Cash pooling: An organizational response to institutional complexity

Abstract

The paper aims to explain how new cash management practi-ces can be used to address institutional complexity inMultinational Enterprises (MNEs) and which are the effects onthe organizational form. Based on a case study, cash poolingreveals to be an effective response for dealing with the finan-cial crisis, even if shifting the complexity at an organizationallevel. Indeed, the MNE selected had to manage a centralizedand decentralized organizational structure since the financialsolution could not be adopted for all subsidiaries. The studyshows that cash pooling can act as an organizational responseonly if a constant dialogue with subsidiaries is ensured.