Organisational structures in emerging markets: cases from multinational telecommunication firms in Russia

Abstract: As many parts of the world markets are becoming saturated, it is becoming
increasingly important for companies to seek new unexploited markets. Many
emerging markets are currently undergoing significant economic growth,
which makes them suitable targets for these companies. However, for a
multinational company (MNC) venturing into an emerging market is seldom a
straightforward task, as these countries often have little similarities to
the home markets of the companies. Consequently, following a decision on a
suitable way to enter the emerging market, the MNC has to adapt the
organisational structure as well as its operations to suit the local
characteristics.

The purpose of this thesis is to get a deeper understanding of how companies
adapt their organisational structure to suit emerging markets. The focus is
on the desired degree of control the company wants over its operations in
the emerging market, the types of organisational structure it uses, and
finally, the factors influencing the choice of organisational structure
used. In order to reach this purpose, interviews were conducted for case-
studies in two Swedish companies in the telecommunications industry.

The most significant finding of the study is the fact that there is no
ultimate organisational structure for companies operating in emerging
markets. Other main findings reveal that the organisational structure
adopted to a high degree, depends on the mode of entry used, which is
closely related to the desired degree of control the company wants over its
operations in the emerging market. MNCs operating in emerging markets are
generally complex in their nature, which can be related to the companies’
size and geographical spreading. In addition, companies that choose to enter
the emerging markets in close cooperation with a local firm will have to
adopt more of the characteristics of a firm originating in an emerging
market. Finally, the study also shows that the local environment
is the factor most heavily influencing the organisational structure. This
is a significant factor to consider since the environment in many emerging
markets is dynamic and influences companies’ operations to a high degree.