From Dependence or Independence to Interdependence
As we described in Chapter 4, national subsidiaries in decentralized federation organi-zations enjoyed considerable independence from the headquarters, whereas those incentralized hub organizations remained strongly dependent on the parent company forresources and capabilities. But the emerging strategic demands make organizationalmodels based on such simple interunit dependence or independence inappropriate.
Independent units risk being picked offone by one by competitors whose coordinatedglobal approach gives them two important strategic advantages: the ability to integratescale-efficient operations and the opportunity to cross-subsidize the losses from battles inone market with funds generated by profitable operations in others. However, foreign op-erations that depend totally on a central unit run the risk of being unable to respond effec-tively to strong national competitors or to sense potentially important local market or tech-nical intelligence.
But it is not easy to change relationships of dependence or independence that havebeen built over a long history. Most companies found that attempts to improve interunitcollaboration by adding layer upon layer of administrative mechanisms to foster greatercooperation were disappointing. Independent units feigned compliance while fiercelyprotecting their independence, and dependent units discovered that the new cooperativespirit bestowed little more than the right to agree with those on whom they depended.
To create an effective interdependent organization, two requirements must be met.First, the company must develop a configuration of resources that is neither centralizednor decentralized but is both dispersed and specialized. Such a configuration lies at theheart of the transnational company's integrated network mode of operations, as wealready discussed in Chapter 4. This fifth edition of Transnational Management is dedicated to Sumantra Ghoshal, alongtime friend, colleague, and coauthor whose name has been on the cover of thisbook since it was first published more than 15 years ago. During our 20-year researchand writing partnership, Sumantra was always concerned about how to bring knowl-edge into the classroom. In our field research, he wanted to ensure that we could cre-ate powerful teaching material out of the data and stories we were uncovering and theconclusions we were reaching. Indeed, he believed that it was impossible to unravelthe twin strands of teaching and learning, claiming that together they created a muchstronger cord of knowledge. To Sumantra, discussion in the classroom raised ques-tions that drove him into the field, and the findings from the field created teachingmaterials that did much more than provide insight for students; they provoked morequestions for research.
To the outside world, the numerous awards Sumantra won as an outstanding teacherand case material developer were a testimony to his lifelong commitment to the class-room. But for those of us fortunate enough to have worked with him personally, whetheras a student, a colleague, or a consulting client, Sumantra was much more than a giftedteacher. His brilliant questioning and insightful challenges pushed us to think harder anddeeper but were complemented by his bold imagination and supportive encouragementthat gave us the courage to take risks. Although he passed away in 2004, we list him asa coauthor in this new edition not only to honor his memory but also to reflect the sig-nificant and lasting contribution he made to the concepts, perspectives, and materialsthat are at the core of this book.