Is a transnational organisation strategy optimal especially for MNCs from smaller countries andor em

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Is a transnational organisation strategy optimal
especially for MNCs from smaller countries and/or
emerging markets?

• Riku Laanti
• The University of Adelaide, Business School
• The University of South Australia, International
  Graduate School of Business
• 25.9.2009
• (work in progress)

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Abstract (working paper)

• The argument is that for MNCs from smaller
  countries and/or emerging markets it is more
  natural to look for input from their foreign
  subsidiaries than for MNCs from the largest
  markets, which are more inclined to aim for
  control and global strategies.
• This may also result as a competitive advantage
  with regards to the internationalisation of these
  types of companies.
• SingTel from Singapore will be used as a case
  study to illustrate this issue.

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Introduction the Authors

• Riku Laanti
• Phd submitted (Aug 2009), the University of
  Adelaide
• MBA (Finance) and MSc (International Business),
  Helsinki School of Economics
• Lecturer (casual), the University of South
  Australia, IGSB - MBA IB and Competitive Strategy
  courses since 2006 in Australia, offshore and
  online
• Lecturer (casual), the University of Adelaide,
  Business, School, International Management III
• Senior Consultant, International Business and
  Strategy (previously worked 13 years in the
  telecommunications industry, e.g. director in
  Telia)
• Fred McDougall
• Professor and Deputy Vice-Chancellor (Academic),
  the University of Adelaide
• Dr. Georges Baume
• Senior Lecturer, Business School, the University
  of Adelaide

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Research Activities so far
ManagementInternational Review

• Two international journal articles
• Laanti et al. (2009) How well do traditional
  theories explain the internationalisation of
  service MNEs from small and open economies?
  Case National telecommunication companies
  Management International Review. Vol. 49 No. 1.
• Laanti et al. (2007) The globalization
  strategies of business-to-business born global
  firms in the wireless technology industry
  Industrial Marketing Management, Vol. 36 No. 8,
  pp 1104-1117.
• Two refereed international research book chapters
• E.g. Laanti et al. (2009) Evolving value
  networks and internationalisation of national
  telecommunications companies from small and open
  economies, in In Lee (ed.) Handbook of Research
  on Telecommunications Planning and Management for
  Business, Hershey, PA IGI Global. pp. 173-193.
• Several refereed international conference papers
• e.g. AIB, EIBA, ANZIBA, ANZAM
• Reviews (ad-hoc)
• MIR, Journal of World Business, ETRI Journal
• Two edited books several conferences

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Interest Areas - International Business and
Strategy

• Globalisation/regionalisation developments
• Internationalisation strategies/processes
• International organisation strategies
• Born globals
• Internationalisation of services / ICT industries
  / sports
• Internationalisation of SMOPEC Firms (Small and
  Open Economies) some similar challenges with EE
  MNCs
• Industry value chains / value networks (e.g. ICT
  industry)
• The Resource-based view internationalisation
• Cross-cultural management
• Qualitative research methods
• Case teaching

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PhD Thesis Research Project

• Internationalisation strategies of companies in
  service industries A study of national
  telecommunication operators from small and open
  economies (SMOPECs)
• A multidisciplinary study
• International Business and Strategy
• A multi-case study
• Telstra from Australia
• SingTel from Singapore
• Sonera from Finland
• Telia from Sweden

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Globalisation factors
Industry specific factors
Home country specific factors
Company specific factors
Internationalisation strategies
Product strategy
Manufacturing Companies Business Service
Companies Retail Service Companies Born Globals
(Manuf.Service) Network Service Companies
Host country specific factors
Operation strategy
Market strategy
Organisation strategy
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Some Key Findings

• International processes of the case companies
  deviated in many areas from those suggested by
  traditional theories, especially their market
  strategies.
• Several industry specific characteristics played
  an important part in this - they further enhanced
  many challenges common to internationalising
  companies from smaller countries (see also Laanti
  et al., MIR, 2009)
• Although organisation strategies were mainly
  multidomestic ones, some evidence of successful
  transnational organisation strategies were
  observed at the later phases of the
  internationalisation processes

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International Organisation Strategies

• Based on Bartlett and Ghoshal (1992, 1998)
  -typology
• International
• Multinational (instead the term Multidomestic was
  used in the study, e.g. Harzing, 2000)
• Global
• Transnational

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Transnational Strategy - Case SingTel

• Majority of revenues generated internationally
• E.g. Optus significantly larger than SingTels
  domestic operations
• No presence in several major markets (except with
  B2B operations)
• Many (most) FDI were JVs preventing an
  efficient global organisation strategy
• Active search and import of ideas between
  different country organisations as well as from
  other country organisations back to the home
  country - key characteristics of a transnational
  organisation
• Combined incumbent and challenger strategies
• Incumbents cost management, technical
  capabilities
• Challengers sales and marketing capabilities,
  and customer focus
• Cross-pollinated ideas
• E.g. Bridge alliance to share information and
  develop mobile communications products
• Learned from other markets, including developing
  markets, e.g. prepaid
• Composition of the Board of Directors and Top
  Management team
• Many quotes by the interviewees (SingTel
  senior managers) demonstrated support for
  these findings. The quotes were not included
  in this public version of the presentation, but
  will be included in the final version of the
  paper.

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Is a transnational organisation strategy optimal
especially for MNCs from smaller countries and/or
emerging markets?

• Relatively smaller role of the domestic market gt
  Push to internationalise/Less lateral rigidity to
  internationalise
• Relatively less resources domestically gt
  Relatively more willing to invest in competence
  centres internationally
• Higher TNI
• Less resources to invest in FDI gt More JVs rather
  than wholly-owned subsidiaries gt Very centralised
  global strategies not feasible
• These types of MNCs more attractive as foreign
  investors, especially in industries which are
  strategically important for host countries less
  threatening investors

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Some examples of the compositions of the Board
of Directors and Top Management teams of selected
MNCs

• Many of the following companies are considered
  global, but still seem to have very ethnocentric
  approach, at least with regards to their top
  management positions
• Among the three mobile phone manufacturers, Nokia
  has been the most transnational and geocentric
  in its staffing
• SingTels approach in its top management
  composition is relatively geocentric and reflects
  its transnational strategy
• This data was collected in 2008

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Mitsubishi

• Board of Directors
• 20 x JAP
• Top Management
• 54 x JAP
• etc...

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Toyota

• Board of Directors
• 26 x JAP
• Top Management
• 46 x JAP, and 3 x other nationalities (as Country
  Managers?)

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Motorola

• Board of Directors
• Top Management
• 9x USA

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Ericsson

• Board of Directors
• SWE, SWE, SWE, USA, UK, SWE, SWE, USA, SWE, SWE
• Top Management
• 13 x SWE

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Nokia

• Board of Directors
• FIN, USA, FIN, IND, FIN/USA, GER, FIN, SWE, USA,
  FIN, FIN
• Top Management
• FIN, FIN, AUS, FIN, USA, NOR, FIN, FIN, USA, FIN,
  FIN, FIN

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ABB

• Board of Directors
• GER, BRA, USA, CH, FRA, GER, SWE
• Top Management
• BEL, SCO, GER, FRA, IND, CH, CH, SWE, FIN, SWE

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SingTel

• Board of Directors
• TH, SG, IND, USA/CHI, AUS, SG, IND, SG, SG,
  USA(?)
• Top Management
• SG, SG, SG, SG, SG, SG, SG, NZ, AUS, SG, SG

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Thank YouQuestions?Feedback?riku.laanti_at_un
isa.edu.auriku.laanti_at_adelaide.edu.au
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Appendix DefinitionSmall and open economies
(SMOPECs)

• Small and open economies include countries such
  as Austria, Denmark, Finland, Ireland, New
  Zealand, Portugal, Norway, Sweden, and
  Switzerland, who have integrated themselves with
  the world economy by lowering or eliminating
  their trade barriers (Kirpalani and Luostarinen,
  1999 Benito et al., 2002 Maitland and Nicholas,
  2002b Merrett, 2002).
• The broader definition includes also medium-size
  countries such as Australia and newly
  industrialised countries such as Hong Kong
  (Maitland and Nicholas, 2002b). Although
  Australia is already a medium-sized country with
  regards to its population, its companies face
  similar challenges in their internationalisation
  than companies from other SMOPECs (Liesch et al.,
  2002 Dick and Merrett, 2007).
• The inclusion of small newly industrialised Asian
  countries, such as Hong Kong and Singapore, can
  also be warranted based on their development
  levels and free economies

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