Alignment of strategy and structure in international firms: An empirical examination

It is increasingly recognized that many multinationals face dual global and local pressures. Foreign subsidiaries are thus expected to exhibit different needs in terms of their internal integration or responsiveness to local needs. This study examines the internal alignment of strategy and structure in multinationals when such dual pressures are recognized. The findings show a lower than expected level of internal strategy–structure alignment. A number of post hoc interviews suggest that contrary to the discussion of differences across foreign subsidiaries’ external environments, dual global and local pressures are frequently experienced within the same foreign subsidiary. The balancing act of aligning strategy and structure in MNCs is thus more complex than existing theoretical frameworks predict. Multinationals may choose to prioritize selective structural characteristics to achieve sufficient levels of both integration and responsiveness.

► Do differences in subsidiaries’ external environments reduce expectations of internal alignment?
► Internal alignment of strategy and structure in multinationals is examined.
► Findings indicate low levels of internal alignment.
► Post hoc interviews suggest dual pressures within each foreign subsidiary.