Designing Matrix Structures to Fit MNC Strategy

Dual Leadership in the Matrix: Effects of Leader-Member Exchange (LMX) and Dual-Leader Exchange (DLX) on Role Conflict and Dual Leadership Effectiveness

While strategic management theories have heavily engaged with the reality of matrix organizations, leadership theories that actually focus on the people working within such arrangements are missing. We argue that (a) followers perceive dual leadership effectiveness to be more than the sum of each leader's effectiveness, (b) a core detriment to perceived dual leadership effectiveness is role conflict experienced by the follower, and (c) Leader-Member Exchange (LMX) needs to be theoretically extended to the triadic level to capture the influence of dual leadership. Specifically, followers’ role conflict and leadership effectiveness perceptions are driven not only by how they perceive their LMX relationships with both leaders, but also how they perceive the relationship quality between their leaders (dual leadership exchange, DLX). As such, even though higher LMX is still better than lower LMX, having a similar exchange relationship with both leaders reduces employees’ role conflict and, by extension, heightens dual leadership effectiveness. Additionally, we reason that when employees lack a good relationship with one of the leaders, higher DLX can act as a substitute. We find support for our hypotheses by applying polynomial regression analyses to a dataset of 111 managers from a matrix organization who report to both a regional and business unit leader.

Multinational Enterprise Organizational Structures and Subsidiary Role and Capability Development: The Moderating Role of Establishment Mode

Multinational enterprises (MNEs) develop structural configurations for managing their geographically dispersed and disaggregated activities. These structures can be classified as (a) simple headquarters configurations (involves corporate, regional, divisional headquarters and mandated units) involving few direct reporting relationships; (b) network organizations involving no direct reporting relationships; and (c) matrix configurations involving multiple reporting relationships. While these structures are built for handling various complexities and purposes, it is unclear how they influence subsidiary role and capability development. We hypothesize how these structures influence subsidiary development and propose a moderating role of MNE establishment mode on the direct structure-subsidiary development relationship. Based on data from 429 foreign subsidiaries in New Zealand, our results show that subsidiary development varies across the structures such that simple headquarters configurations experience the least opportunities to develop. While the matrix and network structures as complex configurations offer distinct paths to subsidiary development, subsidiaries managed under the former are more likely to follow the developmental path of networking and interunit learning, and the subsidiaries managed under the latter are more likely to follow the path of autonomy and innovation. Furthermore, the positive association of network structure with subsidiary initiatives and autonomy is stronger for greenfield subsidiaries, whereas the positive association of matrix structure with subsidiary mandates is stronger for acquired subsidiaries.