Firms in developing Countries are more centralized than Anglo-Saxon/Scandinavian ...

From Harvard Business, Working Knowledge - "First Look" - by Martha Lagac

Do you need sign-off from headquarters when you want to make decisions? Or can you undertake capital investments, hire new employees, introduce new products, and otherwise exercise managerial independence in your daily work? In the age of globalization, the extent of firm decentralization and the reasons behind it are still something of a mystery, leading HBS professor Raffaella Sadun and colleagues to wonder whether product competition is one factor spurring the trend toward decentralization. The basic idea is this: Local managers' information might be increasingly valuable as more products crowd the marketplace.

To test this proposition Sadun, Nicholas Bloom, and John Van Reenen analyzed data on nearly 4,000 firms across 12 countries in Europe, North America, and Asia. "We find that competition does indeed seem to foster greater decentralization," they write in their working paper, "Does Product Market Competition Lead Firms to Decentralize?" [PDF]

The results by geography were also telling: "Intriguingly, we found that firms in developing countries (Brazil, China, and India), tended to be the most centralized, with almost all major decisions taken by the owners in the corporate headquarters. Japanese firms were also relatively centralized. In contrast, firms in Anglo-Saxon and Scandinavian countries (Canada, Germany, Sweden, UK, and US) were relatively decentralized. The rest of Europe (e.g. France, Italy, and Poland) tended to be in the middle of the decentralization ranking." Developing countries might experience tighter control from HQ due to less product competition, the authors suggest.

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How to Fill the Talent Gap

From the Wall Street Journal Online, by Douglas A. Ready and Jay A. Conger

"Global companies face a perfect storm when it comes to finding the employees they need.

It's no secret that global companies are finding it harder to fill critical jobs these days. They're struggling to land top recruits in emerging markets, for instance, and haven't prepared people in their own ranks to step seamlessly into management slots.

Companies are racing to find solutions, but most of them are making a crucial error: They're treating these problems as separate issues. At most multinationals, a host of problems in recruiting and developing talent are converging to create a perfect storm -- a crisis that could derail the company's growth strategies.

To meet the challenge, companies must rethink how they hire, train and reward their employees, placing those tasks at the heart of their business plans. In doing so, they have an opportunity to address all these separate problems with a unified plan, rather than waste time and resources attacking each of the issues individually.

We arrived at this conclusion after researching more than 40 companies to gain a better understanding of their concerns in recruiting and developing. We wanted to identify what steps companies were taking to excel in these areas -- to see what it would take for a company to become a world-class talent factory.

As a part of our research, we identified five common problems in recruiting and development".

Read the rest of the article ...