Organisational design alternatives within international operations networks: a transaction cost perspective

Abstract

This paper shows, through multiple case studies of Moroccan textile apparel offshore factories, that one organisational design does not fit all within international operations networks. Whereas previous research about managing networks of foreign factories has focused on fully owned production affiliates, a considerable diversity of organisational arrangements is shown to exist. Analysed in the light of transaction cost theory, this diversity suggests that the cost of coordination of foreign factories operating in culturally different countries is high, and has possibly been overlooked in international operations management research. As this paper is primarily a piece of exploratory research, its aim is to document the hybrid arrangements, between markets and hierarchies, that are used by multinationals to cope with coordination costs in practice. Moreover, the potential of 'supply chain outposts', as an organisational innovation used to cope with high coordination requirements, is highlighted.