Business and Management

Transnational Management: Text, Cases and Readings in Cross-Border Management28 February 2008
Arthur Francis

Enterprise with a strategic edge

If students read all the overview chapters and all the readings of this textbook, they should convince examiners that they demonstrate mastery of the subject matter and have read widely around the subject. It includes brief (12 to 15-page) overviews of eight key topics, each being accompanied by three to four case studies and two to three readings. This is the fifth edition, but more than half the case studies and half the readings are new to this edition. It seems an excellent model for many other management texts.
The text tells a good story. There is a particularly good institutional analysis of the different development paths, in different epochs, of multinationals from Europe, the US and Japan. A central thread running through the book is the persuasive argument that multinationals now need new generic strategies and structures. Compared with three other enterprise types the authors set up - the multinational, the international and the global - the transnational enterprise has to develop simultaneously global efficiency, national responsiveness, and worldwide learning capability and innovation. It has to configure its assets and capabilities so that they are dispersed throughout the worldwide enterprise but are interdependent and specialised. And it has to develop a new form of organisation that "is characterized by its legitimisation of multidimensional perspectives, its distributed and interdependent capabilities, and its flexible integrative processes".
Readers who find this prescription a little opaque will want to know that the authors dismiss the formal matrix organisation, the previously favoured solution to this challenge, as too complex.
For students needing to know how to manage large enterprises operating in a global environment, this text provides many helpful lessons. But it raises, for outsiders such as me, questions about the claims the international business community makes for its subject area. The authors insist that the topic of their study is only enterprises that "have substantial, direct investment in foreign countries and actively manage and regard those operations as integral parts of the company". And yet I, as dean of a business school with lots of "foreign' partners but no direct investments in them, found much of value to my own management thinking in this book. Moreover, many of the arguments in this text apply to management decisions to engage in operations in new territories where their "foreignness" is not at issue. The implicit insularity of this perspective becomes more obvious in those US and UK international business texts that talk about "overseas" operations. Another fundamental puzzle with this emphasis on national boundaries is that we now know quite a lot about the importance of place for an enterprise's strategy, but the important features of location are less to do with its nationality than with the institutional and other factors that Michael Porter has popularised in his diamond model.

There is also the question of what is not in the text. For me, a weakness is the way in which strategy is dealt with. Although there are some readings by Porter and by others espousing the resource-based approach to strategy, the official line in the text is Dunning's eclectic model, and there are only footnotes to Coase, Chandler or Williamson. I fear that some international business students could graduate from this course thinking that they don't need another course on general strategic management, don't need to know about transactions costs and market failure, and that the eclectic model is an adequate explanation for the geographical expansion of firms, whether by vertical or horizontal integration, or diversification, organically or by acquisition.
Who is it for? Undergraduate and masters students doing modules on international business.
Presentation: Excellent.