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Although the MNC literature privileges the organisational unit as the base ‘unit of analysis’, the wider organisational studies literature suggests that this view is too narrow. At the heart of this is the recognition that organisations, including businesses, are social constructs – as Whitley (1991, p. 160) emphasised:

“The socially constructed nature of business enterprises as systems of coordination

and control of economic activities seems self-evident to most social scientists in the same way that other social institutions and collectivities are socially constituted and

variable.”

As such, it is inappropriate to regard the organisational structure as exogenous or predetermined. Rather, both the formal rules and structures of the organisation, and how these are perceived and understood, need to be seen as the consequence of social processes and discourse as well as being interpreted as part of those social processes. Consequently, both the existence and implication of organisational structure cannot be divorced from the individuals involved in those social processes and discourse, in which “the social and organizational structures often taken for granted are in fact the outcome of patterns of actions at the micro, interaction level” (Heracleous & Marshak, 2004, p. 1294).

Power and Coordination in the Multinational Company Page | 34 This, of course, links directly to the wider – and fierce – agency/structure debate within sociology. While it is inappropriate to discuss this in detail, there is considerable support for perspectives that “formulate a conception of agency and structure, and of the complex dynamic interplay between them, which … deal with the ‘double constitution of agency and structure’” (Reed, 2005, p. 290). That is that agents (especially individuals) are constrained by structures (including structures within organisations), but at the same time, through their agency they have an ability to both reproduce or challenge those structures. Such thinking is reflected, albeit from significantly different philosophical positions and with different emphasis5_{, in both Giddens (1984) Structuration Theory and in Clegg’s (1989) Circuits of Power} (see Chapter 4).

3.1.1 Informal Organisations and Negotiated Order

This interplay between organisational structures and individual actors is seen repeatedly in the literature on organisations, including those of firms. Firstly, it is seen in the view that the formal organisational structure may not reflect the way in which individuals within the organisational actually work. As early as 1939, Roethlisberger & Dickson (1939, p. 559) wrote:

“Too often it is assumed that the organization of a company corresponds to a blueprint plan or an organization chart. Actually, it never does… Many of the

actually existing patterns of human interaction have no representation in the formal organization at all, and others are inadequately represented by the formal organization... The formal organization cannot take account of the sentiments and values residing in the social organization by means of which individuals or groups of

individuals are informally differentiated, ordered and integrated.”

This was followed by a significant literature that stressed the gap between the formal and the informal organisation (Meyer & Rowan, 1977). Among these, were ideas theorised by Strauss et al (1963) who introduced the concept of organisations as ‘negotiate order’. Here “organizations are viewed as created by individuals and collectives who negotiate and interact with each other on a regular basis in changing contexts” (Piekarri & Tietze, 2016, p. 210). This

5_{Reed (2005) argues that Giddens places much more emphasis on agency (regarding structure as having} only ‘virtual existence’), while arguing that Clegg places primacy on structure which “analytically reconstitute agency as an effect or epiphenomenon of deeper, ineluctable social forces that totally determine the inclinations and capacities of agents” (p. 296).

Power and Coordination in the Multinational Company Page | 35 perspective stresses the importance of the negotiated and informal pattern of activities that emerges from the interplay between individuals reflecting their shared understanding of how tasks should be performed. Yet these understandings were clearly temporary, risked being unstable “and have to be made and remade over time” (Watson, 2015, p. 411). As such, the

‘negotiated order’ approach stressed the “importance of understanding interaction processes

as well as the structural features of organizational life” (Maines & Charleton, 1985, p. 272, quoted in Strauss, 1993, emphasis added).

The implications of this perspective are profound, as it highlights that not only can we not understand organisations solely from their formal structure and rules, but it highlights the way that individuals create (informal and temporary) structural elements through their interactions and ‘negotiations’ as well as the context of those negotiations. As March (1962, p. 672) emphasised “the composition of the firm is not given; it is negotiated.”

Similar ideas are seen in the work of Weick (1979) and his emphasis ‘organizing’ rather than ‘organisation’. He sees organising as the consequence of a combination of organizational member actions, social interactions, and task-role interrelationships. This reflects the shift from a focus upon entity, to one on process (Van de Ven & Poole, 2005) in which order is transient and that there is ongoing work to establish order:

“People makesense, try to introduce order… When people ‘introduce’ ‘order’, there

is no guarantee that it will persist. Typically, order is transient and needs to be

reaccomplished repeatedly.” (Weick, 2006, p. 1724).

Critically, these people, individuals, are heterogeneous and are more than clones of their wider institutional environment. As Strauss (1993, p. 252) stresses:

“Endemic to interaction is the probability of discrepancies between the perspectives

of some participants in any interaction. This multiplicity of perspectives derives from differential statuses, experiences, and membership in groups, organizations and

social worlds.”

Weick puts particular emphasis upon the way in which people use language in organising, particularly stressing the way in which individuals ‘make sense’, or help others to ‘make sense’ in a process of Sensemaking (Weick et al, 2005). Indeed, he reflects that:

“Organization is talked into existence when portions of smoke-like conversation are preserved in crystal-like texts that are then articulated by agents speaking on behalf of an emerging collectivity. Repetitive cycles of texts, conversations, and agents

Power and Coordination in the Multinational Company Page | 36

define and modify one another and jointly organize everyday life.” (Weick, 2006, p. 1725).

As such, through these repetitive cycles, ephemeral talk becomes reified texts or objects that act to define and shape the processes of organising.

3.1.2 Boundary Shaping

A similar focus upon the emergent nature of organisation has been seen in the wider organisational literature in the recent focus upon organisational boundaries. In particular, these are seen as multi-dimensional, constructed and ambiguous (Vakkayil, 2012; Heracleous, 2004), challenging how we view the internal boundaries of complex organisations such as multinationals (e.g. how we should understand the boundaries of the headquarters or of a subsidiary?). Vakkayil (2012, p. 206) emphasises that such “boundaries should not be taken as pre-existing entities which need to be managed through stable arrangements, but rather as constructed and brought forth by organizational actors in their daily interactions… [which] is not a simple process that can be hierarchically mandated from the top”. Rather, Heracleous (2004, p. 99) sees these as emerging through a recursive and constructive process in “what we recognize as ‘objective’ boundaries can be seen as social structures that are in the final analysis and in a fundamental way produced by, based on, and legitimated by ongoing social processes at the action level of analysis.”

The importance of these wider perspectives is that they all focus upon the relationship between the individual and the (formal) organisational structure – reflecting not only on how the individual’s behaviour is shaped by the structure, but the ways in which their actions shape structural aspects of the organisation.