A New IT Organizational form for Multinational Enterprises

Globalization has been a major phenomenon since the 1980s. As many multinational enterprises (MNEs) grow their presence globally, they have been supported by distributed IT resources that are organized either as centralized IT, decentralized IT, or federated IT. However, despite the significant increase in business complexity in the last decade, there has been relatively little systematic research on new IT organizational forms capable of coping with the sophistication of today’s complex (e.g., multi-strategy, multi-product, and multi-geography) MNEs. Drawing from our understanding of the development of organization form in the organization design literature, we examine the applicability of a contemporary organization form, i.e., the multidimensional organization (Ackoff 1999; Galbraith 2009; Strikwerda & Stoelhorst 2009) to the organizing of IT function in MNEs. Through a revelatory case study of the global IT organization at Siemens, we demonstrate the possibility of a multidimensional design for IT organization in MNEs, where the IT organization is organized into IT Customer-, IT Product-, and IT Resource units. The strategic application of lean and flexible lateral coordination mechanisms enables the multidimensional IT organization to achieve multiple objectives in totality. Implications for research and practices are discussed.