Exploring the configuration of strategy, structure and culture – the case of multinational subsidiaries in Malaysia

Abstract

The study of organizational strategy, structure and culture has been an area of interest for strategic management research. While there is abundant empirical research on strategic management in the West, little research has been undertaken in countries such as Malaysia, Indonesia, Singapore, Thailand and the Philippines. Moreover, there is a conspicuous absence of a systematic investigation of the relationships amongst organizational strategy, structure and culture. This research systematically examined the path-dependency and the configuration logic in the relationships between the three key organisational variables for organizational development and performance at MNC subsidiaries in Malaysia. Furthermore, the study generated new insight into the vertical internal-fit in the three organisational variables between the subsidiaries and their respective MNC groups from the perspective of Institutional Theory.Ten prominent MNC subsidiaries in Malaysia provided the data for the case studies in the research. For the study, two analytical frameworks were developed from the literature so as to examine these subsidiaries’ practices and logics behind their strategy, structure and culture configurations – i.e., the Strategy, Structure, and Culture (SSC) Triangle and the Duality of Institutional Logics in an MNC Subsidiary framework. Face-to-face interviews were undertaken to collect the primary data. Secondary data were also widely sought in published sources for cross-referencing or triangulation purposes.The findings from this research provide valuable information on the current practices to be found in MNC subsidiaries in Malaysia in respect to the hows and whys of the configuration of organisational strategy, structure and culture. Applying Institutional Theory to the Duality of Institutional Logics in an MNC Subsidiary (Figure 3.9) provided insight into the nature of organisational development in these MNC subsidiaries. In relation to the parent corporations, many of the subsidiaries are found to be under pressure to comply with the mandates from the former in order to achieve internal legitimacy. On the other hand, the study also found that the subsidiaries’ institutional logics are shaped by the institutional profile which includes the local environment, the local partners and competitors, the local government and its agencies, and the local boards and associations.The ten case studies show that the local subsidiaries experience coercive, mimetic and normative isomorphism in order to attain and maintain legitimacy both within their corporate group and in the host country. Thus, changes in the institutional logics at the HQ level affected the formation of distinct organizational forms at the local subsidiary level. The corresponding institutional logics at the subsidiary level further evolved and became further institutionalized. Implicit here is a view of MNC subsidiaries which is quite different from what prevails in previous research in the area.It was indeed a challenge to put together the pieces of the puzzle and capture the diverse and complex organisational realities of these MNC subsidiaries in Malaysia. Although the SSC Triangle and the Duality of Institutional Logics in an MNC Subsidiary framework facilitated analyses of the relationships amongst organizational strategy, structure and culture in MNC subsidiaries, it was Institutional Theory that provided the information to fill in the gaps left unexplained by the two analytical frameworks. It is recognised that there is a need for a more detailed analysis of MNC subsidiaries to better provide us with foresight for the future.A better understanding of the configuration logic amongst these three key organisational variables and its effective management could improve the firm’s future performance. Delving deeply into the delicate mechanism at work in the organisation with the articulated understanding of an individual MNC subsidiary’s SSC Triangle and the dual institutional logics surrounding it, is the crucial means for setting its future strategic direction.