Multi-plant Structures
CONCLUDING DISCUSSION
This chapter has highlighted some of the principal dimensions of the
organisational and spatial structure of large business organisations,
particularly those which operate at an international level. The
generalisations from organisation theory, discussed in the first
section of this chapter, can be integrated with the generalisations
from industrial geography, discussed in the second section, to form a
conceptualised model of the organisation of corporate space. It is now
important to illustrate the complementary nature of these two sets of
A review of organisation theory showed, with reference to the structural contingency m o d e l , that the most useful level at which to examine a business organisation is within its operational domain and task environment. An essential feature of the contingency model is the differentiation and integration which takes place in organisational structures in order that the business organisation is able to deal with varying degrees of uncertainty in elements of its domain and task environment. To this e n d , 'organic' structures are a reflection of unstable environments, whereas 'mechanistic' structures are a response to stable environments. H o w e v e r , differentiation of the structure of a business organisation also brings with it the problem of how to coordinate the separate p a r t s . The main agent for tying together structural sub-units is reckoned to be the configuration of the organisation, especially the structure of its h i e r a r c h y . To understand inequalities within the structure, it was considered necessary to discuss the distribution of authority by the organisation as a basis
for the evolution of sub-unit power. In short, the creation of an intra-organisational power network was considered to be a function not only of the distribution of tasks, and linkages within the organisation, but also of the ability of each sub-unit to deal with u n c e r t a i n t y .
Studies in industrial geography have focussed on different problems, particularly the spatial aspects of behaviour and the evolution of business organisations. Business organisations at different stages of development were shown to adopt contrasting structures, seemingly because of problems associated with coordination over progressively larger geographical areas of operation. At the early stages of growth, business organisations displayed a tendency to
75
expand along lines of least resistance, with locational preferences and
contiguous development apparently representing ways of dealing with
environmental uncertainty. As the centre of gravity of the business
organisation shifts to lie outside the 'home' area, 'leap-frogging'
development becomes characteristic and consequently coordination of the
organisation becomes a problem as decentralisation and the geographical
scope ('multinationality') increases. The structure of the multi-plant
network was also examined and function, scale and ownership structure
were stressed as indicators of the viability and position of each plant
within the organisation.
Two questions emerge from these discussions which are critical to
a developed understanding of the organisation of the corporate space
economy: how do different forms of organisational structure relate to
the spatial characteristics of a business organisation; and how is the
process of differentiation of a business organisation into sub-units to
be represented in space? These two questions are addressed in turn.
With regard to conceptualising structure, organisation theory has
been most successful in tackling the vertical dimension, that is, the
hierarchical arrangement. The division of tasks is seen, first and
foremost, as a division of labour between sub-units arranged
vertically, and so horizontal differentiation has received less
attention. A geographical perspective on the same subject emphasises
the spatial aspect of the division of labour, which is, by definition,
horizontal. Thus, a fusion of ideas relating to horizontal
differentiation from industrial geography, with those on vertical
differentiation from organisation theory would draw a direct link
The division of business organisations into sub-units considerably
complicates this theoretical scheme. Instead of a clear division of
the organisational 'pyramid' into levels, a complex network of levels
and units is revealed. On the one hand, the notion of centrality from
organisation theory offers a framework for understanding inequalities
in this structure by emphasising the sub-unit as a dynamic and indeed
semi-autonomous element of the organisation, either able or unable to
deal with contingencies in its task environment. Industrial geography
on the other hand, has recently begun to stress ownership structure as
the legal confines of the 'sub-unit' - often the division, but
frequently the plant. If these two notions are combined, it is
possible to begin to make a direct link between 'macro' and 'micro'
level forces and scales within the business organisation. In addition,
geography has also emphasised the locational aspect of sub-unit
structure. A combination of these three components should allow a
differentiated business organisation to be represented in space.
To illustrate these two contentions, it is possible to formulate a
simplified model of the principal dimensions of organisational
structure in corporate space (Figure 2.5). In the model of a two
product business organisation, organisational and spatial structure are
illustrated simultaneously. Hierarchical differentiation is
represented within the business organisation as a whole - for example,
each level of administrative or office establishments - as well as
within each sub-unit location. The latter might include staff
performing administrative or boundary spanning functions, such as
marketing, in each plant. Ownership linkages between sub-units are
also shown. The allocation of tasks by the parent business
77 O R G A N I S A T I O N A L S T R U C T U R E S P A T I A L S T R U C T U R E D O M E S T I C O P E R A T I O N S HQ
Q
OVERSEAS O P E R A T I O N S9
©
^ m
o
i i
B U S I N E S S O R G A N I S A T I O Nq;:
! Administrative sub • units and levelsProduction sub - units
Product A '
Product B' Ownership linkages and contact flows • Task environment
Domain
each of the two products to be produced, can also be represented, and the spatial structure is shown when the locations of sub-units are m a p p e d . From this viewpoint, each location has a separate task e n v i r o n m e n t . At head office level the task is broad and strategic. At
the subsidiary office or plant level, lower down the hierarchy, tasks are defined more specifically by the definition of parent firms.
The model is also divided into domestic and overseas operations. This deliberately broad distinction emphasises the structure of
'branches' within organisations. The overseas operations might represent an international division covering operations in a number of countries, or simply an area-based subsidiary company. What this means is that non-homogeneity in the environment of the business organisation is likely to bring about structural differentiation. Thus, additional uncertainty associated in overseas operations might produce a subsidiary structure which has fewer levels in the hierarchy, and therefore represents an 'organic' structure. Domestic operations are less uncertain, possibly resulting in a 'mechanistic' structure.
Of course, it is to be expected that this structure will change as the business organisation itself evolves. A business organisation operating primarily at a national level, with high interdependence between sub-units might have a mechanistic structure based on product or functional divisions. As the overseas operations gain significance, a typical response is to establish a subsidiary company or an international division. Extensive multinational or even global operations further increases uncertainties and the need to differentiate the structure is accompanied by a need for integration. In these cases, a number of organic or area-based divisions might
79
result through a need for structural decentralisation.
This simplified model of the organisation of corporate space based
on a fusion of ideas from industrial geography and organisation theory,
emphasises the main dimensions of the structure of business
organisations. However, as the opening discussion stressed, the
argument has preferred to concentrate on the issue of structure and, in
so doing, any conclusions which have been drawn do not evaluate the
effects of changes in the environment of the business organisation, for
example. Thus, the unequal spatial impact of recession may mean that
the external environment of a sub-unit can become more or less
uncertain over time, as well as over space. Notwithstanding these
deliberations, this theoretical discussion has raised a number of
poignant questions which will be addressed in the following chapters.
First, it must be emphasised this is only an a priori model. Whether
or not such organisational structures can be identified empirically is
a major question which is tackled in this study (Chapter Three). A
second problem which needs to be addressed is how large business
organisations evolve over space (Chapter Four). Third, is it possible
to identify the main elements of the structural and environmental
contexts of organisational sub-units (Chapter Five) and what
implications do these positions hold for the operational