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An economic analysis of matrix structure, using multinational corporations as an illustration

Author

Listed:
  • Tailan Chi

    (School of Business Administration, University of Wisconsin-Milwaukee, Milwaukee, WI, USA)

  • Paul Nystrom

    (School of Business Administration, University of Wisconsin-Milwaukee, Milwaukee, WI, USA)

Abstract

This paper applies a comparative institutional perspective to the organizational design called matrix structure. After discussing the motivations for a multidimensional form of organization, the paper compares the transaction cost characteristics of the matrix (MX-form) structure with those of the well-known multidivisional (M-form) structure. This analysis reveals three advantages and three disadvantages of the matrix structure as well as two conditions affecting the efficacy of a matrix. Examples from multinational corporations are used throughout the paper to illustrate the analysis. © 1998 John Wiley & Sons, Ltd.

Suggested Citation

  • Tailan Chi & Paul Nystrom, 1998. "An economic analysis of matrix structure, using multinational corporations as an illustration," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(3), pages 141-156.
    • Handle: RePEc:wly:mgtdec:v:19:y:1998:i:3:p:141-156
    DOI: 10.1002/(SICI)1099-1468(199805)19:3<141::AID-MDE877>3.0.CO;2-D
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    Citations

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    Cited by:

    1. Jonathan P. O'Brien & Timothy B. Folta, 2009. "A transaction cost perspective on why, how, and when cash impacts firm performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(7), pages 465-479.
    2. Song, Sangcheol, 2023. "Multinational operational flexibility, within-network redundancy, and downside risks and divestment rates of international investments," International Business Review, Elsevier, vol. 32(1).
    3. Christian Asmussen & Tailan Chi & Rajneesh Narula, 2022. "Quasi-internalization, recombination advantages, and global value chains: Clarifying the role of ownership and control," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(8), pages 1747-1765, October.
    4. Song, Sangcheol, 2021. "When do multinational corporations adjust production volume flexibly among in-network subsidiaries?," Journal of Business Research, Elsevier, vol. 135(C), pages 532-542.
    5. Maxim Sytch & Franz Wohlgezogen & Edward J. Zajac, 2018. "Collaborative by Design? How Matrix Organizations See/Do Alliances," Organization Science, INFORMS, vol. 29(6), pages 1130-1148, December.
    6. Chari, Murali D.R. & Devaraj, Sarv & David, Parthiban, 2007. "International diversification and firm performance: Role of information technology investments," Journal of World Business, Elsevier, vol. 42(2), pages 184-197, June.
    7. Jane XJ Qiu & Lex Donaldson, 2012. "Stopford and Wells were Right! MNC Matrix Structuresdo fit a “High-High” Strategy," Management International Review, Springer, vol. 52(5), pages 671-689, October.
    8. Wolf, Joachim & Egelhoff, William G., 2013. "An empirical evaluation of conflict in MNC matrix structure firms," International Business Review, Elsevier, vol. 22(3), pages 591-601.
    9. Daniel A. Levinthal & Maciej Workiewicz, 2018. "When Two Bosses Are Better Than One: Nearly Decomposable Systems and Organizational Adaptation," Organization Science, INFORMS, vol. 29(2), pages 207-224, April.
    10. Chi, Tailan & Nystrom, Paul C. & Kircher, Philipp, 2004. "Knowledge-based resources as determinants of MNC structure: tests of an integrative model," Journal of International Management, Elsevier, vol. 10(2), pages 219-238.
    11. Rajneesh Narula & Christian Geisler Asmussen & Tailan Chi & Sumit Kumar Kundu, 2019. "Applying and advancing internalization theory: The multinational enterprise in the twenty-first century," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1231-1252, October.

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