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MNC structure, complexity, and performance: Insights from NK methodology

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  • Celo, Sokol
  • Nebus, James
  • Kim Wang, I.

Abstract

We introduce NK-simulation models to international business research and more specifically show how this methodology provides insights into the effects of MNC structure and internal complexity on performance. The interdependence of decisions made in different MNC-units is theorized as an underlying mechanism by which structure and complexity affect performance. The performance of three organizational structures, regional, matrix, and network, discussed in the IB literature is compared at the various levels of complexity. The results of our simulations show that the relationship between internal complexity and firm performance is an inverted U for all three organizational structures. Furthermore, at high levels of complexity the network structure has the best performance, followed by the matrix, with the regional last. However, at low levels of complexity the rank order of structure performance is reversed. In addition to these conclusions, this paper contributes to the international business research by demonstrating how the methodology's power can help scholars answer fundamental questions regarding other IB phenomena.

Suggested Citation

  • Celo, Sokol & Nebus, James & Kim Wang, I., 2015. "MNC structure, complexity, and performance: Insights from NK methodology," Journal of International Management, Elsevier, vol. 21(3), pages 182-199.
    • Handle: RePEc:eee:intman:v:21:y:2015:i:3:p:182-199
    DOI: 10.1016/j.intman.2015.06.002
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    2. Haruo H. Horaguchi & Toichiro Susumago, 2022. "Global R&D Location Strategy of Multinational Enterprises: an Agent-Based Simulation Modeling Approach," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 457-479, December.
    3. Cho, Seho & Cantwell., John, 2024. "Knowledge sourcing and national technological development: The weak internationalization of R&D in South Korea," Journal of Business Research, Elsevier, vol. 170(C).
    4. Torben Pedersen & Marcus M Larsen & Àngels Dasí, 2020. "Searching locally and globally: Applying Daniel Levinthal’s scholarship to international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1532-1546, December.
    5. Andreas P. J. Schotter & Maximilian Stallkamp & Brian C. Pinkham, 2017. "MNE Headquarters Disaggregation: The Formation Antecedents of Regional Management Centers," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1144-1169, December.
    6. Celo, Sokol & Lehrer, Mark, 2022. "How much lateral collaboration is optimal? Insights from computer simulations of MNEs as complex adaptive systems," Journal of World Business, Elsevier, vol. 57(3).
    7. Vora, Davina & Sumelius, Jennie & Mäkelä, Kristiina & John, Sofia, 2021. "Us and them: Disentangling forms of identification in MNCs," Journal of International Management, Elsevier, vol. 27(1).

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