An Empirical Examination of the Characteristics of the Integration Responsiveness Pressures

Although the integration-responsiveness framework has been used extensively in the international business and strategy literature, empirical validation of the framework has largely focussed on the strategy and structure of MNCs in response to the environmental pressures confronted by the firm. There have been few attempts to directly investigate the characteristics of the diverse environmental pressures confronted by multinational firms as they conduct their value creating activities worldwide. In this study, we propose five factors to examine in detail the characteristics of the integration-responsiveness pressures. These are depth, dimensionality, direction, distinctiveness and dynamic. Using data from MNC subsidiaries, we empirically test the nature of the environmental pressures that impact on MNC strategy and organisation. Based on our findings, we propose an alternative representation of the integration responsiveness framework that is more meaningful, useful and consistent with the contemporary behavior of MNCs than the current framework. In particular, the alternative representation isolates the issues of strategy and structure from that of the business environment and overcomes the recurrent problem of confounding among these concepts in the literature. Second, the proposed IR framework better captures the trade-off between integration and responsiveness that needs to be managed to operate global businesses. Finally, in contrast with the current IR framework wherein the environmental pressures are a priori classified as GI or LR thus making the framework static and rigid, the alternative framework is dynamic and flexible as it allows the pressures to be classified as GI, LR or both contingent upon the nature of the business, firm, function, task, country and customer segments, and over time.