HUMAN RESOURCE DEVELOPMENT QUARTERLY, vol. 11, no. 1, Spring 2000 © Jossey-Bass Publishers 95

R E V I E W S

The Differentiated Network: Organizing Multinational Corporations forValue Creation, by Nitin Nohria and Sumantra Ghoshal. (1997). SanFrancisco: Jossey-Bass. 253 pp. ISBN 0–7879–0331–0. $34.95 hardcover.

The stated and admirable purpose of this book is to offer a theoretically andempirically useful model of multinational corporations (MNCs). The authorsalso have two stated aspirations: that the book will stimulate further researchon MNCs, which in their view are neglected in organization theory, and torevive interest in contingency theory, which has declined from its peak in the1970s. These aspirations make it clear that the primary audience for the bookis an academic one, although the authors express the hope that practitionerswill also find the book helpful, and they identify the secondary audience asmanagers who are seeking to organize their firms to enhance innovation.

The title of the book derives from the model of the MNC developed by theauthors and is based on their research. The conceptualization of the MNC asa differentiated organization reflects the network perspective adopted. The ideais not new, having been first developed in an earlier book by Chris Bartlett andSumantra Ghoshal, Managing Across Borders: The Transnational Solution (1989),the research for which formed the first phase of the three-phase research pro-ject on which The Differentiated Network is based. In fact, much of this book isbased on the previously reported research of Bartlett and Goshal (1986, 1987a,1987b). Here, however, the argument is extended: “the modern MNC must beorganized as a differentiated network to tap the full value-creation potential ofits globally distributed capabilities” (p. xv).

The book has two main themes: the development of a model of the MNCas a differentiated network, and the importance of integrative mechanismsthat bind the differentiated parts of the MNC together. The model is basedon empirical research carried out in three phases, details of which are pre-sented in the methodological appendix. The first phase consisted of in-depthstudies of nine MNCs, with the objective of developing the concept andgenerating hypotheses. The hypotheses generated were tested in the secondphase through questionnaires distributed to managers in three of the originalnine MNCs. The questionnaires also aimed to develop suitable instruments forthe large sample survey carried out in the third phase of the research project.These survey questionnaires were distributed to the chairman or CEO of438 European and North American MNCs, with a response rate of 15 percent(sixty-six companies).

Part One of the book reports on the first phase of the research. Using thegeneric stages model, which views innovation as a process of sensing a need forchange, responding to that need, and implementing the innovation (Zaltman,Duncan, and Holbeck, 1973), case studies of thirty-eight innovations in the

96

nine large MNCs found that innovations are generated by four different orga-nizational processes: center-for-global, local-for-local, local-for-global, andglobal-for-global. These organizational processes are differentiated by the loca-tion of the sequential but interacting tasks of sensing, responding, and imple-menting. In the center-for-global innovation process, both the sensing of thedemand and the response take place in the center, although the innovation isintended for use worldwide. The local-for-local innovation process is confinedto a particular national unit, with all three tasks located within that particularunit. In the local-for-global innovation process, the demand for change and theresponse occur in a national unit, and the implementation may initially takeplace in that national unit, with subsequent implementation in other units ofthe MNC worldwide. Finally, in the global-for-global innovation process,sensing, response, and implementation occur in many organizational units,including the center. It is argued that if MNCs are to maintain their competi-tive edge, they must recognize that center-for-global innovation no longerenables them to fully take advantage of the potential for innovation thatexists in all the units of the organization. To promote distributed innovationthroughout the MNC, the creation of a shared context for headquarters andnational subsidiaries is essential. This relationship is examined in the secondpart of the book.

Part Two discusses how MNCs can achieve both differentiation and inte-gration using the framework of contingency theory. Contingency theoryemerged during the late 1950s and early 1960s, introducing to organizationalanalysis the concept of the environment. The focus was on the existence of arelationship between the environment of an organization and the way in whichorganizations adapt their structures in order to fulfill the functional needsimposed on them by the environment. Contingency theorists argue that themost effective form of organization is determined by the level of complexityand change in the environment (for example, Burns and Stalker, 1961). Morerecent theorists have argued against the contingency-determinism of this modelby introducing the notion of strategic choice on the part of those managing theorganization (Child, 1972). Nohria and Ghoshal apply contingency theory toexamine the relationships between national subsidiaries of MNCs, which willall be operating under particular contextual conditions, and the headquarters,which again will be operating within its own environment. The question ishow to achieve the best fit between the subsidiaries and the structure of theheadquarters.

In Part Three the limits and extensions of the Differentiated Network areaddressed. The reader is led through the book and the individual chapters bythe use of introductions and summaries, and by indications of the directionso that the arguments are always clear, although those of us who are not fondof statistics might prefer to skip some sections. The differentiated networkmodel is a useful one for understanding the operations of modern MNCs, andthe finding that it is the social capital of the individual, that is, his or her net-work of contacts, that provides the glue that binds the differentiated network

together is a valuable one for managers. Ties across departmental boundarieswere found to be increased by the provision of initial training, suggesting thatties formed early in careers within organizations are the most durable andimportant. Mentoring by seniors later in a manager’s career may also assist theformation of new ties. The important role of expatriates in facilitating inter-subsidiary roles suggests that MNCs would be well advised to invest in thecreation of a pool of expatriates to serve this function.

The authors make a good case for the continued value of contingency the-ory, and their approach may be viewed as part of the defense against critics ofthe contingency-framework approach, set in motion by Donaldson (1985,1987). As such, it is of interest to academics involved in organization theory ororganization studies. It also fulfills its intention to stimulate research into MNCsby offering suggestions for further research and by providing details of theauthors’ empirical research for possible replication. The authors also attempt tomeet their own requirement, that theory must be relevant to practice, byextracting from their research findings the implications for managers of MNCs.However, the large amount of statistical data, especially in the chapters in PartTwo, might discourage many of these managers (who presumably are busy man-aging) from reading the book in any detail. It is unlikely that most managerswould be interested in the results of regression analysis, and they would be bet-ter advised to read the conclusions presented at the end of the chapters, wherethe findings are summarized and implications for management are discussed.

That possible criticism aside, the solid basis of research from which thefindings have emerged does add weight to the arguments, giving managersconfidence that there is some basis for the advice offered, rather than formingpart of the latest search for a solution.

REVIEWED BY

MARGARET BLACK

CENTER FOR LABOR MARKET STUDIES

UNIVERSITY OF LEICESTER, UNITED KINGDOM

References

Bartlett, C., & Ghoshal, S. (1986). Tap your subsidiaries for global reach. Harvard Business Review,4, 87–94.

Bartlett, C., & Ghoshal, S. (1987a). Managing across borders: New strategic requirements. SloanManagement Review, 27, 7–17.

Bartlett, C., & Ghoshal, S. (1987b). Managing across borders: New organizational responses.Sloan Management Review, 27, 43–53.

Burns, T., & Stalker, G. M. (1961). The management of innovation. London: Tavistock.Child, J. (1972). Organizational structure, environment and performance. Sociology, 6, 2–22.Donaldson, L. (1985). In defense of organization theory: A response to the critics. Cambridge:

Cambridge University Press.Donaldson, L. (1987). Strategy, structural adjustment to regain fit and performance: In defense

of contingency theory. Journal of Management Studies, 24, 1–24.Zaltman, G., Duncan, R., & Holbeck, J. (1973). Innovations and organizations. New York: Wiley.

Reviews 97

98

ATLAS/ti: The Knowledge Workbench, by Thomas Muhr. (1997). Berlin,Germany: Scientific Software Development. The educational price for a singlelicense is $395.00 plus $4.00 shipping. Site licenses are sold in multiples offive, a five-user site license is $1440.00 (plus $4.00 shipping).

HRD researchers may now analyze interviews and trace patterns within datasets quickly and efficiently by using one of several different qualitativedata analysis (QDA) software packages that are now available. For a new user,sorting through QDA packages can be confusing, and ultimately a choice thatwill certainly have an impact on the results of their study. The researcher’schoice, therefore, should be as informed as possible. Following is a brief reviewof ATLAS/ti 4.1, a relatively new software package for analyzing qualitativedata. The review includes a short note about appropriate QDA software usageand an overview of the new ATLAS/ti, version 4.1, and highlights some fea-tures of the program that I found interesting and useful.

Some issues that should be investigated before choosing a software pack-age include the kind of computer platform you will use (ATLAS/ti currentlyruns only on Windows for PC), a project time line, researcher familiarity withcomputers, whether the research is solo or team-based, the research findingsaudience, and the analytical orientation of the researcher (Fielding, 1995). Tothose researchers who have not used this type of computer-aided analysisbefore, it is important to note that qualitative software will not actually do theanalysis for you. Qualitative software facilitates but does not replace the realneed for familiarity with the data by trained researchers who link abstract ideasto specific text and hypothesize from that. This software does not create astatistical-type analysis of counting proximity and prevalence of specific codes(Kelle, 1997). These are important concepts to realize before choosing a par-ticular package.

ATLAS/ti is a powerful tool for the qualitative analysis of large bodies oftext, graphics, and audio data. It offers a variety of tools for systematic analy-sis of data, including interviews, questionnaires, record forms, audio text files,and graphical data. In the course of qualitative analysis, ATLAS/ti helps tomethodically organize and document themes within data. For copying withthe inherent complexity of both the tasks and data in large projects, ATLAS/tioffers a more intuitive environment than other qualitative software packages.This environment keeps the user focused on the materials to analyze by pro-viding tools to manage, extract, compare, explore, and reassemble data in aflexible yet systematic way.

This software is designed for experienced qualitative researchers who wantto construct theory arising from their data, as is the tradition in groundedtheory (Glaser and Strauss, 1967). To this effect, two main instruments makeup the foundation of this package: indexing capability based in the assump-tion of theory arising from the data, and global workshops that support userapplications such as SPSS. These main tools are facilitated by the easy coding

procedures, the assumption that all codes will be accompanied by notes fromthe coder, the ability to hyperlink one document to another easily to illustratea theoretical point, and the ease with which a researcher may include detailedgraphical data. Typical applicable areas, in addition to human resource devel-opment research, include anthropology, education, economics, marketing, andother domains in which qualitative data are analyzed.

The main elements that I found to be the most useful and interesting inATLAS/ti were the theory-building tool, the hypertext tool, and the automaticcoding capabilities with Global Regular Expression Print (GREP) searches (apattern matching tool that allows the user to find sequences of characters thatmatch a specified pattern).

Unlike other QDA software on the market, such as NUD*IST (Non-Numerical Unstructured Data Indexing, Searching and Theory-building),ATLAS/ti allows the user to manipulate graphically codes identified within thedata. After the user has completed coding the data within the program, he orshe may view the graphical relationships between the codes (or nodes) that heor she has created from within the Network View. At this point, the user maysee relationships between and among nodes. This is an extremely useful toolfor those of us “right brainers” who work more efficiently with picturemetaphors than with lines of code presented in a more linear fashion. Thetheory-building tool comes into play as the user changes the relationshipsbetween nodes from within the Network View. Moving and changing rela-tionships between nodes facilitates that moment in qualitative research whenthe researcher draws conclusions about the nature of relationships betweencodes in data. In this way, the user may use this tool to generate theory muchin the same way that he or she would generate theory in a more traditional(that is, cut and paste) setting.

The most revolutionary aspect of ATLAS/ti is the ease with which you canuse the hypertext tool. Hypertext allows quotations within the primary docu-ments to be linked to other quotations, including graphical and audio quota-tions. This tool essentially transforms the traditionally imposed linear order ofnarrative to a presentation that acknowledges the interconnectedness of cul-tural and personal experience. Amanda Coffey and Paul Atkinson (1996) writethat the use of hypertext within qualitative software created a new form ofanalysis. This analysis necessarily depends on the use of the computer as amedium, and represents a use of computer software that goes beyond mereword processing. By adding this tool, the designer has created a more up-to-date and applicable QDA package for the employment of the Internet.

The auto coding and GREP search tools are useful for highly organizeddata, such as structured interviews or record forms, in which statements of par-ticular actions or feelings are looked for. Automatic coding allows the user tocollect text passages from one or more text documents. It combines the searchand code assignment by selecting passages according to the specified matchedstring, word, sentence, and paragraph, and identifying all found passages with

Reviews 99

100

a selected code. The GREP search works by allowing special characters to guidethe matching process in the search string. These special characters allow forsuch searches as finding all the years between two stated dates, finding all textwithin brackets, or finding all numbers with three digits at the end of a line.These search systems within ATLAS/ti might facilitate the quick gathering ofoverall interview or observation data on specific actions or feelings from a largeset of records.

I was impressed with and relieved by the graphic-manipulating tool withinATLAS/ti. The ability to see relationships between codes and to rearrange themto fit an idea seemed to embody the spirit of qualitative research. “Massaging”the data, allowing the ideas and connections to rise from what has been col-lected and arranged, rather than accepting the premature order of a rigid hier-archy of codes, seems to me to take true advantage of current user-friendlypower within computer programs. The intuitive interface of the program wasalso a great benefit, because it facilitated my quick understanding of how theprogram could be used.

ATLAS/ti is designed to be user-friendly, but there are certain functionsthat require one-on-one assistance with a trainer. Although the interface ofATLAS/ti is quite intuitive, the more sophisticated capabilities of the program,such as GREP searches and hyperlinks, were difficult for me to access as a newuser. Because of the purely qualitative nature of my work, the SPSS functionsseemed foreign and inaccessible. I was disappointed, as a Mac user, to be lim-ited to using a PC for this program; I can only hope that future plans for devel-opment include creating a Mac version.

REVIEWED BY

CATHERINE MILLER

EDUCATION DEPARTMENT

UNIVERSITY OF CALIFORNIA, SANTA CRUZ

References

Coffey, A., & Atkinson, P. (1996). Making sense of qualitative data: Complementary research strate-gies. Thousand Oaks: Sage.

Fielding, N. (1995, January). Choosing the right software package. ESRC Data Archive no. 58. n.pag. Online. Internet. 7 Feb. 1998. Available: soc.surry.ac.uk/eaqclas/choose/htm.

Glaser, B. G., & Strauss, A. L. (1967). The discovery of grounded theory. Hawthorne, NY: Aldinede Gruyter.

Kelle, U. (1997). Capabilities for theory building and hypothesis testing in software for computer-aided qualitative analysis. Data Archive Bulletin, 65.