Organisational Structure as Risk-Mediator (1)

Meta-Theoretical Considerations

According to Morgan (1973), self-organisation is a key competence. Growth, size, and integration (whose chief activities are decentralisation and outsourcing) necessitates a rethink in structural design. Integration is a fundamental concept in supply chain management; organisational structure less so.

Contingency theory proposes that various risks can be reduced by understanding an organisation’s structure, management, relationships, and the operations of related organisations. This study produced only outlines of the organisations it examined, but (using process block diagrams) described their activities vis-à-vis related organisations and their respective functions, and found a high degree of similarity.

Based on the MNE cases I investigated during my PhD research, it appears that in the case of China, market proximity-decreasing in-country mediation has created decentralisation, that outsourcing is intensive and strategic, and central steering is fairly limited. From the MNE case findings, it seems that supply chain risk is one of many forms of business risk likely reduced by organisational structuring. Thus, structural design as SC risk mechanism is likely another worthy topic of investigation (beyond the scope of my PhD, unfortunately).

Rose and Sipling (1997) and Hains (2002) argued that firms pursue differentiation by improving their core services, so will increasingly prefer to outsource non-core activities. I saw this seemingly evidenced in two of the SME and MNE cases I reported. By describing their companies as “integrators” of supplier-made product, two MNE respondents supported this assertion clearly.

Also, as firms downsize and focus on their key competencies, the role and utility of consultants will increase (Caulkin, 1997). This research showed that consultants claim to act as a risk-reducing intermediary buffering the foreign buyer-China supplier interface. Whether or not these intermediaries will remain necessary (or are today in fact as necessary as the consultant respondents reported) constitutes a question for future research.