Innovation vs. Control: Dilemmas of the New Multinational Corporation

Abstract

In the post-COVID global landscape and particularly in the era of economic uncertainty following war in Europe, a looming recession and intensifying economic tensions between the West and China, the MNC can no longer be conceptualized as the vertically integrated unit it used to be, but a much more amorphous network. An important paradox intensifies the problem of MNC control in the current scenario: while most empirical research suggests that diversified firms need decentralized control systems, some studies also contend that singular strategies must be developed to exploit synergies in the homogenizing world market. In this paper, we attempt to resolve this paradox by studying contingencies such as the level of centralization, reward systems, transfer pricing, and the geographic and technological contiguities within MNCs. These contingencies will hopefully assist us in developing a new paradigm of MNC control.