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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. 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.
    3. 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.
    4. 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.
    5. 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).
    6. 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.
    7. 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.
    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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