Transnational Organizations

Transnational Organizations was a term we used extensively in the 90’s to put forth a different version of what it meant to “go global” or “become international.”  As a practitioner and a junior consultant, traveling the world to implement change management projects for large corporations (usually called Business Process Re-Engineering or Enterprise Resource Planning or Global Shared Services…), it was fascinating to see the different forms companies could take.

Projects were very large and global, and there was a lot of cost reduction and productive improvements to be had.  These projects were designed centrally and rolled-out regionally, and the business case was so obvious that consultants did not have to work too hard to prove ROI.  A $10M project for a large petroleum or pharmaceutical or automotive company would yield $50-100M in tangible benefits, tracked on unsophisticated spreadsheets.  What made these large corporations unique and what made them similar?

International SolutionsWe developed terms and used organizational characteristics to determine the way companies go-to-market internationally. For example, one can observe the asset configuration, corporate capabilities, the role of international operations, the interfaces between headquarters (home country) and the branch offices abroad to determine if the company is in fact more of a:

  • Multinational
  • Global
  • International
  • Transnational

For alliance professionals, this is not merely semantics.  Large and small companies alike have different ambitions and organizational frameworks to manage their international business.  A quick overview might look like this:

Organization Multinational Global International Transnational
Assets and Capabilities Decentralized Centralized Mixed Virtual
Role of Offices outside HQ Local initiatives / bottom up Execution of top down strategies Adaptive and local changes within limits Differentiated and specific to each market
Knowledge Sharing Locally retained knowledge Centrally retained knowledge Centrally driven with local input Joint development and diffusion

There are several schools of thought concerning the advantages and disadvantages of the centralized – decentralized approach to global corporate development.  The excellent book “Managing Across Borders” (Bartlett and Ghoshal), first written in 1998, is subtitled “The Transnational Solution”.  It offers an compelling case for Transnational Organizations as the preferred model of the 21st century.

Here is a summary of the characteristics of Transnational Organizations as per the authors:

Capability Organization Management
Competitiveness Dispersed and independent Acknowledging and encouraging differences
Flexibility Differentiated and specialized Key competencies are coordinating synergies
Learning Joint development and knowledge sharing Shared core vision with individual contributions

Alliance consultants and global managers need to clarify better the type of organizational model a company has, not just on paper but in its daily business practices, in order to match better intended joint activities across partnerships and channels.

Transnational Organizations are one way of labeling and articulating the global-local model.  The impact of technology and creative collaborative solutions continue to push the international organizational design concepts into additional complexity and new exciting models.  These new ways of working are still in infancy but already we can begin to see their impact on the workforce and organizations.


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