Distribution of decision power in matrix organizations: A qualitative survey

Schröter, Andreas (2014) Distribution of decision power in matrix organizations: A qualitative survey. DBA thesis, University of Gloucestershire.

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Abstract

Matrix organizations were successfully pioneered in the U.S. aerospace industry in the 1960s, which motivated many multinational corporations (MNCs) to implement matrices as a response to a more complex business environment. A vast number of research studies were conducted primarily seeking a single relationship between the strategy and the structure of the MNCs. The approach was mainly quantitative and consisted of studying large samples of MNCs that operated in different industries and countries. Since the late 1980s researchers have lost interest in matrix organizations of MNCs despite the fact that today most MNCs use a matrix organization. This thesis proposes to breach gaps of the present literature and addresses the questions of ‘how’ and ‘why’ German technology MNCs distribute the decision power between headquarters and local subsidiaries. The present study follows a qualitative approach. 31 semi‐structured interviews were conducted with experienced managers in order to gain deep understanding of the challenges faced and to reveal recommendations and conclusions with regard to the ideal fit between strategy and structure. As conclusion the thesis suggests the following six answers to the research questions. First this thesis shows that contemporary MNCs employ various kinds of matrix organizations simultaneously in different parts of the organization because matrices offer a flexible and effective way of concurrently balancing various competing interests. Management and staff are better prepared to mitigate the ambiguity and stress caused by matrix organizations. Both conditions were viewed as primary weaknesses of matrix organizations since its appearance in the 1960s. Second there is no permanent and universally applicable point of decision power distribution, but rather a constantly changing continuum. Decision power depends on many factors such as maturity of the product, capabilities of the local subsidiary, the national historic heritage of the MNC and the general market environment. There is always a matrix and all matrix dimensions are important because of legal, tax and national regulations or because of customers’ requests. Third this study reveals that the distribution of power is primarily applied to decisions regarding financial investments, human resources and customer strategy. These elements represent the three most important stakeholders of MNCs namely shareholders, employees and customers. The fourth assertion of this thesis suggests that MNCs implement the strategy‐structure fit primarily in the matrix dimensions products, regions and customers. This is because these matrix dimensions can be run and measured with an own Profit & Loss (P&L) statement and therefore treated as quasi-independent companies within the MNCs.

Item Type: Thesis (DBA)
Thesis Advisors:
Thesis AdvisorEmailURL
Wittberg, Volkervwittberg@glos.ac.ukUNSPECIFIED
Bown, Robinrbown@glos.ac.ukUNSPECIFIED
Uncontrolled Keywords: Decision-making powers, technical multi-national corporations, matrix organization, Germany
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Schools and Research Institutes > Business School > Business and Human Resource Management
Depositing User: Susan Turner
Date Deposited: 15 Jul 2015 13:20
Last Modified: 22 Sep 2016 15:08
URI: http://eprints.glos.ac.uk/id/eprint/2454

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