Internationalization of division management in Swedish international firms

An important issue in the divisionalized firm are the relationsships between the three levels; top management, divisional management and the operational level. In the international firm the physical location of the divisional management level becomes especially problematic because of this level’s strategic role concerning the links to the top management and the foreign subsidiaries respectively. Most literature on international business leaves no doubt that the parent company, the “centre”, designs the organization and controls the subsidiaries, the “periphery”. However, the relevance of this perspective is dependent on the stage of the internationalization process. In later phases of this process the subsidiaries can extend their operations to markets outside their own and become strong enough to play a strategic role in the group’s total operations within a certain product area or function. Thus a situation can arise with a firm consisting of several centres located in different geographic areas, rather than one centre and a periphery. In the paper this is labeled multi-centre structure. In a political perspective such centres are expected to have considering influence on the formal organization structure including the location of the divisional management. In the paper the relation between the internationalization of divisional management and the existence of multi-centre structures in 22 Swedish firms is analysed.