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Strategic and architectural dimensions of the decision-making processes in South African multinational corporations

Published online by Cambridge University Press:  16 December 2014

John M Luiz  and
Grant Visser
John M Luiz*
Affiliation:
Graduate School of Business, University of Cape Town, Cape Town, South Africa
Grant Visser
Affiliation:
Graduate School of Business, University of Cape Town, Cape Town, South Africa
*
Corresponding author: john.luiz@gsb.uct.ac.za
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Abstract

We examine the manner in which South African-owned multinationals devolve power to their international subsidiaries in Africa, and the resulting effects of the interaction between strategy and structure. The research suggests that a dynamic process of power distribution may develop, in terms of the following: (1) the performance of the subsidiary, its expertise and experience to adapt to local market demands; and (2) the multinational’s need to manage the risks propagated by the African operating environment in which it operates. There is a dual facet to power devolvement, one in which South African multinationals opt for risk mitigation through long-standing control, often at the expense of operational adaptation. In contrast with the literature, which sees multinational corporations as differentiated networks, in the South African case we find a more traditional approach with clear headquarters and ‘miniature replica’ subsidiaries. This suggests that South African multinational corporations are still emerging and that it will take time to develop differentiated networks.

Keywords

multinational corporationsAfricaSouth AfricaMNC–subsidiary relationships
Type
Research Article
Information
Journal of Management & Organization , Volume 20 , Issue 6 , November 2014 , pp. 832 - 850
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2014 

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