The IT contribution in developing a transnational capability at Electrolux

Abstract

Transnational companies combine global integration with local responsiveness, catering to national and even regional tastes while obtaining efficiencies through global operations. What is the role of IT in enabling an organisation to become transnational? What actions ensure that IT helps, rather than hinders, the transition?

One major European company recognised as having a transnational disposition is Electrolux. Home Products Europe (HPE), the largest sector in Electrolux, has previously been investigated both by international business and IT researchers. This paper updates the longitudinal perspective of HPE, including an examination of the transnational change drivers. Using a tentative framework that combines previous research into multinational and transnational IT policy, it shows that all of HPE's IT strategies align with the framework. We identify a number of key obstacles in the HPE case that hindered the transition, most notably problems of data quality and integration, largely occurring due to acquisitions. We also note the slow changes in the working practices of distributed IT groups and suggest that future research and frameworks need to better address staff issues.

Introduction

According to Bartlett and Ghoshal (1998), three strategies characterise the transnational company: global integration (efficiency), local differentiation (responsiveness), and worldwide innovation (learning). Whereas, global companies select integration policies, and multi-domestic companies focus on national responsiveness, transnational companies attempt to combine global integration with local responsiveness. Transnational strategies are being adopted by an increasing number of firms, as a result of the need to combine integration strategies, for example cross-border logistics or (in Europe) the single currency, with differentiation at the customer interface (Karimi and Konsynski, 1991). It is typically the largest companies in the world with multinational customers, products, and operations that need to implement these strategies.

A key theme of international researchers is the balance between the forces of integration and responsiveness (Prahalad and Doz, 1987, Bartlett and Ghoshal, 1998, Roth and Morrison, 1990, Johnson, 1995) and how to link IT to business strategies based on the multinational configuration (Jarvenpaa and Ives, 1992, Karimi and Konsynski, 1991, Ramarapu and Lado, 1995, Earl and Feeny, 1996). Previous research conducted by Earl and Feeny (1996) identifies aspects of IT policy that may help transnational capabilities, but concludes that work in this area is limited and that there is a need for longitudinal study of the evolution to transnational operation.

What is the role of IT in enabling an organisation to become transnational? What organisational actions ensure that IT helps, rather than hinders, the transition? This paper both contributes to our understanding of these questions and produces some initial answers. We use previous concepts and investigations to produce a tentative framework of IT transnational policy, which is then used to analyse the case of Electrolux Home Product Europe, the largest sector in Electrolux. Specifically, we identify some issues raised within this case that have not been addressed by previous research.

In the next sections, we briefly review prior research, explain our research methods, and then describe and analyse the case study before drawing conclusions for future research.