Global Integration and Local Flexibility: Managing Contradictions in a Global Company - A Case Study of a Multi-National Service-Oriented Manufacturing Company

This dissertation addresses strategic change from the viewpoint of managing strategic dualities in the growth and internationalization of a company. The theoretical framework builds on theories of international business, organizational capabilities, and managing contradictions in organizations. The overarching theme of this research is the management of strategic dualities. Based on a cross-theory review, I frame a qualitative single case study, which produces a research narrative of a long-term strategic change, introducing various perspectives to provide a description of the research phenomenon in its context: a multinational service-oriented manufacturing company going through a strategic change. The data for the single case study were drawn primarily from a set of documentary data. The documentary data consisted of in-house employee magazines, company internal presentations and memos, annual reports, and articles and books on the company.

This monograph starts with a review of existing literature. The literature review draws a line from traditional internationalization theories and managing the liability of foreignness to globalization and the needs to balance between global integration and local flexibility. A historical single case study follows the Finland-based multinational service-oriented manufacturing company and its growth and change. The research interest lies in the company’s attempts to harmonize its ways of working globally across the company. The results describe the various harmonization efforts and their impact on the growth and productivity of the company. The results shed light on how the company has managed tensions arising from the conflicting demands between global integration and local flexibility, between productivity and innovation, and between company internal and external views. These contradictions are addressed from three different aspects: structures and processes and adaptation thereof: technologies and products and innovation thereof: and short-term and long-term view and renewal thereof. The findings of this study explicate how the case company has developed its global operating model, the “company way” and what choices the company has made in managing tensions it has faced in the integration efforts.

The key findings of this case study are the following. First, involving geographical business areas in global decision making has been helping the prioritization and allocation of scarce global resources across the network of local companies. Involving these businesses has also supported the global strategy – and the global mindset – of the company. Second, technological innovations have had a key role in developing global products and have thus supported the renewal from local to global business, differentiating the case company from many of its competitors. Third, harmonized ways of working are seen as key for agility and renewal, because the harmonized baseline enables faster changes. Fourth, the case company have chosen different approaches to manage the conflicting demands between global and local requirements. In many cases, the question has been about choices between global and local, and therefore about accepting possible trade-offs. However, in the case of an exceptional market situation in the emerging China market, local demands and pressure led to conflicts that in turn led to transformation and creation of even better ways of working by combining the global and local views. Finally, the results indicate how the drivers for harmonization have changed over time. The focus appears to have shifted from ensuring operational efficiency and economies of scale, towards making it possible for the company to integrate with external networks, especially as technological development has accelerated, and the locus of innovation has been moving outside companies.

The main theoretical contribution of this dissertation is to examine international management theories with a historical long-term case study, where the need for harmonization remains but the drivers for a global strategy change. Through an empirical case study, this dissertation demonstrates the role of harmonization in a global company. It applies the existing theories to practice and illustrates how the case company has been managing the tensions that it has faced during the harmonization programs. This research complements existing international business research with a real-life case study on the global integration process of one company operating in a traditional industry.