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Stopford and Wells were Right! MNC Matrix Structuresdo fit a “High-High” Strategy

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  • Jane XJ Qiu

    (University of New South Wales)

  • Lex Donaldson

    (University of New South Wales)

Abstract

This paper seeks to address a primary question about matrix structures: under which strategic condition should multinational companies (MNCs) use matrix structures instead of other structures? To answer this question, the seminal Stopford and Wells Model (1972) is re-examined. Stopford and Wells (1972) predicted in their model that MNCs tend to use matrix structure to implement high levels of dual strategies—foreign product diversification and area diversification. Their prediction, however, has remained theoretically unclear and empirically unproven. To address this gap in the strategy-structure literature, we re-examine and revise the Stopford and Wells Model to explain the strategic condition in which MNCs tend to use matrix. The key of the revision is to use “corporate integration” instead of “foreign product diversification”. The revised model is preliminarily supported by the data from a study of German MNCs. This suggests that corporate integration, together with area diversification, are the two over-riding strategies that lead to MNCs’ use of matrix.

Suggested Citation

  • Jane XJ Qiu & Lex Donaldson, 2012. "Stopford and Wells were Right! MNC Matrix Structuresdo fit a “High-High” Strategy," Management International Review, Springer, vol. 52(5), pages 671-689, October.
    • Handle: RePEc:spr:manint:v:52:y:2012:i:5:d:10.1007_s11575-011-0122-z
    DOI: 10.1007/s11575-011-0122-z
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    References listed on IDEAS

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