Carroll School of Management
Boston College, Fulton Hall 430
140 Commonwealth Avenue
Chestnut Hill, MA 02467
Tel: (617) 552-4277
Fax: (617) 552-0433
My research explores the interdependence of organization design and competitive strategy in multiunit organizations, including multibusiness firms (e.g., conglomerates), firms with multiple branches (e.g., banks), and multinationals. Delegation and control concerns are particularly apropos for these organizations because they require coordination across multiple units and across industry and/or country boundaries. Therefore multiunit organizations, in particular the design of headquarters-subsidiary relationships, constitute the ideal background for my research, which, by implication, bridges competitive and corporate strategy.
I study those managerial choices that structure the organization, define the nature of power and influence, and shape the firm's competitive stance. These choices affect not only firm-level outcomes but also how competition unfolds within and across markets. I focus on delegation and control mechanisms that address complex and consequential organizational problems, such as competitive spillovers across units of multiunit firms or negative externalities across different types of firm activities. By bringing and combining insights from competitive strategy, organizational theory, and organizational economics, I have pursued four central and interrelated questions in my research:
1. How do firms use delegation and control mechanisms to manage intrafirm competitive spillovers across their subsidiaries?
2. How do firms use delegation and control mechanisms to manage negative externalities among their different activities, particularly when activities that help one organizational objective come at a cost to another?
3. How do firms use delegation and control mechanisms to manage cognitive processes and mitigate potential biases in making organizational choices?
4. How do contingencies arising from firms' embeddedness in broader competitive, socio-political, technological contexts influence their ability to deploy delegation and control mechanisms?
Most theories analyzing competitive interactions in strategy and economics have adopted a unitary actor assumption with the firm acting as a single, rational actor. These theories tend to overlook the complex reality of intra-organizational structures, incentives, and processes, which shape many organizational choices. These organizational choices have been a central tenet of research on the design of delegation instruments, and more generally governance systems, in organization theory, organizational economics, and strategy. However, work focusing on governance choices is predominantly internal-looking and tends to ignore the dynamics of competitive interaction between firms. This omission is particularly acute and problematic in the study of multiunit-multimarket firms such as diversified companies and multinationals because most strategic decisions are inevitably delegated to unit managers and because they face a different competitive context in each market. This gap is the core focus of my research.
Accordingly, I seek to understand how multiunit organizations' incentives and ability to deploy instruments of corporate control: (1) vary by their embeddedness in the broader competitive, political, and/or technological context in which they currently operate; (2) lead to different organization designs and shape their organizational boundaries; and, as a result, (3) influence their competitive interactions and, ultimately, economic performance. Collectively, the findings of my work comprise an integrated perspective revealing the dynamics of delegation and control within and across organizations. The resulting insights fall into the following three broad categories:
Interdependence of organization design and competitive strategy: I show that organizational choices are influenced by the competitive context and that organization design and competitive strategy should not be seen as distinct or independent processes. Thus, the design of headquarters-subsidiary relationships should be both externally oriented to shape competitive interactions and internally oriented to allow efficient strategy formulation and implementation. This is an important insight that has been suggested but not directly theorized and/or empirically examined in the strategy and management literature.
Strategic role of delegation and control mechanisms: I show that in multiunit firms, delegation and control mechanisms arise endogeneously to address complex and consequential organizational problems, such as competitive spillovers across units or negative externalities across different activities (e.g., trade-offs involved in fulfilling different organizational objectives at the same time). This highlights the strategic role of delegation and control instruments, beyond standard agency problems emphasized in prior work.
A refined understanding of the competitive environment: I show that access to and deployment of delegation and control mechanisms vary both across firms and across markets. That is, incentive (reflecting a cost-benefit calculation) and ability (reflecting organizational and/or environmental constraints) to deploy specific instruments of corporate control vary across different units of a firm and across different firms operating in a given industry. This finding provides a novel understanding of the competitive environment that has been missing in previous studies.
The conceptualization of delegation and control mechanisms as midlevel constructs (which are influenced by organizational objectives and, in turn, shape organizational choices) holds considerable promise for the study of modern organizations. This is especially the case because today most, if not all, developed (e.g., Europe, Japan, and the United States) and developing (e.g., Brazil, China, and India) economies are dominated by multimarket-multiunit firms, like conglomerates, diversified companies, business groups, or multinationals. These firms account for a large majority of employment, investment, and assets. Therefore, understanding the link between their internal organizational choices and external competitive behavior will have far-reaching implications for creation and division of value in the entire economy. My research contributes to this understanding, both theoretically and pragmatically.
Last edited: July 15, 2013