"Matrix organisational structures: Headquarter subsidiary type relations impact on financial performance"

Abstract

"Multinational corporations executing multidimensional strategies can select various organisational structures, with the matrix structure as one possible option. Where organisations select this matrix structuring the subsidiary role allocation is a critical step in ensuring financial performance, yet research within the field of international business on this topic is nascent. Where organisations achieve fit between their strategy selected, structure opted for, and the environment within which it operates this is reflected in their performance. This research through the application of the information processing view focusses on the impact that the subsidiary type, defined as Autonomous, Receptive and Active has on financial performance when considering the configuration and coordination in multinational companies that have adopted the matrix organisational structure. The research thus focusses on a gap in research on the matrix structuring at macro level between the organisational HQ and the subsidiaries and contributes to a field that has stalled since 2017. This research study applied a quantitative cross-sectional study conducted at the subsidiary level within multinational companies with a matrix structuring. The survey questionnaire was distributed through convenience and snowball sampling to senior executives, with 57 valid responses received of which 52% were South African based and predominantly in the services industry, where most studies historically were done within the manufacturing industry. The study used two-stage procedure of cluster analysis to determine the underlying group structure within the sample, identifying the three clusters and empirically determining ideal profiles. From the ideal profiles for the implementation variables for the three subsidiary types a differentiated fit score was determined and with multiple regression relationships between the differentiated fit and performance were assessed. The study confirmed the subsidiary taxonomy defined by Martinez and Jarillo (1991) and expanded by Meyer and Su (2015). Further the study found that no significant relationship existed between the subsidiary type and performance, and that where Autonomous subsidiaries worked on improving the coordination fit they would perform better. This study contributes to the stalled research on MNCs matrix organisational structures, specifically at a macro level between the HQ and subsidiary, contributing to the understanding of the operational capability impact on performance. The study also proposes THE “IRCC matrix” that HQ managers can use to structure organisations optimally in the matrix structuring, or subsidiary managers can use to ensure strategy-structure-environment fit, contributing to performance."