IR Trade-off Management - Simultaneous management of international integration and local responsiveness in a consumer-oriented MNC

Abstract: Multinational corporations (MNCs) face a trade-off between international integration and local responsiveness, named the IR trade-off. International integration refers to an organizational focus on economies of scale while local responsiveness refers to an emphasis on adaptation to differing consumer needs. Literature on IR trade-off management has so far produced theoretical contributions that for most MNCs are unattainable or undesirable. The purpose of this thesis is therefore to fill this research gap by presenting a strategic and operational theory on how to simultaneously manage international integration and local responsiveness. This is done through the synthesis of a conceptual framework drawn from theory with an explorative and qualitative in-depth case study at a consumer oriented MNC. It is found that a regional strategic approach to the trade-off enables consumer-oriented MNCs to enjoy benefits from integration and responsiveness simultaneously. Further, the results show how this strategy can be operationalized through two separate centralized product development processes. One of these develops standardized products to be sold on a global scale, while the other develops products adapted to regional needs, sold on a regional scale. In the latter process headquarters and regional subsidiaries cooperate, which demands facilitation of knowledge transfer.