The Differentiated Network: Organizing Multinational Corporations for Value Creation / Edition 1

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In a dynamic global economy, multinational corporations (MNCs) face certain competitive challenges that traditional, hierarchical "hub and spoke" organizations simply aren't geared to meet. But in this landmark work, authors Nitin Nohria and Sumantra Ghoshal present a viable alternative — the differentiated network. Writing for managers seeking changes in their administrative systems that boost firm performance, and for academics engaged in research organization design, the authors detail how the competitive MNC can fully tap the value creation potential of its globally distributed capabilities. The authors build on their premise that the units of an MNC should be organized as a differentiated network in order to optimize use of resources, encourage knowledge exchange and development, and increase innovation. By systematically grounding this core concept in organization theory and rigorously testing its validity using large sample data, they are able to offer practical application strategies. Nohria and Ghoshal draw on in-depth case studies of the organization, structures, systems, and management practices in nine large MNCs, and show why overall subsidiary performance is positively correlated with a high degree of internal differentiation and high levels of shared values across the subsidiaries. The nature and functioning of linkages within each national subsidiary, between headquarters and subsidiary, and among the subsidiaries themselves in explored in detail, as the importance of integrative mechanisms.The pioneering nature of their detailed research into the implications of organization theory allows Nohria and Ghoshal to draw the most reliable and robust real-world conclusions about the differentiated network ever available. As such, the organizational model they present in The Differentiated Network can be used by any multinational corporation seeking competitive advantage in the worldwide and well into the foreseeable future

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Editorial Reviews

Based upon their case studies of nine multinational corporations (MNCs) and surveys of the CEOs of 63 North American and European MNCs, Nohria (Harvard Business School) and Ghoshal (London Business School) provide empirically-grounded organizational theory for how such corporations can flourish in the global economy. Building upon the product cycle theory of Vernon (1966), which proposes that the ability to innovate is the "raison d'etre" of MNCs, the authors contend that successful MNCs require intra- and inter-subsidiary differentiation and integration of values and functioning to optimize use of resources, foster knowledge exchange, and innovation<-->counter to traditional hierarchical organizations. Methodological appendix. Annotation c. by Book News, Inc., Portland, Or.
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Product Details

Meet the Author

NITIN NOHRIA is professor of business administration at the Harvard Business School. He is the co-editor of Fast Forward and Networks and Organizations, and the co-author of Beyond the Hype. His teaching, research and consulting focus on designing and transforming organizations to achieve superior performance. He lives in Boston, Massachusetts. ANUP K. GHOSH is holder of the Robert P. Bauman Chair in Strategic Leadership at the London Business School. He has also taught in the Sloan School, MIT, and at France's INSEAD. Co-author of Managing Across the Borders and other books, his award-winning case stutides, research and consulting focus on the management of large worldwide firms. He lives in London, England.

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Table of Contents


The Differentiated Network.


Distributed Innovation in Multinational Corporations (MNCs).

Optimal Slack for Distributed Innovation.

Creation, Adoption, and Diffusion of Innovations Across theMNC.


Internal Differentiation Within the MNC.

Formal Structure and Shared Values.

Integration Through Interunit Communication.

Integration Through Interpersonal Networks.


Requisite Complexity.

Beyond the Differentiated Network.

Methodological Appendix.


The Author.


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