The entrepreneurial M-form :
a case study of strategic integration in a global media company /
Thomas R. Eisenmann, Joseph L. Bower.
Description
- Language(s)
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English
- Published
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[Boston] : Division of Research, Harvard Business School, c1998.
- Summary
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Researchers have debated whether a centralized approach to managing strategy is appropriate for multi-national ("M-form") corporations exploiting economies of scope from related diversification. This issue is especially salient when economies of scope stem from strategic integration, which involves building new businesses by combining resources from two or more divisions. We argue that the appropriate organizational form for pursuing strategic integration depends on two factors: 1) the scale of capital commitments required in launching new businesses, in relation to the corporation's total asset base; and 2) the level of environmental turbulence that new businesses are expected to encounter. A decentralized organization relying on strong cultural norms and information systems to promote cross-unit cooperation is most appropriate when new businesses face high levels of turbulence and involve modest resource commitments. By reducing vertical communications and negotiations, a decentralized approach facilitates rapid decision making, which is valuable in turbulent conditions. When strategic integration entails major capital commitments, however, a more centralized approach is likely to be required, because risk averse division managers may be reluctant to sponsor "bet-the-company" projects. Under such conditions, the means by which the corporate center intervenes to promote strategic integration willdepend on the level of environmental turbulence. When commitment is high and levels of turbulence are low, an activist corporate staff may take the lead in identifying opportunities for cross-unit cooperation and planning their implementation. However, when levels of commitment and turbulence both are high, staff-driven planning processes are likely to be too slow, so companies will rely on an activist CEO to drive strategy in a top-down manner, with limited staff support. We call this top-down approach to strategic management the "Entrepreneurial M-form." ...
- Physical Description
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35 p. ;
28 cm.
Viewability