The Future of the Multinational Companyin The Future of the Multinational Company
Authors: Santos José, Doz Yves L.
Researchers have long been interested in the question of why, from a theoretical perspective, the multinational enterprise (MNE) exists as an organisational form. However, implicit in this work is a fundamental and seldomly stated assumption: that a company first gains competitive advantage through strategic innovation at home and then exploits its advantage internationally.While projection has obviously been a profitable strategy in the past, this paper argues that it is facing diminishing returns as the costs of distance fall and markets have become more efficient mechanisms for transfer of resources, information and knowledge.The authors contend that in the future the competitive advantage of the multinational enterprise will come, not so much from its efficiency in transferring resources, information and knowledge, but from its unique potential for radical innovation by melding and leveraging distinctive knowledge drawn from diverse geographic contexts around the world. They show that this source of innovation advantage and the existence of a new organisational form that is uniquely capable of building and exploiting this type of advantage is the logical “next step” in the evolution of the multinational enterprise. The potential for this kind of innovation advantage has always existed (and one past instance is the Airbus), but it was seldomly exploited in practice because the cost of bringing together dispersed pieces of knowledge was simply too high. Once the costs fell sufficiently, multinational companies would begin to exploit this source of advantage that was uniquely open to them.The authors’ research set out to discover whether this new organisational form, which they termed the “metanational company” was in fact emerging, and what kind of new structures and management processes might be necessary to make it work effectively. They concluded that today some companies are pioneering the metanational organisation, but to do so requires both important changes in mindsets and the augmentation of the structures and processes used to manage a traditional MNE with fundamentally new ones.