Interorganizational governance and global strategy

A wide range of interorganizational relationships falls on the global market to multinational hierarchy spectrum, ranging from supplier relationships (Dyer and Chu, 2000) to multinational business groups (Colpan, Hikino, and Lincoln, 2010; Granovetter, 1994). Concurrently, as firms increasingly deepen and widen their cross-border value chains, the structure and content of their foreign location portfolios become more critical to their global competitive positions (Dunning, 1998). In pursuing foreign direct investment (FDI) and establishing managerial control across borders, multinational enterprise (MNE) managers have become progressively more able to slice global value chain activities into finer pieces and allocate them across multiple locations. Global strategy studies these competitive cross-national dynamics and how ‘a firm’s competitive position in one national market is significantly affected by its competitive position in other national markets’ (Ghoshal, 1987: 425). Thus, decisions on the location (where) and degree/form of control (how) (Buckley and Ghauri, 2004) are critical sources of competitive advantage in managing MNEs. When firms decide to go international for various strategic objectives, they might choose to have full managerial control and acquire a firm or develop a new wholly owned subsidiary, but alternatively they might engage in different degrees of cooperation with other firms (Kogut and Singh, 1988). Generally, firms get involved in interorganizational relationships abroad to minimize firm costs, create discriminating alignment between host country uncertainties and firm control, and learn from its partners.