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Cross-border relocations of headquarters in Europe

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Author Info

  • Tomi Laamanen

    (University of St.Gallen, St.Gallen, Switzerland)

  • Tatu Simula

    (Aalto University, Helsinki, Finland)

  • Sami Torstila

    (Aalto University, Helsinki, Finland)

Registered author(s):

    Abstract

    This paper analyzes the relocations of both corporate and regional headquarters (HQ) in a multi-country setting. On the basis of a dataset of 52 cross-border HQ relocations in Europe during 1996–2006, we document an increasing trend toward relocation, push and pull factors affecting HQ location choice, and catalyzing factors that affect the relocation decision. High taxes and a high employment rate represent push factors that we find to increase the likelihood of HQ relocation. In particular, at the mean rate of corporate tax, a one percentage point increase in tax translates into a 6.8% increase in HQ relocation likelihood. In contrast, central location and low taxes represent pull factors that increase the attractiveness of the HQ location. In terms of catalyzing factors, we find that export-oriented companies and regional HQ have a higher tendency to relocate. As a whole, we extend the existing research by putting forward a conceptual framework of HQ relocation decisions, and by providing novel empirical evidence on the HQ relocation phenomenon. Our findings contribute to an improved understanding of the determinants of corporate HQ relocation decisions, and provide important tax policy considerations for public policy decision-makers in individual European countries and in the European Commission.

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 43 (2012)
    Issue (Month): 2 (February)
    Pages: 187-210

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    Handle: RePEc:pal:jintbs:v:43:y:2012:i:2:p:187-210

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    Web page: http://www.palgrave-journals.com/

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    Cited by:
    1. Martin Falk, 2012. "Determinants of Greenfield Investment in Knowledge Intensive Business Services," FIW Research Reports series IV-002, FIW.
    2. repec:wsr:ecbook:2010:i:iv-002 is not listed on IDEAS
    3. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    4. Martin, Xavier, 2013. "Solving theoretical and empirical conundrums in international strategy research by matching foreign entry mode choices and performance," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5637252, Tilburg University.

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