Managing the Multinational

"Managing the Multinational" by Samuel Humes
Prentice Hall (International), 1993, £19.95pb

Review by Mark McKergow
 

The globalisation of products, markets and corporations has been a key feature of the second half of the twentieth century. This admirable volume is subtitled "Confronting the global - local dilemma", and in it Samuel Humes assembles a large amount of research and thinking on the different ways in which multinationals could and do run their operations whilst seeking to find a balance between global direction and local discretion. What distinguishes Humes' work is the large amount of space given to examining the actual approaches taken by 26 major corporations, from the USA, Europe and Asia, in developing their businesses to take account of global and local pressures and in attempting to find roles for both central and local management.

Humes opens with a good summary of the various dilemmas and alternatives facing global enterprises at the moment. At the heart of the whole book is what the author describes as "a3x3x3 transcontinental framework", a matrix comprising different possibilities for three different aspects of organisation. The first aspect is organisational perspective, which Humes typifies as being associated with either product, function and geography. Secondly there are three management dynamics, with focus on structure, staffing and shared values. Finally, there are three or more different degrees of "operational distance", reflecting the amount of local autonomy given by the corporation. In general terms, Humes has found that US-based corporations operate with focus on product and structure, whilst European organisations emphasise geography and staffing. Asian businesses have used functional focus and the creation of shared values, along with significant autonomy.

I was concerned at this point that I was about to be treated to yet another consultantish theory of how the world was organised in terms of boxes and matrices, but my fears were not realised. Humes is ready to point out the many exceptions to these generalities, and uses his framework to organise the mass of material rather than to create some kind of overarching theory. Bravo!

Having given a useful historical perspective on the globalisation of business in terms of time and in terms of various industries, Humes proceeds to examine each of his three management dynamics in more detail. Structure is a key issue, and the issues for both the top board-level management and those at continental and lower levels are considered. The differences in board composition regarding "insider" directors (ie employees) and "outsiders" are interesting - Japanese companies almost exclusively relying on insiders, to German businesses having no insiders on their "supervisory" board, are an indication of the range of possibilities on show. One of the strong points of this book is the way that Humes wants to show all the various possibilities in action, rather than draw questionable conclusions from selected data. The differences instructure which are brought about by choosing to base the organisation on products, geography or functions are well handled, with prototypes given for each which can be used to compare and contrast with the case study information given later on. Mention is made of the use of teams as a way of embracing diversity.

The second management dynamic is staffing, specifically the kinds of roles that materialise in a global company and the kinds of people available to fill them. The issues of developing managers to handle diversity and the pros and cons of using staff from the headquarters country, the host country and third country nationals is discussed, together with differences such as the Japanese penchant for using their own nationals abroad, and the American use of third country staff in Western Europe and Latin America. In the latter case, Humes isn't sure whether the driver is vision in international terms, or American insensitivity to national cultural differences - perhaps time will tell?

Shared values is the third dynamic, and Humes reminds us of Ed Schein's assertion that "the unique and essential function of leadership is the manipulation of culture". This is avery relevant reminder - if there is to be a role for the global leadership, is this it? Having provided a good summary of the work on national cultural differences by Hofstede and others, Humes describes the orchestration of value-sharing as "the critical leadership task".

The third section of the book, however, is the meat in the sandwich. Humes presents 26 case studies of global businesses -their backgrounds, strategies, structures and challenges. Here you can find Procter & Gamble's cultural emphasis, Ford's development of international alliances, Nestle's globally dispersed operating companies and Toyota's global functional systems. Splitting this section firstly into continental sections and then grouping companies with similar overall approaches together makes for an easy-to-read collection, so that under Europe and "Global product divisions manage international operations" we find material on Bayer, Daimler-Benz, Fiat, Alcatel Alsthom and Philips. This collection is a real find for the student or manager of global business, and is presented well, as is the whole book, with clear headings, short sections and diagrams to help the reader along.

In the final section of the book, Humes takes a look ahead to the challenges of the future, and concludes that there are steps which corporations which seek to actively manage the global-local dilemma could usefully take. These include viewing the corporate "we" in a way that goes beyond cultural colonialism, globalising corporate governance, increasing lateral co-ordination (rather than hierarchical direction), developing linchpin managers who are able to take forward international assignments, and using multi-dimensional teams to go beyond committees and to provide coherent direction whilst thriving on diversity and complexity. Whilst none of these points is exactly brand new, the collection forms a rounded conclusion to the whole book, with points to stimulate the thinking of those starting to study the field. I also expected to find some thoughts as to the impact of the Internet and changing communications on multinationals and global corporations, but there are none. Humes may have published slightly early to have been aware of the digital revolution which is going on.

The whole work is well indexed and has a good bibliography. It is primarily aimed at an academic audience, but would also be of great interest to anyone wondering about the many different ways of being a multinational, or engaged in the enterprise of creating one. My only reservation is that the excellent case study material is bound to date, probably in not many years time. If you're interested in this area of endeavour, get hold of this book soon and make the most of it.
 

"Managing the Multinational", Long Range Planning 29,pp 425 - 427 (1996) (Book review)