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

Abstract

AbstractWe 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.