We propose that to be successful under major environmental changes, an organizational
response must fit the new environmental contingencies. We employ the political and economic
reforms in Latin America during the 1990s as a natural experiment in which to examine these
phenomena. Increased market integration should lead firms to establish closer managerial
coordination among subsidiaries to an extent proportional to the strength of external changes.
Firms that retain under- or overstructured organizations will underperform those whose
response is fitting to environmental changes particular to their industry. Moreover, firms that
exhibit an appropriate regional response are likely to have organizational capabilities transferable
to a global level. Data obtained through a survey of MNEs operating in Latin America
by 2000 and from Compustat support the theory proposed. Copyright © 2012 Strategic
Management Society.