How Boundary Spanners Create Profits From Conflict
ccelerating globalization pressures, rapidly developing emerging markets, and technological advances require multinational corporations (MNCs) to constantly adjust both their strategies and organizational structures. These organizational adjustment processes and the increasing complexity of intra-organizational coordination frequently create conflict between MNC headquarters and their foreign subsidiaries.
Conflicts can be triggered by a multitude of factors at headquarters, the subsidiary, and the interpersonal managerial level including: differences in market and customer preferences, global and local competitors’ strategies, host-country and home-country regulatory requirements, asymmetries between local and global industry dynamics, managerial self-interests, psychosocial and cultural characteristics of managers at both headquarters and the subsidiaries, and many more.
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Thunderbird Professor Andreas Schotter | |
In addition, growing levels of subsidiary and managerial self-sufficiency reduces subsidiary dependency on headquarters. Hence, more confrontational organizational-politicking becomes a feasible option for subsidiary manager when negotiating with headquarters. Despite increasing conflict potential and frequency, conflict today is not necessarily regarded as dysfunctional or the result of inefficient global integration.
Instead, conflict is considered a normal consequence of organizing and managing across national borders. The greater challenge then becomes how to know if a conflict is good or bad. Boundary spanners provide solutions to tackle this challenge.
What is boundary spanning?
Boundary spanning enables expertise sharing by linking internal and external groups or organizations from different hierarchical or functional levels that would otherwise be more inward looking. Hence boundary spanners are a means of increasing linkage economies.
The boundary spanning function is not a formal position or an explicitly defined task. The boundary spanning ability is intrinsically attached to the individual and his or her psychosocial and professional characteristics.
There are five core characteristics that all boundary spanners have in common, including high levels of what we call bipolar context understanding, high levels of professional expertise, strong and wide reaching social ties, awareness of the need for boundary spanning, and a global mindset.
The most critical tasks of boundary spanners in the MNC context are the identification of fringe business opportunities, the bidirectional transfer of knowledge, the management of functional intra-organizational interfaces between different subunits within the MNC, and the management of external relationship between the MNC and different stakeholder groups, including customers, suppliers, and other stakeholders.
Boundary spanners achieve these tasks through sensing of opportunities and threats (especially at the fringes of contextual environments, through bi-directional converting and translating of different contexts, and through multi-directional trust building. Figure 1 below describes the characteristics, tasks and functions of boundary spanners.
Who are boundary spanners?
Research and development managers, sales representatives, human resource executives, and IT professionals are examples of professionals who have explicit boundary spanning roles to fulfill. Boundary spanners become mission critical in situations that have the potential for perception gaps. In order for boundary spanners to be effective, they need the ability to identify and properly understand these perception gaps and to influence HQ–subsidiary conflict situations toward high levels of organizational effectiveness.
Therefore, boundary spanners need critical organizational knowledge at both headquarters and the subsidiary. In addition, a certain level of decision-making authority is required to influence the conflict negotiation process.
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