Transnational and multi­dimensional organization

Organizational StructuresLateral and multidimensional forms13 min read

A multinational holds product, region, and function in tension, giving national units different roles in one integrated network.

What it is

A transnational organization is a multinational that declines to pick one axis, and its national units play different parts: one subsidiary leads a product worldwide, another contributes a capability, a third implements what others design. A shared perspective and mutual adjustment, more than one chain of command, hold them together.

The transnational gives each national unit a different role in one network

Select a unit or a letter to read it; the key above the drawing names the lines and letters used. Function, the third dimension Bartlett and Ghoshal hold at once with product and geography, is not drawn as a unit, since no record gives a worldwide function's place.

Reports toAdjust to each other directlyMMutual adjustmentNStandardization of normsStrikwerda and Stoelhorst (2009) find each dimension with its own accountable manager, read here as one basis per unit

HeadquartersUnits in thenetworkHeadquartersWorldwideproduct lineSubsidiary:strategic leaderSubsidiary:contributorSubsidiary:implementerBy productBy countryMN
HeadquartersUnits in the networkHQProductLeadsAddsAppliesBy productBy countryMN
Select a unit or a letter to read it. M, mutual adjustment: People coordinate their own work by informal communication with each other. N, standardization of norms: Shared beliefs and values, usually across the whole organization, guide the work.Headquarters. Layer: Headquarters. Reports to no one. Fits its relation with each subsidiary to that unit's context, from hierarchical to federative (Ghoshal and Nohria 1989), and differentiating the structure this way went with better performance (Nohria and Ghoshal 1994).Worldwide product line. Layer: Units in the network. Reports to Headquarters. By product. Accountable for the product dimension. In the multidimensional firms Strikwerda and Stoelhorst (2009) studied, each dimension had its own accountable manager, which they say avoids the matrix's two bosses.Subsidiary: strategic leader. Layer: Units in the network. Reports to Headquarters. By country. A national unit that leads a product worldwide for the whole network (Bartlett and Ghoshal 1989).Subsidiary: contributor. Layer: Units in the network. Reports to Headquarters. By country. Contributes a capability to the rest of the network.Subsidiary: implementer. Layer: Units in the network. Reports to Headquarters. By country. Implements what other units design.M, mutual adjustment. People coordinate their own work by informal communication with each other.N, standardization of norms. Shared beliefs and values, usually across the whole organization, guide the work.
The structure in words
  1. Headquarters
    • Headquarters, reports to no one. Fits its relation with each subsidiary to that unit's context, from hierarchical to federative (Ghoshal and Nohria 1989), and differentiating the structure this way went with better performance (Nohria and Ghoshal 1994).
  2. Units in the network
    • Worldwide product line, reports to Headquarters, grouped by product. Accountable for the product dimension. In the multidimensional firms Strikwerda and Stoelhorst (2009) studied, each dimension had its own accountable manager, which they say avoids the matrix's two bosses.
    • Subsidiary: strategic leader, reports to Headquarters, grouped by country. A national unit that leads a product worldwide for the whole network (Bartlett and Ghoshal 1989).
    • Subsidiary: contributor, reports to Headquarters, grouped by country. Contributes a capability to the rest of the network.
    • Subsidiary: implementer, reports to Headquarters, grouped by country. Implements what other units design.
  • Subsidiary: strategic leader and Subsidiary: contributor: adjust to each other directly, coordinated by mutual adjustment.
  • Subsidiary: contributor and Subsidiary: implementer: adjust to each other directly.
  • Across the whole organization: standardization of norms.
  • Strikwerda and Stoelhorst (2009) find each dimension with its own accountable manager, read here as one basis per unit

Headquarters sits over a product line and national subsidiaries, each with one accountable manager, and the subsidiaries play different parts: one leads a product worldwide, one contributes a capability, and one implements what others design. Mutual adjustment among the interdependent units and a perspective shared across the whole hold them together.

Source: Bartlett and Ghoshal 1989, case studies of nine multinational companies in three industries; Ghoshal and Nohria 1989, a survey of 618 headquarters-subsidiary relations in 66 multinationals; Strikwerda and Stoelhorst 2009, interviews at 36 Dutch organizations and five case studies; Nohria and Ghoshal 1994, a quantitative study of multinationals.

Grouping, the first of five levels that rest on theory, is two or more bases at once (Bartlett and Ghoshal 1989), a contested level: by a single-boss test, our judgment, each unit sits on one basis, since Strikwerda and Stoelhorst (2009) found one manager accountable per dimension, which they say avoids the matrix's two bosses, and Bartlett and Ghoshal (1990) call matrix management a frame of mind. Decision rights are selective vertical and horizontal decentralization, in Mintzberg's (1980) terms, a synthesis offering propositions without a new test. Coordination is by mutual adjustment and standardization of norms. Lateral mechanisms, also contested, stop at integrating and managerial linking roles, short of the matrix, with careers, cross-unit teams, and planning doing the integrating (Bartlett and Ghoshal 1990; Strikwerda and Stoelhorst 2009; Galbraith 2010). Differentiation is high, integration heavy. Donaldson and Joffe (2014), a practitioner article on fit, read both levels the other way: the transnational strategy is fitted by geographies matrixed with functions, or with product divisions where products are diverse, and by high levels of at least one of centralization, formalization, and shared values.

The rest is our reading. Specialization spans medium to high. Formalization is medium and centralization spans mixed to decentralized, though Ghoshal and Nohria (1989), a survey of 618 headquarters-subsidiary relations in 66 multinationals, found both set differently for each subsidiary context, so the placement leaves out the hierarchical relations. Layers are moderate. Exchange spans bureaucracy to clan (after Ouchi 1980, conceptual), and the boundary selective to permeable: national borders are crossed routinely (Ashkenas and colleagues 1995), the firm's own edge not necessarily.

Where the transnational and multidimensional organization sits on the eleven dimensions

The filled segments are the form's levels, and an outlined segment is the other view's level on a contested row; select a row for its reason and sources.

Select a dimension to read why the form sits there, and on what basis.Basis of grouping: Two or more at once. Basis: Theory. Bartlett and Ghoshal: product, geography, and function are held at once in one integrated network. Sources: Bartlett and Ghoshal 1989; Strikwerda and Stoelhorst 2009; Bartlett and Ghoshal 1990. View 2: Product or purpose and place. Seven of 36 firms interviewed had a multidimensional form organized around several dimensions at once, but with a different manager accountable for each, which the authors say avoids the matrix's two bosses, and Bartlett and Ghoshal call matrix management a frame of mind rather than a structure; by the single-boss test this batch applies to the hybrid, each unit then sits on one basis, product or place, a reading that is judgment. Sources: Strikwerda and Stoelhorst 2009; Bartlett and Ghoshal 1990.Specialization: Medium to high. Basis: Judgment. National units take differentiated, specialized roles in one network; judgment for the band. Sources: Bartlett and Ghoshal 1989.Standardization and formalization: Medium. Basis: Judgment. In 618 headquarters-subsidiary relations in 66 multinationals, formalization was set differently for different subsidiary contexts, a spread across the scale; placing the form as a whole in the middle is judgment. Sources: Ghoshal and Nohria 1989; Nohria and Ghoshal 1994.Centralization: Mixed to decentralized. Basis: Judgment. Centralization was fitted to each subsidiary context, from hierarchical to federative relations, and differentiating the structure this way went with better performance; the span for the form as a whole is judgment, and it leaves out the hierarchical relations, which sit at level 1. Sources: Ghoshal and Nohria 1989; Nohria and Ghoshal 1994.Layers and span of control: Moderate. Basis: Judgment. Nothing in the sources read sets the depth; judgment. Sources: Bartlett and Ghoshal 1989.Decision rights and the locus of authority: Selective vertical and horizontal decentralization. Basis: Theory. National units get differentiated roles, strategic leader, contributor, or implementer, so different decisions go to different places, which is Mintzberg's selective decentralization. Sources: Bartlett and Ghoshal 1989; Mintzberg 1980.Prime coordinating mechanism: Mutual adjustment and standardization of norms. Basis: Theory. Mutual adjustment among interdependent units and a shared management perspective; a high degree of shared values between headquarters and subsidiaries went with better performance. Sources: Bartlett and Ghoshal 1989; Nohria and Ghoshal 1994.Lateral mechanisms: Integrating roles and managerial linking roles. Basis: Theory. Bartlett and Ghoshal argue that matrix management is a frame of mind rather than a structure, and multidimensional firms make a different manager accountable for each dimension, integrated through careers, cross-unit teams, and planning rather than dual reporting. Sources: Bartlett and Ghoshal 1990; Strikwerda and Stoelhorst 2009; Galbraith 2010; Donaldson and Joffe 2014. View 2: Matrix. Donaldson and Joffe write that a transnational strategy is fitted by geographies matrixed with functions, or with product divisions where products are diverse, coordinated by the geographies balanced by functions or products, and fitted by high levels of at least one of centralization, formalization, and shared values; a practitioner article on fit. Sources: Donaldson and Joffe 2014.Differentiation against integration: High differentiation, heavy integration. Basis: Theory. An integrated network of differentiated units: high differentiation, heavy integration. Sources: Bartlett and Ghoshal 1989.Mode of exchange and control: Bureaucracy and clan. Basis: Judgment. Headquarters-subsidiary relations combined centralization, formalization, and normative integration in four fitted types, one labeled clan; reading those types onto Ouchi's bureaucracy and clan is judgment. Sources: Ghoshal and Nohria 1989; Ouchi 1980.Boundary permeability: Selective to permeable. Basis: Judgment. Resources and knowledge flow across national borders among interdependent units, Ashkenas's geographic boundary opened, while the firm's own edge is not necessarily so; judgment. Sources: Bartlett and Ghoshal 1989; Ashkenas and colleagues 1995.

Five of the eleven levels rest on theory and six on judgment. Two are contested: on grouping, Strikwerda and Stoelhorst (2009) find one accountable manager per dimension, and on lateral mechanisms, Donaldson and Joffe (2014) fit the strategy with a matrix.

Source: Bartlett and Ghoshal 1989, case studies of nine multinational companies in three industries; Strikwerda and Stoelhorst 2009, interviews at 36 Dutch organizations and five case studies; Bartlett and Ghoshal 1990; Ghoshal and Nohria 1989, a survey of 618 headquarters-subsidiary relations in 66 multinationals; Nohria and Ghoshal 1994, a quantitative study of multinationals; Mintzberg 1980, a synthesis of earlier research, offering propositions without a new test; Galbraith 2010; Donaldson and Joffe 2014; Ouchi 1980, a conceptual article; Ashkenas and colleagues 1995.

Where it came from

C. K. Prahalad and Yves Doz, in The Multinational Mission (1987), framed the multinational's task as two demands at once, global integration of activities and local responsiveness, after Doz, Bartlett, and Prahalad (1981) examined conflicts between global competitive pressures and host country demands. Christopher Bartlett and Sumantra Ghoshal named the organizational answer: their 1988 article called the transnational an integrated network of worldwide operations that achieves global coordination and national flexibility together. Managing Across Borders (1989) rests on case studies of nine multinational companies in three industries. The problem was how a multinational could be globally efficient, locally responsive, and able to learn worldwide at once.

The schools of organization design and the forms' origins, 1900 to now

Each row is a school's era; each square under them is a form at its first year. Select a row or a square to read it; on a form's page, its own square and span are marked, with the schools that treat it.

1900192019401960198020002020Bureaucracy and its criticsClassical administrationHuman relations and System 4Transaction cost economicsCarnegie schoolSocio-technical systemsLabor-managed firmModularity and mirroringStrategy and structureContingency theoryFrench bureaucratic schoolJapanese-firm literatureScandinavian and DutchConfiguration theoryInformation processingLabor processStrategic choiceGerman codeterminationOrganizational economicsInstitutional theoryPopulation ecologyResource dependenceBusiness groupsScandinavian institutionalSocietal effectNetwork perspectiveComputational designNew-forms debateAlgorithmic managementForms by first yearTransnational and multidimensional organization, 1987 to 1989Now

The forms by first year

1900192019401960198020002020Transnational and multidimensional organization, 1987to 1989Now

Schools that treat this form: Strategy and structure; Information processing.

Select a school's row or a form's square to read it.Select a form's square to read it; open a school below.Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.Bureaucracy and its critics in The Schools of Organization DesignClassical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.Classical administration in The Schools of Organization DesignHuman relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.Human relations and System 4 in The Schools of Organization DesignTransaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.Transaction cost economics and the M-form hypothesis in The Schools of Organization DesignThe Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.The Carnegie school and the attention-based view in The Schools of Organization DesignSocio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.Socio-technical systems in The Schools of Organization DesignThe economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.The economics of the labor-managed firm and of enterprise ownership in The Schools of Organization DesignModularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.Modularity and the mirroring hypothesis in The Schools of Organization DesignStrategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.Strategy and structure in The Schools of Organization DesignStructural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.Structural contingency theory in The Schools of Organization DesignThe French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.The French bureaucratic school (strategic analysis) in The Schools of Organization DesignThe Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.The Japanese-firm literature in The Schools of Organization DesignThe Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.The Scandinavian and Dutch socio-technical schools in The Schools of Organization DesignConfiguration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.Configuration theory in The Schools of Organization DesignInformation processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.Information processing in The Schools of Organization DesignLabor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.Labor process and critical theory in The Schools of Organization DesignStrategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.Strategic choice in The Schools of Organization DesignThe German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.The German codetermination literature in The Schools of Organization DesignOrganizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.Organizational economics: decision rights, authority, and complementarities in The Schools of Organization DesignInstitutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.Institutional theory in The Schools of Organization DesignPopulation ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.Population ecology in The Schools of Organization DesignResource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.Resource dependence in The Schools of Organization DesignThe business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.The business-groups literature in The Schools of Organization DesignScandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.Scandinavian institutionalism in The Schools of Organization DesignSocietal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.Societal effect and comparative business systems in The Schools of Organization DesignThe network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.The network perspective on organizations in The Schools of Organization DesignComputational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.Computational organization design and search in The Schools of Organization DesignThe new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.The new-forms debate in The Schools of Organization DesignThe algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.The algorithmic-management literature in The Schools of Organization DesignFunctional structureOrigin: 1911 to 1937.Family: Classical hierarchies.Line and staffOrigin: 1916 to 1943.Family: Classical hierarchies.Multidivisional (M-form) by productOrigin: 1920s practice; named and analyzed 1962 to 1975.Family: Divisionalized forms.Machine bureaucracyOrigin: 1922 (Weber); 1979 (Mintzberg).Family: Classical hierarchies.Divisional by customer or market segmentOrigin: 1937; 2005.Family: Divisionalized forms.Matrix organizationOrigin: 1950s to 1960s practice; analyzed 1971 to 1977.Family: Lateral and multidimensional forms.Co-determined organizationOrigin: 1951 to 1976 (the laws); 1984 to 2022 (the main studies).Family: Forms from other traditions.Socio-technical autonomous work groupsOrigin: 1951 to 1965.Family: Team-based and self-managing forms.Stratified hierarchy (requisite organization)Origin: 1951 to 1989.Family: Classical hierarchies.Cooperative organizationOrigin: 1958 to 1999.Family: Forms from other traditions.Linking-pin organization (System 4)Origin: 1961 to 1967.Family: Team-based and self-managing forms.Divisional by regionOrigin: 1962 to 1972.Family: Divisionalized forms.Adhocracy (innovative organization)Origin: 1968 to 1979.Family: Professional, project, and knowledge forms.J-form (the Japanese firm)Origin: 1968 to 1990.Family: Forms from other traditions.Professional bureaucracyOrigin: 1968 to 1979.Family: Professional, project, and knowledge forms.Holding company (H-form)Origin: 1972 to 1975; 1987.Family: Divisionalized forms.Ambidextrous organizationOrigin: 1976 to 2004.Family: Professional, project, and knowledge forms.Simple structureOrigin: 1979.Family: Classical hierarchies.Hybrid structureOrigin: 1980 to the present.Family: Lateral and multidimensional forms.Missionary (ideological) organizationOrigin: 1980 to 1989.Family: Ideological forms.Network, modular, and virtual organizationOrigin: 1986 to 1990.Family: Network and market-like forms.Transnational and multidimensional organizationOrigin: 1987 to 1989.Family: Lateral and multidimensional forms.Business group (keiretsu, chaebol, family house)Origin: 1988 to 2007.Family: Forms from other traditions.Shamrock organizationOrigin: 1988 to 1989.Family: Network and market-like forms.Federal organizationOrigin: 1989 to 1992.Family: Network and market-like forms.Self-managing organization (less-hierarchical forms)Origin: 1989 to 2017.Family: Team-based and self-managing forms.Boundaryless organizationOrigin: 1990 to 1995.Family: Network and market-like forms.Front-back organizationOrigin: 1990s to 2007.Family: Lateral and multidimensional forms.Professional partnership (P2 form)Origin: 1990.Family: Professional, project, and knowledge forms.The corporate center and shared servicesOrigin: 1991 to 2000.Family: Divisionalized forms.Internal market organizationOrigin: 1993 to 1994.Family: Network and market-like forms.Process (horizontal) organizationOrigin: 1993 to 1999.Family: Lateral and multidimensional forms.Cellular organizationOrigin: 1994 to 1997.Family: Network and market-like forms.Hypertext organizationOrigin: 1994 to 1995.Family: Forms from other traditions.Team-based organizationOrigin: 1995.Family: Team-based and self-managing forms.Project-based organizationOrigin: 2000 to 2006.Family: Professional, project, and knowledge forms.Agile at scaleOrigin: 2001 to 2016.Family: Contemporary and emerging forms.Distributed (all-remote) organizationOrigin: 2002 to 2021.Family: Contemporary and emerging forms.Open-source and community-based organizationOrigin: 2002 to 2007.Family: Contemporary and emerging forms.Algorithmically managed organizationOrigin: 2015 to 2020.Family: Contemporary and emerging forms.Team of teamsOrigin: 2015.Family: Team-based and self-managing forms.

The schools by first year

  1. Bureaucracy and its critics1900s to 1950s, revived from the 1990sWhat it claimsWeber held that rational-legal authority exercised through an office hierarchy, written rules, trained officials, and promotion by qualification is technically superior in precision, speed, and reliability. Critics studied its unintended consequences, Michels's iron law sharpest.What it has shownMerton (1940) argued, with no test, that rules can turn from means into ends; case studies followed. The Aston group concluded that the type's dimensions vary independently, and Wagner's meta-analysis (2021) found that many of their interrelationships have weakened.Who disputes itHuman relations and System 4 sets the costs of impersonal rules to motivation and cooperation against the technical superiority Weber stresses.
  2. Classical administration1910s to 1940s, and in German to the 1970sWhat it claimsThere are general principles of administration, among them division of work, unity of command, a scalar chain of authority, and a limited span of control, and a structure built to them will be efficient in most settings. Taylor added that planners should set work methods.What it has shownThe school offered reasoning and experience, not tests. Woodward (1965) found that the spans and levels of the more successful firms in her sample differed by production system, and Simon (1946) showed that the principles come in pairs that point in opposite directions.Who disputes itStructural contingency theory found that the structure of successful firms varies with technology and environment, where classical writers treat their principles as general.
  3. Human relations and System 41920s to 1960sWhat it claimsOutput depends on the social relations of work, the norms of informal groups, and the style of supervision as much as on formal design. Likert's System 4, overlapping work groups joined by linking-pin managers under participative management, outperforms authoritative systems.What it has shownThe founding evidence is the Hawthorne studies, which later reanalyses dispute (Carey 1967; Levitt and List 2011). Likert's support came largely from his own institute's surveys. Wagner (1994) found participation's effects on performance and satisfaction significant but small.Who disputes itLabor process and critical theory reads human relations as a technique of managerial control rather than a change in the distribution of power.
  4. Transaction cost economics and the M-form hypothesis1937, then the 1970s to the presentWhat it claimsFirms exist, and are organized as they are, to economize on transaction costs. Hierarchy replaces the market when assets are specific, uncertainty is high, and exchange is frequent, and the multidivisional form should outperform the functional form in large, diversified firms.What it has shownArmour and Teece (1978) found, in United States petroleum firms from 1955 to 1973, a positive relationship between the multidivisional form and profitability while the form was spreading, but not once an equilibrium in organizational form was reached.Who disputes itThe network perspective on organizations: Granovetter argued that the theory undersocializes economic action, which is embedded in networks of personal relations that also produce trust and order.
  5. The Carnegie school and the attention-based view1940s to the presentWhat it claimsPeople in organizations are boundedly rational, so structure matters because it sets the premises of their decisions and channels their attention: who sees which problems, which goals they pursue, and which routines they follow. Ocasio makes structure distribute attention.What it has shownMarch and Simon (1958) drew propositions from the existing literature, and Cyert and March (1963) added process models and simulations. Two studies show hierarchy shaping what is sent up as well as what is chosen (Reitzig and Maciejovsky 2015; Keum and See 2017).Who disputes itOrganizational economics: decision rights, authority, and complementarities models a principal and agents with defined objectives; the Carnegie school, firms as coalitions with unresolved goal conflict.
  6. Socio-technical systems1950s to 1980sWhat it claimsAn organization is a social system and a technical system that must be designed together. The same technology admits more than one way of organizing work, and groups that own a whole task and control its variances at the source perform better and are more satisfied.What it has shownTrist and Bamforth (1951) found that longwall mechanization broke up self-regulating work groups. A review of 134 experiments found them extremely successful overall, and Stewart (2006) linked team autonomy to performance; studies of socialist brigades and Volkswagen qualify it.Who disputes itLabor process and critical theory: Kelly argued that labor intensification, not joint optimization, accounts for what socio-technical redesign achieved, and that the part of pay incentives was seriously underestimated.
  7. The economics of the labor-managed firm and of enterprise ownership1958 to the presentWhat it claimsA firm run by its workers behaves differently from one run for investors: Ward modeled the Yugoslav-style firm as maximizing income per worker. Hansmann argued that an ownership form's success depends on the balance between the costs of market contracting and of ownership.What it has shownBurdín (2014) found a 29 percent lower hazard of dissolution for Uruguayan worker-managed firms than for conventional ones, and Fakhfakh, Pérotin, and Gago (2012) found French labor-managed firms as productive or more so in every industry studied.Who disputes itOrganizational economics (Jensen and Meckling) contrasts the labor-managed firm, in which tradable residual claims are legally prohibited, with cooperatives and partnerships that arise out of voluntary contracting.
  8. Modularity and the mirroring hypothesis1960s to the presentWhat it claimsComplex systems are built of nearly decomposable parts, and an organization's structure tends to mirror the architecture of what it makes: modular products allow loosely coupled organizations, and tightly coupled products need tightly coupled teams. Conway's law runs in reverse.What it has shownColfer and Baldwin (2016) review the empirical studies and report both support and principled exceptions. Direct tests point both ways: MacCormack, Baldwin, and Rusnak (2012) found open source products more modular than their commercial pairs; dynamic components break the mirror.Who disputes itNo school in the record disputes it head on; it answers information processing, which meets the coordination load inside the organization; mirroring writers locate it in the product's architecture.
  9. Strategy and structure1960s to 1980sWhat it claimsStructure follows strategy: firms that diversify by product or geography outgrow the centralized functional structure and, after a lag and usually a crisis, adopt divisions. Chandler drew this from the histories of DuPont, General Motors, Standard Oil of New Jersey, and Sears.What it has shownChandler (1962) is comparative business history of four firms set against a wider survey. Rumelt (1974) related diversification and structure to performance, and Egelhoff (1988), with 34 multinationals, found some of Stopford and Wells's relationships supported and others not.Who disputes itInstitutional theory: in Fligstein's model divisions spread with a product-related or unrelated strategy, presidents from sales or finance, and other firms in the industry changing; strategy was one of three.
  10. Structural contingency theory1960s to the presentWhat it claimsThere is no one best structure. Performance depends on fit between structure and contingencies such as environment, technology, size, and strategy, on an open-system view of the organization. Drazin and Van de Ven separate fit as selection, interaction, and systems.What it has shownBurns and Stalker, Woodward, and the Aston group related structure to context; Drazin and Van de Ven (1985) supported selection and systems fit only. Pennings (1975) found that fit did not explain effectiveness; Schoonhoven (1981) found traditional hypotheses unsupported.Who disputes itStrategic choice: Child argued that contingency theory explains structure by the constraints of context and leaves out the political process by which power-holders choose strategic action, structural forms included.
  11. The French bureaucratic school (strategic analysis)1960s to 1980sWhat it claimsA bureaucracy is a system of power relations organized around zones of uncertainty. Impersonal rules and centralization protect members from depending on one another, those who control uncertainties hold power, and, unable to correct its errors, it changes only through crisis.What it has shownLe phénomène bureaucratique (1963; English 1964) rests on two case studies, a clerical agency and a state industrial monopoly. L'acteur et le système (1977; English 1980) is theoretical.Who disputes itSocietal effect and comparative business systems: D'Iribarne argues that national logics of conduct, such as a French logic of honor, explain differences that Crozier attributed to power games.
  12. The Japanese-firm literature1960s to the presentWhat it claimsThe large Japanese firm coordinates operating decisions through horizontal information sharing among semi-autonomous shops and uses its ranking hierarchy mainly as an incentive scheme (Aoki). It creates knowledge through middle-up-down management (Nonaka and Takeuchi).What it has shownAoki (1986) is a formal model. Lincoln, Hanada, and McBride (1986) compared 51 Japanese and 55 United States manufacturing plants, and Nonaka and Takeuchi (1995) rest on case studies, chiefly of Japanese firms. Fruin (1994) found the enterprise system defined at three levels.Who disputes itLabor process and critical theory reads shop-floor delegation as control: Sewell and Wilkinson argue that just-in-time and total quality regimes delegate tactical responsibility while centralizing strategic control.
  13. The Scandinavian and Dutch socio-technical schools1960s to 2000sWhat it claimsThe Scandinavian program sought democracy at work through field experiments with semi-autonomous groups, then through democratic dialogue. The Dutch school's design theory turns complex organizations with simple jobs into simple organizations with complex jobs.What it has shownEmery and Thorsrud reported field experiments in Norwegian industry; Gustavsen (1992) records that they spread less than hoped, his reason for turning to dialogue. Berggren studied work organization in the Swedish auto industry. The Dutch work rests on design cases and argument.Who disputes itThe Japanese-firm literature: defenders of the Toyota system hold that standardized work with employee participation learns faster; Berggren reports Swedish long-cycle plants matching a line plant on productivity.
  14. Configuration theory1970s to the presentWhat it claimsStructures cluster into a small number of internally coherent configurations whose elements reinforce one another, so organizations move between a few types in large jumps, not small steps. Mintzberg's five configurations each rest on one coordinating mechanism.What it has shownDoty, Glick, and Huber (1993) found that fit to Miles and Snow's ideal types predicted effectiveness while fit to Mintzberg's did not. A meta-analysis of 40 tests (Ketchen and colleagues 1997) found that configuration partly explains performance, more so with broad definitions.Who disputes itStructural contingency theory: Donaldson counters that most organizations sit at intermediate points on a continuum of fits, not in a few configurations, and that studies over time find mostly incremental change.
  15. Information processing1970s to the presentWhat it claimsThe more uncertain the task, the more information must be processed during its execution. An organization either reduces that need, through slack resources or self-contained tasks, or raises its capacity, through vertical information systems or lateral relations up to the matrix.What it has shownGalbraith (1973, 1974) built the framework from cases and from Simon's theory of bounded rationality, and Tushman and Nadler (1978) set it out as an integrating concept for design. Daft and Lengel (1986) argued that structure must reduce equivocality as well as supply data.Who disputes itThe Carnegie school and the attention-based view: Ocasio holds that firm behavior results from how the firm channels and distributes attention, so structure governs where attention goes, not only how much is processed.
  16. Labor process and critical theory1970s to the presentWhat it claimsStructure is above all a system of control over labor. Braverman argued that management deskills work by separating conception from execution; Edwards traced a sequence from simple control by the boss to technical control through machines to bureaucratic control through rules.What it has shownHistorical and theoretical (Braverman 1974; Edwards 1979). Delbridge (1995), observing a Japanese-owned plant in England, found that just-in-time and total quality regimes combined the control of labor with management's economic goals more completely than piece rates had.Who disputes itBureaucracy and its critics: Adler argues that labor process theory ignores the progressive socialization of the labor process, which drives long-term skill upgrading, and disputes deskilling as the trend.
  17. Strategic choice1970s to the presentWhat it claimsStructure is the outcome of choices by those with power in the organization, who decide on strategic action, including the structural form, the manipulation of environmental features, and the performance standards to be met. Context constrains but does not determine structure.What it has shownLargely conceptual: Child (1972) built the argument from gaps in contingency findings, and the empirical case rests mostly on the modest share of structural variance contingencies explain. A 2026 review of 42 studies finds upper echelons theory their main theoretical anchor.Who disputes itStructural contingency theory: Donaldson replies that organizations mostly adopt the structures their contingencies dictate, to avoid the loss of performance misfit brings, so choice over structure is at most limited.
  18. The German codetermination literature1970s to the presentWhat it claimsWorks councils and employee board seats form a structural layer through which coordination can become negotiation between management and employees. Defenders argue that it supports long-term employment, training, and cooperation; critics, that it weakens shareholder control.What it has shownJäger, Schoefer, and Heining (2021) found board-level codetermination left wages unchanged and, if anything, raised capital formation. Jirjahn (2011) reports studies pointing to positive works council effects; a meta-analysis found codetermination laws tied to lower productivity.Who disputes itOrganizational economics (Gorton and Schmid) found that firms with equal employee and shareholder representation did worse for their shareholders than firms with one-third employee representation.
  19. Organizational economics: decision rights, authority, and complementarities1976 to the presentWhat it claimsDesign is the joint choice of who holds which decision rights, how performance is measured, and how it is rewarded. Rights should be placed where the specific knowledge lies, formal authority differs from real authority, and practices are complements that pay off in clusters.What it has shownIchniowski, Shaw, and Prennushi (1997) found, on 36 steel finishing lines, that lines using a set of innovative work practices achieved substantially higher productivity, consistent with complementarities. Bloom and colleagues found more decentralization where trust was higher.Who disputes itGhoshal argued that management research has shaped managers' worldview with ideologically inspired amoral theories, built on a scientific model that excludes human intentionality and so denies moral considerations.
  20. Institutional theory1977 to the presentWhat it claimsFormal structures are often adopted because they are legitimate in the organization's field, as rationalized myths, and then decoupled from the work done. Organizations in a field grow alike through coercive, mimetic, and normative isomorphism, whether or not it is efficient.What it has shownTolbert and Zucker (1983) found that city characteristics predicted early but not later adoption of civil service reform, which they read as institutionalization. Palmer, Jennings, and Zhou (1993) found support for institutional and economic accounts of late M-form adoption.Who disputes itStructural contingency theory: Kraatz and Zajac found little support for neoinstitutional predictions in 631 liberal arts colleges, which grew less alike; the change they studied was curricular, not structural.
  21. Population ecology1977 to the presentWhat it claimsOrganizations face strong structural inertia, because selection favors the reliability and accountability of stable structures. Change in a population's forms comes mainly from founding and failure, not adaptation, and changing core features resets the liability of newness.What it has shownAmburgey, Kelly, and Barnett (1993) found that the effects of change on the hazard of failure vary by type of change and over time, and that rates of change depend on how often and how recently an organization has changed. Carroll and Hannan (2000) set out the program's methods.Who disputes itFor structural contingency theory, Donaldson argues that ecology understates managers' capacity to adapt structure.
  22. Resource dependence1978 to the presentWhat it claimsOrganizations depend on outside parties for critical resources, and structure follows the management of that dependence: units that cope with critical dependencies gain power, and boundaries are redrawn through cooptation, joint ventures, and mergers to absorb constraint.What it has shownPfeffer and Salancik (1978) assembled studies of boards, mergers, and joint ventures. A meta-analysis of 157 tests (Drees and Heugens 2013) corroborated the main prediction: organizations meet resource dependencies with interorganizational arrangements that raise their autonomy.Who disputes itTransaction cost economics and the M-form hypothesis explains boundaries by efficiency; resource dependence, by power and constraint.
  23. The business-groups literature1978 to the presentWhat it claimsGroups of legally independent firms bound by ownership and social ties are a durable form of their own, neither one firm nor a market. Where institutions function poorly, groups can benefit member firms and can destroy value; they are sometimes paragons, sometimes parasites.What it has shownKhanna and Palepu (2000) found that affiliates of the most diversified Indian groups outperformed unaffiliated firms. A meta-analysis of 141 studies (Carney and colleagues 2011) found that affiliation lowers performance in general, less so where institutions are underdeveloped.Who disputes itOrganizational economics: agency writers read pyramids and cross-holdings as devices that separate control from ownership; Almeida and Wolfenzon offer a financing rationale for pyramids instead.
  24. Scandinavian institutionalism1980s to the presentWhat it claimsIdeas of organizing do not diffuse unchanged; they travel and are translated as they are adopted, so a form taken up in one place is not the same form elsewhere. Organizations can also be built of organizations (meta-organizations), which behave differently.What it has shownA discussion paper by Czarniawska and Joerges (1995) contrasts the diffusion of ideas with their translation, drawing on examples such as Swedish municipal reform; the work on meta-organizations (Ahrne and Brunsson 2008) is conceptual.Who disputes itInstitutional theory can read the same processes, seen from a translocal view, as institutional isomorphism, though translation holds that each adopter modifies an idea, so an institution re-created elsewhere is new.
  25. Societal effect and comparative business systems1980s to the presentWhat it claimsFirms matched on size, technology, and industry differ systematically by country, because how a society educates, trains, recruits, and promotes its workforce, and its industrial relations, shape how work is divided and supervised, so structure is partly a national product.What it has shownMaurice, Sorge, and Warner (1980) compared closely matched manufacturing units in France, West Germany, and Great Britain and found more pervasive differences in their organization than usually recognized. Whitley (1999) set out a comparative account of business systems.Who disputes itStructural contingency theory stresses culture-free elements of structure; matched comparisons find nationally different shapes of organization.
  26. The network perspective on organizations1985 to the presentWhat it claimsOrganizations and their members are nodes joined by ties, and the pattern of ties shapes what they can do. Economic action is embedded in networks of personal relations (Granovetter 1985), and network forms are a distinct form, not a hybrid of market and hierarchy (Powell 1990).What it has shownPodolny and Page (1998) review the research and find that network forms foster learning, confer status and legitimacy, bring economic benefits, help manage resource dependencies, and give employees considerable autonomy, and they ask for attention to networks' dysfunctions.Who disputes itTransaction cost economics: Williamson treats the hybrid as a third generic form between market and hierarchy; for Powell, network forms are a distinct form, not a mix of the two.
  27. Computational organization design and search1990s to the presentWhat it claimsDesign choices interact, so design space is a rugged landscape with many local peaks, and structure affects how well an organization searches it. Decentralizing interdependent decisions can trap units on poor peaks; temporary decentralization, then reintegration, can help.What it has shownMostly simulation, with one field test: Csaszar (2012), with more than 150,000 stock-picking decisions by 609 mutual funds, found that decision-making structure affects the number of initiatives pursued and the omission and commission errors made.Who disputes itNo school in the record disputes it head on; it disputes structural contingency theory, whose bivariate fit, its simulations show, cannot capture how the best design depends on interactions among choices.
  28. The new-forms debate1990s to the presentWhat it claimsOrganizations must solve four universal problems (dividing tasks, allocating them, providing rewards, and providing information), and a form is new when it solves them in new ways. Self-managing organizations radically decentralize authority; skeptics hold hierarchy reappears.What it has shownFoss (2003) traced the rise and partial reversal of Oticon's spaghetti organization to the problem of selective intervention. A meta-analysis of 54 studies of 13,914 teams (Greer and colleagues 2018) found that hierarchy within teams on net slightly lowers team performance.Who disputes itBureaucracy and its critics: removing formal structure leaves informal elites whose power is unaccountable (Freeman), and democratic and network organizations are much less hierarchy-free than their labels suggest.
  29. The algorithmic-management literature2015 to the presentWhat it claimsSoftware does much of the directing, evaluating, and disciplining that managers and rules once did. Kellogg, Valentine, and Christin (2020) call algorithmic control a new contested terrain; Puranam (2021) treats dividing decisions between people and machines as a design problem.What it has shownMostly qualitative field studies of gig work. Wood and colleagues (2019), with 107 interviews in six countries and 679 survey respondents, found that algorithmic management tends to give remote gig workers flexibility and autonomy, but also low pay, isolation, and overwork.Who disputes itLabor process and critical theory reads control at work as contested terrain; Kellogg, Valentine, and Christin take up that view but argue that algorithmic control is distinct from earlier forms.

The forms by first year

  1. Functional structure: 1911 to 1937
  2. Line and staff: 1916 to 1943
  3. Multidivisional (M-form) by product: 1920s practice; named and analyzed 1962 to 1975
  4. Machine bureaucracy: 1922 (Weber); 1979 (Mintzberg)
  5. Divisional by customer or market segment: 1937; 2005
  6. Matrix organization: 1950s to 1960s practice; analyzed 1971 to 1977
  7. Co-determined organization: 1951 to 1976 (the laws); 1984 to 2022 (the main studies)
  8. Socio-technical autonomous work groups: 1951 to 1965
  9. Stratified hierarchy (requisite organization): 1951 to 1989
  10. Cooperative organization: 1958 to 1999
  11. Linking-pin organization (System 4): 1961 to 1967
  12. Divisional by region: 1962 to 1972
  13. Adhocracy (innovative organization): 1968 to 1979
  14. J-form (the Japanese firm): 1968 to 1990
  15. Professional bureaucracy: 1968 to 1979
  16. Holding company (H-form): 1972 to 1975; 1987
  17. Ambidextrous organization: 1976 to 2004
  18. Simple structure: 1979
  19. Hybrid structure: 1980 to the present
  20. Missionary (ideological) organization: 1980 to 1989
  21. Network, modular, and virtual organization: 1986 to 1990
  22. Transnational and multidimensional organization: 1987 to 1989
  23. Business group (keiretsu, chaebol, family house): 1988 to 2007
  24. Shamrock organization: 1988 to 1989
  25. Federal organization: 1989 to 1992
  26. Self-managing organization (less-hierarchical forms): 1989 to 2017
  27. Boundaryless organization: 1990 to 1995
  28. Front-back organization: 1990s to 2007
  29. Professional partnership (P2 form): 1990
  30. The corporate center and shared services: 1991 to 2000
  31. Internal market organization: 1993 to 1994
  32. Process (horizontal) organization: 1993 to 1999
  33. Cellular organization: 1994 to 1997
  34. Hypertext organization: 1994 to 1995
  35. Team-based organization: 1995
  36. Project-based organization: 2000 to 2006
  37. Agile at scale: 2001 to 2016
  38. Distributed (all-remote) organization: 2002 to 2021
  39. Open-source and community-based organization: 2002 to 2007
  40. Algorithmically managed organization: 2015 to 2020
  41. Team of teams: 2015

Twenty-three of the 29 schools run to the present, and 16 of those began in the 1970s or later. The forms arrive in waves: 14 of the 41 first appear between 1985 and 1994.

Source: Fayol 1949; Weber 1978; Mayo 1933; Trist and Bamforth 1951, an interview-based field study in one industry; Burns and Stalker 1961, a field study of twenty firms; Mintzberg 1979; Child 1972a; Coase 1937; Meyer and Rowan 1977; Hannan and Freeman 1977; Galbraith 1973; Jensen and Meckling 1976; Crozier 1963; Emery and Thorsrud 1969; Yoshino 1968; Streeck 1984a; Kellogg and colleagues 2020, a review of earlier research through one theoretical lens, with no new data; Puranam and colleagues 2014, a conceptual argument; Chandler 1962, several independent case histories by a historian; Pfeffer and Salancik 1978; Simon 1946; Maurice and colleagues 1980, a comparison of matched factories in three countries; Levinthal 1997; Simon 1962; Braverman 1974; Hamilton and Biggart 1988, a comparison of three economies by scholars; Ward 1958; Czarniawska and Joerges 1995; Granovetter 1985.

The form grew up in the multinational corporation. An earlier line of multinational structure research runs from Stopford and Wells (1972), a study of 187 U.S. multinational enterprises, who traced structure in stages from an international division to area or worldwide product divisions or a mix; Egelhoff (1988), a multi-firm study of 34 large US and European multinationals, found some of its relationships supported and others not, and Qiu and Donaldson (2012), a preliminary test on German multinationals, put corporate integration in place of foreign product diversification.

Where it fits

Our judgment sets eight cells, theory two, and evidence two, both contested.

The transnational and multidimensional organization against the twelve contingency factors

Each factor at its three levels, Fits, Partial, or Strain, or Contested where a contested cell's views disagree; select a row for its reason, sources, and grade.

Select a factor to read its reason, sources, basis, and grade.Size. Holding product, region, and function in tension across national units presumes a large multinational with operations in many countries. Basis: Theory. Grade: conceptual only, no empirical test. Sources: Bartlett and Ghoshal 1989; Prahalad and Doz 1987; Rugman and Verbeke 2004.Age. The integrated network of differentiated national units is built over time by multinationals that already have established subsidiaries. Basis: Judgment. Sources: Bartlett and Ghoshal 1989; Ghoshal and Nohria 1989; Hannan and Freeman 1984; Amburgey and colleagues 1993. View 1: Young partial, Established fits, Old fits. The integrated network of differentiated national units is built over time by multinationals that already have established subsidiaries. Sources: Bartlett and Ghoshal 1989; Ghoshal and Nohria 1989. View 2: Young partial, Established fits, Old partial. Inertia rises with age, and attempts at reorganization raise death rates, so reorganizing an old organization into this form is itself a hazard at the old level. Sources: Hannan and Freeman 1984.Environmental uncertainty (unpredictability, dynamism). Shared knowledge flows and differentiated units help a multinational adjust to shifting conditions across countries; in stable ones the coordination costs more than a simpler global or multidomestic form. Basis: Judgment. Sources: Bartlett and Ghoshal 1989; Galbraith 1973; Meyer and Su 2015; Venaik and colleagues 2005; Devinney and colleagues 2000; Leong and Tan 1993; Pennings 1975.Environmental complexity. Two multinationals facing complex global competition built differentiated structures process by process, the nearest premise; the transnational's machinery has little to do where few conditions vary. Basis: Judgment. Sources: Malnight 2001; Pennings 1975.Munificence and hostility. An integrated network of differentiated units runs on rich lateral flows that a hostile environment's push to centralize and simplify cuts back. Basis: Judgment. Sources: Burton and Obel 2004; Bartlett and Ghoshal 1989; Pennings 1975.Diversity of products and markets. An integrated network of units sharing knowledge and resources needs businesses with something to share; unrelated businesses have little. Basis: Judgment. Sources: Qiu and Donaldson 2012; Bartlett and Ghoshal 1989.Strategy type. The transnational seeks efficiency, responsiveness, and learning at once, which is closest to an analyzer's mix of exploitation and exploration; international scope, not this scale, is its main factor. Basis: Judgment. Sources: Bartlett and Ghoshal 1989; Burton and colleagues 2020a.Technology and routineness. The form answers the pull between global integration and local responsiveness; how routine the work is inside each unit does not decide it. Basis: Judgment. Sources: Prahalad and Doz 1987; Bartlett and Ghoshal 1989.Interdependence. Giving subsidiaries different roles in one integrated network, with resources and knowledge flowing among them, answers reciprocal interdependence; where units only share capital or pass goods along, simpler multinational forms suffice. Basis: Theory. Grade: conceptual only, no empirical test. Sources: Bartlett and Ghoshal 1989; Thompson 1967.Knowledge intensity and professionalization. The transnational is defined by integration and responsiveness pressures across countries, and no work read ties it to training levels, so this factor gives no reason for or against. Basis: Judgment. Sources: Bartlett and Ghoshal 1989.Global integration pressure. The transnational is built for strong pressure to integrate across countries together with local responsiveness; with little integration pressure its network of interdependent units is complexity the firm does not need. Basis: Evidence. Grade: a multi-firm empirical study or several independent case studies by scholars. Sources: Bartlett and Ghoshal 1989; Prahalad and Doz 1987; Harzing 2000; Devinney and colleagues 2000; Meyer and Su 2015; Leong and Tan 1993. View 1: Low strain, Moderate partial, High fits. The transnational is built for strong pressure to integrate across countries together with local responsiveness; with little integration pressure its network of interdependent units is complexity the firm does not need. Sources: Bartlett and Ghoshal 1989; Prahalad and Doz 1987; Harzing 2000. View 2: Low strain, Moderate partial, High partial. Firms can meet competing integration and responsiveness pressures with a variety of configurations, the transnational is not shown to be optimal, and a transnational strategy improved subsidiary performance in particular when the subsidiary was wholly owned, was not established by acquisition, and was highly export oriented; executives' reports matched the typology's predictions for the transnational less well than for the multinational and global types. Sources: Devinney and colleagues 2000; Meyer and Su 2015; Leong and Tan 1993.Local responsiveness pressure. The transnational is built for strong pressure to adapt to each country together with integration across countries, giving national units differentiated roles; with little need to adapt, those roles are complexity the firm does not need. Basis: Evidence. Grade: a multi-firm empirical study or several independent case studies by scholars. Sources: Bartlett and Ghoshal 1989; Prahalad and Doz 1987; Harzing 2000; Devinney and colleagues 2000; Meyer and Su 2015; Leong and Tan 1993. View 1: Low strain, Moderate partial, High fits. The transnational is built for strong pressure to adapt to each country together with integration across countries, giving national units differentiated roles; with little need to adapt, those roles are complexity the firm does not need. Sources: Bartlett and Ghoshal 1989; Prahalad and Doz 1987; Harzing 2000. View 2: Low strain, Moderate partial, High partial. Firms can meet competing responsiveness and integration pressures with a variety of configurations, the transnational is not shown to be optimal, and a transnational strategy improved subsidiary performance in particular when the subsidiary was wholly owned, was not established by acquisition, and was highly export oriented; executives' reports matched the typology's predictions for the transnational less well than for the multinational and global types. Sources: Devinney and colleagues 2000; Meyer and Su 2015; Leong and Tan 1993.

Counting each contested cell by its first view, the 36 settings read Fits at 11, Partial at 20, and Strain at 5, the strains at a small size, a hostile environment, unrelated diversification, and low pressure for global integration or for local responsiveness. Three of the twelve cells are contested, and eight rest on judgment.

Source: Bartlett and Ghoshal 1989, case studies of nine multinational companies in three industries; Prahalad and Doz 1987; Rugman and Verbeke 2004, an archival study of 380 of the largest multinationals; Ghoshal and Nohria 1989, a survey of 618 headquarters-subsidiary relations in 66 multinationals; Hannan and Freeman 1984; Amburgey and colleagues 1993, a quantitative study of organizational change and failure rates; Galbraith 1973; Meyer and Su 2015, a survey of subsidiaries in two emerging economies; Venaik and colleagues 2005, a survey of subsidiary managers; Devinney and colleagues 2000, a formal model with no new data; Leong and Tan 1993, a survey of 131 senior executives; Pennings 1975, a quantitative field test of the structural-contingency model; Malnight 2001, a longitudinal comparison of two firms; Burton and Obel 2004; Qiu and Donaldson 2012, a preliminary test on a sample of German multinationals; Burton and colleagues 2020a; Thompson 1967; Harzing 2000, a survey of 166 subsidiaries of 37 multinationals.

Your own situation against the transnational and multidimensional organization

Set any factor to outline its cell in the strip above; the lines under the switches give the counts, the form's place among the 41, and the misfit rules that fire.

Size
Age
Environmental uncertainty (unpredictability, dynamism)
Environmental complexity
Munificence and hostility
Diversity of products and markets
Strategy type
Technology and routineness
Interdependence
Knowledge intensity and professionalization
Global integration pressure
Local responsiveness pressure

Set: 0 of 12 factors. Fits on 0, Partial on 0, Strain on 0, Contested on 0.

Its place in the explorer's rankingEvery factor is on Any: all 41 forms tie, and the explorer lists them alphabetically.1st of 411st of 41, tied with one other1st of 41, tied with 0 othersSunk by a misfit rule: 1st of 41Sunk by a misfit rule: 1st of 41, tied with one otherSunk by a misfit rule: 1st of 41, tied with 0 others

  • Flagged (its sources disagree): A defender with authority spread wide. Disputed: Burton and Obel 2004; against it, Mintzberg 1980.
  • Flagged (it meets the form only through part of its profile): An analyzer with authority spread wide. Source: Burton and Obel 2004.

Ranking rule: by count of Fits on the factors the reader has set, then fewest Strains, then alphabetical; a fired misfit rule that no source disputes sinks the form to the bottom when every level of the form's profile meets it, a disputed one, or one that meets the form only through one end of a spanned level, one view of a contested profile cell, or one part of a two-part form, is flagged on the row (with both views where it is disputed), and a misfit between two of the reader's own settings is shown once above the list; a contested cell counts only where its views agree at the reader's level, and otherwise shows as Contested; factors on "Any" count for nothing; with every factor on "Any" the list is alphabetical and says so.

Open these settings in the explorer

The misfit rules that can fire for this form

  • A defender with authority spread wide fires when Strategy type at Defender (exploitation): flagged (its sources disagree). Disputed: Burton and Obel 2004; against it, Mintzberg 1980.
  • An analyzer with authority spread wide fires when Strategy type at Analyzer (exploitation and exploration): flagged (it meets the form only through part of its profile). Source: Burton and Obel 2004.

Two of the 39 contingency misfit rules can fire for this form, both against authority spread wide, in a defender and in an analyzer, and neither sinks it: the defender rule is disputed, and the analyzer rule meets the form only through the decentralized end of its centralization span.

Source: Burton and Obel 2004; Burton and colleagues 2020a.

  • Size. Strain small, partial medium, fits large, from theory: Bartlett and Ghoshal (1989) and Prahalad and Doz (1987) write about large multinationals. Rugman and Verbeke (2004), an archival study of 380 of the largest multinationals, found most selling mainly in their home region.
  • Age. Contested judgment. Bartlett and Ghoshal with Ghoshal and Nohria: partial young, fits established and old, since the network is built from established subsidiaries. Hannan and Freeman (1984): inertia rises with age, and attempts at reorganization raise death rates, so partial at old.
  • Environmental uncertainty. Partial stable, fits shifting and unpredictable, judgment on Bartlett and Ghoshal and Galbraith (1973).
  • Environmental complexity. Partial simple and moderate, fits complex, judgment; the nearest premise is Malnight (2001), a longitudinal comparison of two pharmaceutical multinationals that differentiated structure process by process.
  • Munificence and hostility. Strain hostile, partial elsewhere, judgment on Burton and Obel (2004): the strain rests on their push to simplify under hostility, which cuts this form's lateral flows. The hostile level spans their high hostility, where they lower centralization for speed, and their extreme, where they raise it.
  • Diversity. Partial single business, fits related, strain unrelated, judgment; the premises are Bartlett and Ghoshal's (1989) network, which needs businesses with something to share, and Qiu and Donaldson (2012), who studied matrices, not the transnational.
  • Strategy. Fits analyzer, partial defender and prospector, judgment on Bartlett and Ghoshal (1989) and the exploration and exploitation space of Burton, Obel, and Håkonsson (2020): seeking efficiency, responsiveness, and learning at once is closest to the analyzer's mix.
  • Technology and knowledge intensity. Partial throughout, judgment: the form answers cross-border integration and responsiveness pressures (Prahalad and Doz 1987; Bartlett and Ghoshal 1989), which neither routineness nor training levels decides.
  • Interdependence. Partial pooled and sequential, fits reciprocal, from theory (Bartlett and Ghoshal 1989; Thompson 1967): units trading resources and knowledge need it; units sharing only capital do not.
  • Global integration pressure. Contested, evidence. View one (Bartlett and Ghoshal; Prahalad and Doz; Harzing 2000): strain low, partial moderate, fits high. View two (Devinney, Midgley, and Venaik 2000, a formal model with no new data; Meyer and Su 2015, a survey of subsidiaries in two emerging economies; Leong and Tan 1993): strain low, partial moderate and high, since firms can meet the pressures in many configurations.
  • Local responsiveness pressure. Contested, evidence, the same two views at the same levels.

What it does well

It fits headquarters to each subsidiary. Ghoshal and Nohria (1989) found four subsidiary contexts, each governed by a fitting mix of centralization, formalization, and normative integration: hierarchical, federative, clan, and integrative. Nohria and Ghoshal (1994), a quantitative study of multinationals, found that the more a firm differentiated those structures to fit each context, the better it performed, that shared values also helped, and that firms doing both did best. Zhou (2015), an archival study of many US multinationals over 13 years, found supervision differentiated too: foreign units more often supervised subsidiaries in countries with weaker institutions.

The explorer offers it for countries that each reinvent everything and for head-office products that do not fit local markets (Prahalad and Doz 1987; Bartlett and Ghoshal 1989); a second view (Leong and Tan 1993; Devinney and colleagues 2000; Meyer and Su 2015) drops it from both, leaving the matrix for the first and divisional by region for the second.

What it costs

In our reading, the plain cost is management attention on unlike relationships: the center must know each subsidiary's context, set a different mix of controls for each, and keep shared values alive across them.

Lunnan and colleagues (2019), a survey of 104 subsidiary managers in two multinationals, found that distance raised bargaining costs; that centralization and formalization cut information costs; and that social integration, against the authors' hypothesis, raised bargaining costs.

How it fails

How the transnational and multidimensional organization fails, and the coordination failures behind it

The entry's failure modes at the left, each tied to the Coordination Failures patterns it names at the right; a pattern links its entry there.

Coordination overhead overrunModel-world divergenceConsensus splitSiloed knowledge
Coordination overhead overrunModel-world divergenceConsensus splitSiloed knowledge

How many ties the failure has. Highest: Building a network the business does not needHeadquarters runs every subsidiary the same wayProduct and region heads fight over the same decisionsKnow-how stays where the reporting line puts itCoordination overhead overrunModel-world divergenceConsensus splitSiloed knowledge

Select a failure to read its place in the network.Building a network the business does not need. Degree 1Headquarters runs every subsidiary the same way. Degree 1Product and region heads fight over the same decisions. Degree 1Know-how stays where the reporting line puts it. Degree 1Coordination overhead overrun. Degree 1Model-world divergence. Degree 1Consensus split. Degree 1Siloed knowledge. Degree 1
FailureDegree
Building a network the business does not need1
Headquarters runs every subsidiary the same way1
Product and region heads fight over the same decisions1
Know-how stays where the reporting line puts it1
Coordination overhead overrun1
Model-world divergence1
Consensus split1
Siloed knowledge1

Four failure modes name four patterns, one each: coordination overhead overrun, model-world divergence, consensus split, and siloed knowledge.

Source: Rugman and Verbeke 2004, an archival study of 380 of the largest multinationals; Devinney and colleagues 2000, a formal model with no new data; Ghoshal and Nohria 1989, a survey of 618 headquarters-subsidiary relations in 66 multinationals; Nohria and Ghoshal 1994, a quantitative study of multinationals; Wolf and Egelhoff 2013, a survey of 82 German multinationals; Asakawa 2020, an empirical comparison of R&D subsidiaries across multinationals.

Building a network the business does not need. Where little must be integrated or adapted, the lateral machinery costs more than it returns: coordination overhead overrun. Rugman and Verbeke (2004) found most large multinationals regional in their sales, and Devinney and colleagues (2000) argue other configurations can meet the same pressures. The link is our reading.

Headquarters runs every subsidiary the same way. One model of control for every context means the center's picture of what it governs is wrong: model and world divergence. This is the converse of Ghoshal and Nohria's findings, our reading, not a failure they observed.

Product and region heads fight over the same decisions. Where the form runs as a product-by-region matrix, two lines claim one call, a consensus split. Wolf and Egelhoff (2013), a survey of 82 German multinationals, found more conflict than in single-dimension structures only in matrices crossing products with regions.

Know-how stays where the reporting line puts it. Asakawa (2020), an empirical comparison of R&D subsidiaries across multinationals, found knowledge sharing associated with which part of headquarters a subsidiary reported to; the siloing is our reading, since the study shows associations, not effects.

At the decentralized end of the centralization span, two misfit rules fire, both Burton and Obel (2004) propositions, not tested results: authority spread wide in a defender, whose advantage is tight control of one stable operation, and in an analyzer that does not innovate, whose core loses central control. The defender rule is contested, since Mintzberg (1980) places the decentralized professional bureaucracy in complex but stable environments, so it can at most flag the form; the analyzer rule is undisputed but meets the form only through level 3, the decentralized end of a centralization span that is our judgment, so it too flags the form without sinking it; the fit table counts the analyzer a fit. Burton, Lauridsen, and Obel (2002), a quantitative study of 224 Danish small and medium-sized firms, tested an earlier model's rules only as a set: any misfit went with lower return on assets. One factor paired with one structure is the interaction form of fit, which Drazin and Van de Ven (1985), a quantitative study of 629 work units, found unsupported. Volberda and colleagues (2012), a survey of 3,259 respondents in 1,904 companies, found that firms in quasi fit gain from improving either fit but firms with perfect institutional fit slightly lose performance striving for contingency fit, so a firing rule does not show that moving toward fit helps a firm its field treats as legitimate; and Pennings (1975), a quantitative field test of the structural-contingency model, found that environment-structure fit did not explain effectiveness, a failure Donaldson (2001) lays to method.

What the research found

Leong and Tan (1993), a survey of 131 senior executives who classified their own firms, found partial support for the typology Bartlett and Ghoshal built from their nine cases: transnationals were the least often reported type, and the practices hypothesized for the international and transnational types matched worse than those for the multinational and global types. Harzing (2000), a survey of 166 subsidiaries of 37 multinationals, tested a three-type typology from the literature, without the international type; clusters matching the three emerged and differed significantly in interdependence and local responsiveness.

Whether the form performs better is disputed. Devinney, Midgley, and Venaik (2000) argue that firms can configure themselves in a variety of ways rather than the transnational being optimal, and that average-based methods may explain the missing link between form and performance. Venaik, Midgley, and Devinney (2005), a survey of subsidiary managers, found one path to subsidiary performance through networking and inter-unit learning and another through autonomy and innovation, holding only with environmental controls. In Meyer and Su's (2015) survey the transnational strategy enhanced subsidiary performance in particular under three subsidiary conditions, a finding about subsidiary strategy, not the parent's structure.

Of the most recent studies, from 2020, the strongest is a meta-analysis of 94 studies covering 23,337 foreign subsidiaries (Geleilate, Andrews, and Fainshmidt 2020): autonomy may improve subsidiary performance in some contexts, moderated by institutional and industry context and the headquarters-subsidiary relationship. The abstract gives no pooled effect.

Where the form runs through a matrix: Wolf and Egelhoff (2002), a statistical study of 95 German firms, found general support for the traditional fits, as association, not a performance effect, and Egelhoff, Wolf, and Adzic (2013), a survey of 57 German multinationals that use a matrix, found the information-processing hypotheses supported. Habib and Victor (1991), a multi-firm study of 144 US multinationals, found structures matched to strategy but no fit effect on performance among service firms and mixed effects among manufacturers. Hall and Saias (1980, ungraded here) dissent from the strategy-structure school: strategy, structure, and environment are closely linked, and structure later constrains strategic choice.

The evidence ledger holds 21 studies filed under this form.

In practice: one published case

ABB (Asea Brown Boveri), its relays business area, as Christopher Bartlett describes it in a Harvard Business School teaching case (1993), one case study. Bartlett coauthored Managing Across Borders, so the case comes from one of the form's authors.

What the organization did: ABB developed and ran its relays business area inside its global matrix organization. The case follows three levels of management and what each was responsible for. It shows how ABB built a structure and a management process meant to unify operations dispersed across many countries while keeping its frontline units entrepreneurial.

What happened, and what the source concluded: the case description presents ABB's structure and management process as highly successful in integrating disparate worldwide operations while keeping a highly entrepreneurial front line. That is the case writer's framing, from the publisher's description; the case text and teaching note were not read.

A teaching case is written for discussion, not to test a form. Its title and the publisher's description call ABB's structure a global matrix, and nothing read shows headquarters relations varying by subsidiary, the form's distinguishing move; that bears on the grouping dispute over whether the form gives managers two bosses or one manager per dimension.

Source: Bartlett 1993. ABB's relays business: building and managing a global matrix, Harvard Business School case 394-016 (25 pages).

Variants and near relatives

Heterarchy. Hedlund's (1986) hypermodern multinational has many centers of different kinds, written against the matrix. Its integration is primarily normative, other controls secondary, where the transnational also fits centralization and formalization to each subsidiary (Ghoshal and Nohria 1989); the hypertext entry teaches his later N-form.

Metanational. Doz, Santos, and Williamson (2001): a global company that senses new knowledge worldwide and uses it to out-innovate competitors; in our reading, from a book brief only, it puts worldwide sensing first where the transnational balances three aims.

Multidimensional and reconfigurable organization. Strikwerda and Stoelhorst (2009), interviews at 36 Dutch organizations and five case studies, found seven organized around several dimensions, each with its own accountable manager; nothing there concerns national units' differentiated roles. Galbraith (2010) adds geography, market segments, channels, and solutions to function and product, uses front-back designs, and reconfigures by assembling and disassembling teams. Galbraith's (2002) reconfigurable single business is taught under adhocracy's Platform organization (Ciborra), its internal prices under internal-market. The variant is not Ackoff's multidimensional organization, under internal-market.

Multinational, international, and global types. Bartlett and Ghoshal define it against these types: the multinational type is the divisional by region entry's structure, the global type the multidivisional entry's global product division. The international type is a coordinated federation with many assets and decisions decentralized, whose management treats overseas operations as appendages to a central domestic corporation.

Two pressures on a multinational, and the three pairings that name a type

Global integration pressure across, local responsiveness pressure up, each at the factors' own three levels. Select a structure, then the box it belongs in, or show the sort. The cut points between levels are judgment. Where each of the three forms fits on the two pressures is contested (Devinney and colleagues 2000 argue firms can meet them in many configurations). Bartlett and Ghoshal's international type is not placed because no record places it.

Items (select one, then a box)
  • Not placedPlacedGlobalMulti-domesticTransnationalNo type named
  • Not placedPlacedGlobalMulti-domesticTransnationalNo type named
  • Not placedPlacedGlobalMulti-domesticTransnationalNo type named

Local responsiveness pressure

HighModerateLow
Multi-domestic
No type named
Transnational
Global
LowModerateHigh

Global integration pressure

Global: Strong pressure to integrate activities across countries, little to adapt to each.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.Transnational: Strong pressure to integrate and to adapt at once.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.Select a structure, then the box it belongs in.Global product division.Not placed yet.Global product division.Global: Strong pressure to integrate activities across countries, little to adapt to each.Worldwide product divisions own their product everywhere and run it the same way everywhere, so they can integrate it across countries, while strong pressure to adapt to each country cuts across their product lines: Bartlett and Ghoshal's global type, under the multidivisional form.Global product division.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.Global product division.Transnational: Strong pressure to integrate and to adapt at once.Global product division.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.Area divisions.Not placed yet.Area divisions.Global: Strong pressure to integrate activities across countries, little to adapt to each.Area divisions.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.Area divisions own every product in a place, so each can adapt to its countries, while strong integration pressure cuts across their territorial lines: Bartlett and Ghoshal's multinational type, which Harzing (2000) tests as the multi-domestic type, and the divisional by region form.Area divisions.Transnational: Strong pressure to integrate and to adapt at once.Area divisions.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.The transnational.Not placed yet.The transnational.Global: Strong pressure to integrate activities across countries, little to adapt to each.The transnational.Multi-domestic: Strong pressure to adapt to each country, little to integrate across them.The transnational.Transnational: Strong pressure to integrate and to adapt at once.Built for strong pressure to integrate across countries together with strong pressure to adapt to each, it gives national units differentiated roles inside one network.The transnational.No type named: No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.

Your sort matched 0 of 3.Your sort matched 1 of 3.Your sort matched 2 of 3.Your sort matched 3 of 3.

Global
Strong pressure to integrate activities across countries, little to adapt to each.
Multi-domestic
Strong pressure to adapt to each country, little to integrate across them.
Transnational
Strong pressure to integrate and to adapt at once.
No type named
No record names a type of multinational for these cells. A firm that operates in one country sits low on both pressures.

The sort

  • Global product division: Global. Worldwide product divisions own their product everywhere and run it the same way everywhere, so they can integrate it across countries, while strong pressure to adapt to each country cuts across their product lines: Bartlett and Ghoshal's global type, under the multidivisional form.
  • Area divisions: Multi-domestic. Area divisions own every product in a place, so each can adapt to its countries, while strong integration pressure cuts across their territorial lines: Bartlett and Ghoshal's multinational type, which Harzing (2000) tests as the multi-domestic type, and the divisional by region form.
  • The transnational: Transnational. Built for strong pressure to integrate across countries together with strong pressure to adapt to each, it gives national units differentiated roles inside one network.

The global and multi-domestic types each answer one pressure and sit in opposite corners; the transnational is the corner where both are high at once. No record names a type of multinational for the other six cells.

Source: Prahalad and Doz 1987; Bartlett and Ghoshal 1989, case studies of nine multinational companies in three industries; Harzing 2000, a survey of 166 subsidiaries of 37 multinationals; Devinney and colleagues 2000, a formal model with no new data.

The Matrix organization, its nearest neighbor, puts the same people under two lines of authority at once, where the transnational gives different subsidiaries different roles, strategic leader, contributor, or implementer (Bartlett and Ghoshal 1989), with headquarters relations fitted to each (Ghoshal and Nohria 1989). The Hybrid structure also gives units different bases, one boss each, as this profile's single-boss reading does; the transnational adds those roles and relations. The corporate center entry's Center of excellence (Frost and colleagues 2002), studied in foreign subsidiaries, is a near relative: one unit whose capabilities the firm means to spread, not a network of differentiated roles. The professional partnership entry's multiplex form (Greenwood and colleagues 2010), the transnational professional service firm, also differentiates on several axes, but in a firm its professionals own and govern.

The transnational beside its nearest neighbor, the matrix

Select a number to fill what it marks in both drawings; the list under them gives the dimensions on which the two profiles differ.

It gives different national units different roles and different headquarters relations inside one integrated network, so structure varies by subsidiary and does not give every manager the same two bosses.

Transnational and multidimensional organization

HeadquartersUnits in thenetworkHeadquartersWorldwideproduct lineSubsidiary:strategic leaderSubsidiary:contributorSubsidiary:implementerBy productBy countryMN11122333
HeadquartersUnits in the networkHQProductLeadsAddsAppliesBy productBy countryMN11122333

Reports toAdjust to each other directlyMMutual adjustmentNStandardization of normsStrikwerda and Stoelhorst (2009) find each dimension with its own accountable manager, read here as one basis per unit

Matrix organization

Adjust between the linesStrategic apexThe two linesTwo bossesSharedsuperiorFunctionalheadProjectmanagerSpecialist inboth lines2By functionBy projectM12223
Adjust between the linesStrategic apexThe two linesTwo bossesSuperiorFunctionProjectSpecialist2By functionBy projectM12223

Reports toAdjust to each other directlyMMutual adjustment2Two superiors

  1. Its subsidiaries play different roles (strategic leader, contributor, or implementer), so structure varies by subsidiary; the matrix gives each specialist in both lines the same two bosses.
  2. Product and country sit in separate units, each with its own accountable manager on this explorer's reading, after Strikwerda and Stoelhorst (2009); the matrix lays two lines over the same specialist.
  3. Mutual adjustment runs among the interdependent subsidiaries, with norms shared across the whole network; in the matrix it runs between the two lines.

Differs on 6 of 11 dimensions

  • Centralization Mixed to decentralized; Matrix organization: Mixed
  • Decision rights and the locus of authority Selective vertical and horizontal decentralization; Matrix organization: Limited vertical decentralization to selective vertical and horizontal decentralization
  • Prime coordinating mechanism Mutual adjustment and standardization of norms; Matrix organization: Mutual adjustment
  • Lateral mechanisms Integrating roles and managerial linking roles; Matrix organization: Matrix
  • Mode of exchange and control Bureaucracy and clan; Matrix organization: Bureaucracy
  • Boundary permeability Selective to permeable; Matrix organization: Selective

The transnational, like the matrix, holds more than one basis of grouping at once. It gives its national units different roles in one network, each with one accountable manager on this explorer's reading; the matrix gives the same people two bosses.

Source: Bartlett and Ghoshal 1989, case studies of nine multinational companies in three industries; Strikwerda and Stoelhorst 2009, interviews at 36 Dutch organizations and five case studies; Nohria and Ghoshal 1994, a quantitative study of multinationals; Davis and Lawrence 1977; Galbraith 1971.

Moving into or out of it

Malnight (1996), an evolutionary account whose abstract describes no data, argues that established multinationals move from decentralized toward network-based structures in phases. Forsgren, Holm, and Johanson (1995), a quantitative study of divisions in many Swedish firms, found dominant foreign subsidiaries pulling a division's headquarters abroad while corporate headquarters resisted.

Moves can also run from the matrix toward the multidimensional variant, our reading. Worren (2017), one case study, follows FMC Subsea from geography, through global product units added in 2011 that gave some regional managers two bosses, to products separated from regions in 2015, ending dual reporting; the author calls the matrix a transitory form toward a simpler, still multidimensional structure.

Hannan and Freeman (1984) argue that attempts at reorganization raise death rates and reset the liability-of-newness clock; Amburgey, Kelly, and Barnett (1993), a quantitative study of organizational change and failure rates, find the effects vary by type of change and over time. Running the reorganization belongs to Change & Transformation.

The thinking behind it

C. K. Prahalad and Yves Doz (1981, with Bartlett; 1987): global pressures against host country demands, then integration against responsiveness.

Christopher Bartlett and Sumantra Ghoshal (1989, 1990): the transnational solution, more prescription than test, and matrix management as a frame of mind.

Sumantra Ghoshal and Nitin Nohria (1989, 1994): differentiated fit and shared values, linked to performance in one study whose abstract gives no sample or measure.

Gunnar Hedlund (1986): the heterarchy.

John Stopford and Louis Wells (1972): the stages model of multinational structure, later revised by Egelhoff (1988).

Jay Galbraith (1974, 2010): information processing, and the multidimensional organization. Ocasio's (1997) attention-based view disputes that school: structure channels attention, not only information. Classical writers dissent too, keeping the hierarchy as coordination's backbone.

Hans Strikwerda (2009): one accountable manager per dimension.

Anne-Wil Harzing (2000) and Siew Meng Leong (1993): tests of the typology, Harzing's of three of its four types.

Timothy Devinney, David Midgley, and Sunil Venaik (2000, 2005): the transnational not normatively optimal, the equifinality Gresov and Drazin (1997) describe, and dual paths to subsidiary performance.

Alan Rugman and Alain Verbeke (2004): the regional multinational.

Michael Hannan and John Freeman (1984): structural inertia.

Also called

Transnational corporation and transnational company, in Bartlett and Ghoshal's sense; integrated network (Bartlett and Ghoshal 1988, 1989); multidimensional organization (Strikwerda and Stoelhorst 2009) or multi-dimensional organization (Galbraith 2010); internally differentiated organization, for the multinational in Ghoshal and Nohria (1989); and transnational strategy, the subsidiary-level strategy Meyer and Su (2015) test.

Works cited

On this page, “read” means read by this series: where a line says a work, or part of one, was not read, the series did not read it.

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