M-Form Firms

M-form firms are multidivisional organizations in which each division is a product or geographic unit responsible for its own operations and profit while the corporate head office sets overall strategy and monitors the divisions. The M-form emerged as the dominant organizational design for large corporations in the twentieth century and continues to be so, with variations that include some decentralization of strategy responsibilities to operating units. A positive performance effect of M-form early adoption has been documented, at least for US and UK firms. The effectiveness of the M-form requires appropriate incentive design, good leadership and a division of labour appropriate to the relatedness of the firm's diversification.