2015). For example, financial reports, other key performance indicators, market studies, analysis, and discussions with different stakeholders can be helpful information. In the Foreign Investment Decision Process in 1966, the authors have outlined five aspects that influence the decision process: the social system around the decision-makers and time for the decision. Uncertainty around the decision and the risk propensity of the decision-makers, interaction about the goals between managers, business units and the whole organisation and constraints of the decision-makers’ actions (see Aharoni et al. 2011). The interaction of the goals of managers, business units and the organisation is how the subsidiaries can usually contribute to the strategic decisions in MNEs. Therefore, there must be enough communication and interaction between the different parts of the organisation. Communication ensures that everybody understands what each wants to strive for in the organisation and how.
Aharoni et al. (2011) emphasise that the informal ties between the managers and other decision- makers have a role in the decisions and communication. It may be easier to discuss the decisions with familiar people and informally. In MNEs, the foreign operations may not have these informal relations with the key decision-makers, at least to the same extent as inside the HQ, which can hinder participation in the decisions.
Elbanna (2006) discuss that few aspects have an impact on strategic decision-making. Usually, the decision-makers use rational thinking while making decisions. In other words, they try to justify
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their decisions with the facts and other gathered information. However, other people can influence the decision-makers while making decisions. It is called political behaviour and can be compared to lobbying in politics (see Eisenhardt & Bourgeois 1988). Political behaviour can be, for example, bargaining, negotiating or manipulation or control of information. For example, if a company discusses reorganising its production and the employers close the production, defend their existence by discussing it with the decision-makers. In that case, it can be considered political behaviour. So, political behaviour is a natural part of the business, and it is not always a negative element. The other non-rational aspect that influences strategic decision-making is intuition. It is often characterised as a strong feeling about some of the options for decision. It can be very instinctive or rely on experience (Elbanna 2006). The scholars have found a relationship between successful intuitive decisions and long experience in the field (Wally & Baum 1994). Therefore, there are also non-rational aspects that influence a strategic decision. It is essential to notice that non-rational decisions can be successful too.
One of the most acknowledged scholars in the field of strategy, Henry Mintzberg, with his colleagues (1976), has created a model to describe unstructured strategic decision-making processes (see figure 1). As discussed before, the strategic decisions are significantly heterogeneous; hence the model is rather complex. However, notwithstanding the complexity, it seems one of the most efficient ways to understand strategic decision-making.
According to the model, the most straightforward strategic decisions consist only of recognition, where the problem, opportunity or crisis that creates the need for the decision, is defined and then analyses and evaluates the options before executing the decision. However, in their study, Mintzberg and others identified that more commonly, the decisions have more steps than just two.
The process can be described in three phases: identification, development, and selection. The identification phase can include an addition to the recognition also the diagnosis of the defining the issue. The diagnosis can include, for example, information gathering to understand the need for the decision correctly. The diagnosis can be either formal or informal. After the identification follows the phase of development. The development is optional but often identified in the decision making. It represents creating the solutions for the decision. The solutions can be either searched from the already existing options or designed independently. The final phase of the process is
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called selection. The selection can include screening the existing opportunities, followed by evaluating the options and authorising the decision as a last.
Figure 1: A general model of the strategic decision process (Paraphrasing Mintzberg et al ., 1976).
The decision-making process is also supported by three sets of supporting routines. A decision control routine is about planning for approaching the decisions and planning resources. The decision communication routine means the communication activities in the process, such as gathering information, especially in the diagnosis stage and early stages of the development phase.
The communication can be either explorative where the scanning is more general or investigative where the search is focused. The last support routine is a political routine which was also described by other scholars (see, i.e. Eisenhardt & Bourgeois 1988, Elbanna 2006). The last aspect that Mintzberg and others found that impact the strategic decision-making process is called dynamic factors. The dynamic factors are aspects that disturb the decision-making process by delaying, stopping, restarting or speeding it up, moving the process to the next phase or cycle between two phases. For instance, if the decision-makers identify that none of the solution options they have searched is eligible, they may need to get back to the development phase and design or search for new options. The dynamic factors are interrupts, scheduling delays, feedback delays, timing delays and speedups, comprehension cycles and failure cycles. (Mintzberg et al., 1976)
To conclude, it is easy to identify that the scholars have some consensus about strategic decision- making and some disagreements. Common aspects are that the decision-making process initiates
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from the need, which functions as a trigger for the process. The decision-making process often seems to be followed by information gathering, where the decision-makers attempt to understand and detect the characteristics of the need and how they could solve the problem. As the last part, the options are evaluated, and the final decision seems to be made. Finally, the decisions are made in the environment, which often aspires to influence the decision either way, and that is called politics.
2.2 Hedlund’s study
Hedlund and his research group interviewed six Swedish MNEs and, in total in 27 international subsidiaries. The subsidiaries were located in North America, Europe, and South America. The companies were among the 20 biggest companies in Sweden, and all of the companies had international production. The companies were presented briefly. For example, their organisational structure, key business characteristics, the relationship of HQ and subsidiaries, and the participating subsidiaries were described. The subsidiaries can be described as rather heterogeneous as they had relatively different functions and challenges. Some of the companies had a product division structure, but the traditional mother-daughter structure was more common.
The core finding of Hedlund’s (1980) study was that there were no systematic processes for the participation, and the communication was “informal, variable and built on historical personal relationships and subsidiaries were generally given much autonomy”. The behaviour was more passive or reactive rather than proactive or interactive. The headquarters gave very little or no role for the subsidiaries in the strategy creation; it was given from top to down. Commonly the participated subsidiaries also felt that the implementation of the strategy was unclear and inadequate. Apart from the implementation, the strategic importance of the subsidiary for the corporation was unclear. However, the subsidiaries wished that through closer integration of strategic thinking and actions on different levels, the strategic decisions seemed to come for international subsidiaries as a given. Commonly the participated subsidiaries also felt that the implementation of the strategy was unclear and inadequate. On the contrary, the headquarter seemed to be satisfied with the current participation and indicated that the subsidiaries should focus on operational activities such as selling and leave the strategy for the corporation.
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Hedlund (1980) states that companies should give the subsidiaries more responsibility in the strategic decision-making than they gave in his study. The core arguments for the more substantial participation are following: government involvement in the activities of MNCs, political and economic uncertainty, participation and unionisation of the employees, joint-ventures and inter- firm cooperation, technological uncertainty and change, oligopolistic market structures, organisation complexity and size and the need for the utilise human resources. These aspects have had some changes after the study was published due to, for example, global politics. Government involvement in the MNE activities may have raised, for example, through different procedure requirements. In addition, if MNE is planning significant investments such as new factories, it may have to negotiate with the local government about the details of the decision, such as location or infrastructure, beforehand. Political and economic uncertainty has increased in certain areas and decreased in others. For example, Finland and Sweden have become part of the European Union after 1980; thus, they are now part of its domestic market which means that the trade regulation follows the same principles in each member country. However, protectionism has increased significantly globally, even during the last years. WTO reports that there were in 2019 the most different trade restrictions in import in its member countries since the global economic crisis in 2008-2009 (WTO, 2019). Participation and unionisation of the employees are still remarkable in some countries; however, their situation has remained similar in many countries since 1980. The collaboration between companies and organisations has tightened in past decades. For instance, airlines have formed strong alliances since the 1990s. The aspect of technology has changed dramatically since 1980 due to digitalisation. Nonetheless, technological changes continue happening and even more rapidly than 40 years ago. Therefore, some markets have saturated, and the structure has become more oligopolistic, such as the mobile phone market. Organisational complexity refers to the organisational structure of the MNE and the struggle of the insufficiency of the traditional mother-daughter structure. However, as discussed before, the traditional model of MNE has been challenged, and there are indications that many MNEs have changed their organisational structure. Also, as the knowledge work has become more essential and the personnel’s skills are a significant intangible asset, it certainly is that the need of utilising human resources have already increased.
24 The aspects mentioned above can be grouped in four as:
1. active participation of stakeholders that have not used to be active, 2. uncertainty of the corporate environment,
3. increasing competition and 4. new values and aspirations.
Hedlund presents these aspects as unavoidable. Thus MNEs must respond to these if they want to remain profitable and stay in the competition. According to Hedlund’s study (1980), an MNE can respond to these new challenges with tightened collaboration inside the corporation, such as shared values and organisational matrices. These both indicate more active participation on different levels of the business. Shared values are something that the company is agreeing on as a whole, not a set of values from the home country of MNE. The organisational matrices mean the collaboration between different organisations that have similar targets. For example, those can be made through a joint venture or re-arranging the MNE organisational structure from the hierarchical mother-daughter structure to a more heterarchical structure. According to Hedlund, this practically means stronger integration and more significant responsibility for the subsidiaries, especially in the strategy creation and other responsibilities.
Hedlund suggests eight ways to involve the subsidiaries more in the strategic decision-making.
The first is to “de-ritualise the planning process” (1980, 33). It means that the planning processes of the corporation should require a dialogue with the subsidiaries. The second way is to involve the subsidiary top managers in the strategy creation. The third solution is to include strategic content in the regional, divisional, and corporate-wide meetings, focusing on a particular problem that should be solved. The fourth way is the increased communication about the environmental conditions that are affecting the business. The fifth solution is the structured communication channel into headquarters and decision-makers. However, Hedlund found that the communication was relatively informal and spontaneous, which is not necessarily reliable. The sixth solution is the personnel rotation between headquarter and subsidiaries to ensure integration. The seventh way is the cross-participation to the board of directors in other subsidiaries because it could help create and implement a better and easier strategy in the subsidiaries. The last way is to clarify the role of the board of directors in the subsidiary and instead give them strategic responsibility than
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keeping it just as a formality. These solutions require the participation of both parties, subsidiaries and the headquarter. However, as the headquarter is mainly in the mother-daughter structure considered a superior, the HQ should have the more significant responsibility to initiate, encourage and enable the change in the organisation.
2.3 The research of the theme after Hedlund’s study in the 1980s
It seems that there are no plethora of studies that have followed the same paradigm as Hedlund’s study in 1980. Evidently, Hedlund himself was one of the leading scholars of MNE – international subsidiary research. After the study about the strategic decision-making in Swedish MNEs, he has researched the evolution of the organisational structure of Swedish MNEs (1984) and how it has been evolving from a strict mother-daughter organisational structure toward a more divided product line -organisation. In his article “The Hypermodern MNC – A Heterarchy?” Hedlund discussed the future of the MNE organisational structure and different options for traditional hierarchical mother-daughter structure (1986). In addition to the mentioned studies, Hedlund researched Swedish MNEs in his article “A model of knowledge management and the N-form corporation” (1994) how the tacit knowledge is transferred in MNE and how the organisational structure has an impact on the knowledge transfer.
The studies where Hedlund’s study (1980) was cited can be divided into several themes. First, naturally, the study was cited the most in the MNE management studies in different directions, such as running the MNE business and strategic decision-making (see, i.e., Lindgren & Spånberg 1981 and Kim & Maugborne 1996). Other significant groups of studies were the internationalisation of the firms (see, i.e., Pisoni et al. 2010), MNE strategies (see, i.e., Johansson
& Yip 1994) or the role of a subsidiary in the MNE (see, i.e., Harzing & Noorderhaven 2006).
One interesting approach and evidently the most relevant theme to observe was in the article of Mees-Buss et al. (2019) about the organisational structure of MNE and how it has evolved from a transnational structure to the “neo-global corporation”. The article studies and reflect the evolution with an in-depth 12-years case study with Unilever. The study of Mees-Buss and other scholars describes how the organisational structure has changed through the years. Therefore, it could
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impact the results of strategic decision-making in MNEs between Hedlund’s study in 1980 and the study that I replicate now. As mentioned above, during the 1980s, Hedlund discussed himself too about the evolution of the organisational structure of MNEs (1984, 1986). When taking into consideration the discussion in part 2.1.3 and the studies about the regional division of corporate headquarter responsibilities (see, i.e., Baaij & Slangen 2013; Alfoldi et al. 2017), it seems that the trends of organisational structures in MNEs have changed since Hedlund’s study in the 1980s.
Perhaps in the 21st century, especially in the 2020s, the MNEs are not expected to follow any more mother-daughter structure but rather complex and global models. Global in this context can mean, for example, more equal geographical locations or division of the responsibilities and adding the collaboration between different functions horizontally, not just vertically (Mees-Buss et al., 2019).
Prahalad and Doz (1981) support other scholars arguing that the MNEs tend to shift from autonomous subsidiaries to international division structure when the business matures and the subsidiaries gain experience. Also, due to today's technological possibilities, it is possible that teams are not geographically located, such as sales teams. Therefore, there is no requirement of a similar regional division necessarily than before.
2.4 The summary of the literature review
As a conclusion of the literature review can be raised several aspects. The structure of MNE seems to have a strong influence on the role and responsibilities of the subsidiary or other foreign unit of business. The traditional structure of the MNE has been a clear mother-daughter structure where the corporative decisions are made in the mother company. In other words, HQ and the daughters execute them. This structure, where the role of HQ is very dominant, relies on the assumption that the competitive advantage is created in the HQ and distributed to subsidiaries (see Dellestrand &
Kappen 2012). However, this view is very challenged, and perhaps it is already outdated. There are indications that a modern, todays’ MNE has a more complex organisational structure where foreign subsidiaries are not anymore alike but with specific responsibilities and advantages. It also implies that the traditional corporative responsibilities can be divided between different locations of the company.
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The strategic decision-making in the MNEs seems to be complex, irregular, and undefined. There usually are not identified process; however, some repetitive patterns have been found. First, there is an identification for the need, following the information gathering, and lastly, making the decision (Aharoni et al., 2011). The complexity is due to the nature of the strategic decisions. There is no consensus of what precisely a strategic decision is. However, mainly it is characterised as a decision that follows the strategy, is related to the organisation's resources, and is often non- regular. Scholars identify that strategic decisions can be made on different organisational levels, such as in the HQ or the international business unit, depending on the decision. The strategic decisions are not equal in the different industries: a critical strategic decision in one industry can have very little importance in another industry. Strategic decisions can be made rationally based on given information or, for example, intuitively with a “gut feeling”. In an organisation, another individual can try to influence the decision differently, which is called political behaviour.
Therefore, the MNE strategic decisions are not concordant but rather very company and environment-related.
As a result, when analysing the international subsidiary participation in strategic decision-making, it is essential to take into account for few aspects:
1. The organisational structure of the company. There are indications that in the modern MNE, the organisational structure is more complex than the mother-daughter structure. For example, instead of subsidiaries, there might be different parts of the organisation, such as business units or teams.
Furthermore, the business units are not necessarily operating only in one country, and the responsibilities can be divided, such as sales and manufacturing. All of these impact strategic decision-making and participation, as it may differ between the different parts of the organisation.
2. The nature of the strategic decisions. It varies between the companies or even divisions that what is considered strategic decisions and what kind of decisions have strategic importance. There are different levels of strategic decisions, such as corporate-level strategic decision (i.e. mergers and acquisitions) and business level decisions (i.e. sales channels).
3. The decision-making process. According to the former literature, the process is somewhat informal, but there are several phases. The most critical phase for the participation is collecting the information, which usually includes data and discussions between different parties.
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4. The decision-makers. In the big corporations such as MNEs, the final decision-makers tend to be either teams such as executive teams and boards or high-level individuals such as directors.
5. The internationality. The international subsidiaries are physically and sometimes culturally away from the headquarter, which may influence the participation activity and possibilities. The key is to identify whether the participation is different between people and units abroad and in the headquarter.
These five aspects mentioned above must be observed to understand how the strategic decisions are made in the MNEs and subsidiaries are participating. The underlying question is why the decisions are made in a certain way because it can define the root causes of participation and its level. Also, the satisfaction to the strategic decision-making and the participation can give a broader understanding of the theme.
29 3. METHODOLOGY
As I wanted to reflect on the study of Hedlund (1980), my study aims to follow the methodological principles of the earlier study. However, Hedlund does not describe their approach or data analysis very in-depth, so I have also reviewed the other international business literature about the research methodology to evaluate the most suitable ways to execute the research successfully.
3.1 The methodology of the study by Hedlund
Hedlund’s study (1980) was part of the research project of the Institution of the International Business in Stockholm School of Economics. The research group interviewed six Swedish MNEs, which were among the 20 biggest companies in Sweden. They interviewed all together 27 subsidiaries. These companies were divided into 11 mini case studies so that the companies would remain un-identified. The sample was not random, and the raised examples of the findings focused on the challenges that corporations face.
The research of Hedlund is a qualitative case study. The nature of the study is empirical. As the purpose of Hedlund’s study was to understand how the MNEs make their strategic decisions, the open in-depth interviews have been the most suitable for the study. The paper does not present the way of coding the data, but it seems that the results have been group by similarity in categories.
3.2 The research approach of this paper
As the aim of the study is to see how the findings of Hedlund are applying today in the Finnish context, it is natural to use a similar methodology as Hedlund. Therefore, the approach of this study is a qualitative case study. In addition, Eisenhardt (1989) suggest using a case study approach for the topic areas which are new or lack adequate study. As there is not a plethora of current research about the strategic decision-making processes and the subsidiary role, the case study approach seems the most suitable to understand the phenomenon. However, due to the smaller scope and resources of the study, this study is limited to a single case study instead of Hedlund’s
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multiple case study. In this study, I do not give a broader perspective of the Finnish MNEs strategic decision-making but instead, focus on understanding how it happens in the case company. In addition, Eriksson and Kovalainen (2008, 120-123) say that an intensive case study aims to understand how one specific and unique case works, which support the use of one company as a case. They argue that the emphasis of the research is on interpretation. It means that the concepts and results are interpreted in a commonly understood way. In the case of this study, it means that the strategic decision-making is described rather more overall perspective instead of the context of the industry and the company. The case study is cross-sectional, so it describes the situation of the strategic decision-making in the company in spring 2021 (Eisenhardt 1989).
The data for the strategic decision-making research has been collected in several ways. Mintzberg et al. (1976) argue that the strategic decision processes can be researched by observation, studying the organisational records, questionnaire, or interviews. However, they mention that the research target can be demanding as the strategic decision processes can take a long time, so the researcher must rely heavily on interviews. As the resources of the data collection of this study are limited, interviewing seems to be the most efficient way to understand and describe the strategic decision- making process and participation.
The research is in the form of a sub-unit analysis. Furthermore, the sub-unit analysis is done in two levels. First, due to the research resources, the study focuses on one of the business areas of the case company. It ensures that the results are more coherent as the different business areas work in the different industries, and the organisations are formed to respond to distinct needs. The other level of sub-unit analysis is the comparison between business units and functions, whether there are differences in opinions compared to the headquarter.
3.3 Data Collection
The data collection method is in-depth open interviews. The participants were answering the same questions about the theme. The questions were open-ended and focused on two categories: the organisational model and how the business runs in the organisation and the company's strategic decision-making, where the emphasis was on the latter part. I asked the participants to describe the decision-making process, the decision-makers, how the supporting information for strategic
