Size
There has been some discussion in the management literature as to
the importance of organizational size and management structures
and mechanisms. The view taken by the majority of observers is that
a large size leads to more formalization and less centralization
(Hickson et al., 1974; Hedlund, 1981; Garnier, 1982; Yunker,
1983). Later,writers have attempted more precise correlations by
considering size and management in relation to sector, country of
origin, and consideration of financial, product/service, and market-
ing strategies. The results are very mixed, with Hickson et al. (1974)
and Horvath et al. (1981) finding no correlation in the United
Kingdom, but a high degree in Swedish and Japanese companies.
Seror (1989) also found a negative correlation between size and cen-
tralization in the United States. Harzing’s (1999:90) review of this
literature concludes that “in general MNC’s size will not be system-
atically related to the level of centralization in decision making.”
There have been few previous studies of size and control by social-
ization. The obvious conclusion being that the smaller the operation,
the more likelihood that interpersonal relationships will flourish
throughout the organizations as a whole, bringing into play a more
direct and personalized system of management (Duberly & Walley,
1995).
Hypothesis 1: The method of control and coordination in international
public sector SMEs will be based more on informal, interpersonal rela-
tionships between managers than on centralized, formal systems.
Public Sector
Another obvious correlation is between management style and sec-
tor—the assumption being that the public sector civil service ethos
would have a considerable influence on policy making and imple-
mentation. A key feature of employment relations in the public
sector in the United Kingdom after World War II was centraliza-
tion. The role of most local personnel departments was to act as
monitors of national policy, with little or no authority to interpret
policies at a local level (Farnham, Horton, & Giles, 1994; Fogarty
& Brooks, 1986). Increasing disruption caused by public sector
disputes in the 1970s, together with adverse economic conditions
for the viability of large-scale state investment, led to a radical
restructuring of the public sector. Tight financial controls were
implemented, numerous state industries were privatized, and for
those that remained within the state sector, elements of competi-
tion were introduced. This has resulted in a fragmented picture
today, with real tensions between devolution and centralization.
Between Autonomy and Control: Expatriate Managers and Strategic IHRM in SMEs
81
Thunderbird International Business Review • January–February 2001
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