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Power or Market? Location Determinants of Multinational Headquarters in China

Author

Listed:
  • Danny T Wang

    (Department of Marketing, School of Business, Hong Kong Baptist University, Kowloon Tong, Hong Kong, China)

  • Simon X Zhao

    (Department of Geography, The University of Hong Kong, Pokfulam Road, Hong Kong, China)

  • Flora F Gu

    (Department of Management and Marketing, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China)

  • Wendy Y Chen

    (Department of Civil and Structural Engineering, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China)

Abstract

Multinational corporations (MNCs) have increasingly been establishing regional headquarters in China. However, no study has systematically examined how MNCs make strategic decisions about where to locate Chinese headquarters (CHQs) in this transition economy. The paper makes the first attempt to investigate the issue by focusing on two questions. First, what are the location-specific factors that determine where MNCs locate their CHQs? Second, how do these factors influence making the decision between Beijing and Shanghai, the two largest cities in China? We integrate existing literature and assess the differential roles of (1) path dependency, (2) institutional support, and (3) proximity to superior information. Data were collected through a large-scale survey of MNC CHQs in mainland China. The empirical analysis supports the three-dimensional framework and the central role of proximity to superior information in the decision-making process. The results advance existing understanding of MNC location decisions in China by revealing the unique interplay between power and market in this transition economy, and between Beijing and Shanghai, the two promising cities toward world city status, in particular.

Suggested Citation

  • Danny T Wang & Simon X Zhao & Flora F Gu & Wendy Y Chen, 2011. "Power or Market? Location Determinants of Multinational Headquarters in China," Environment and Planning A, , vol. 43(10), pages 2364-2383, October.
    • Handle: RePEc:sae:envira:v:43:y:2011:i:10:p:2364-2383
    DOI: 10.1068/a448
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    References listed on IDEAS

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    2. Wang, Qingtao & Chen, Kevin Z. & Chiang, Longwen & Xie, Xuanli, 2016. "How headquarters relocation is affected by rising wages and ownership: Evidence from China's annual survey of industrial enterprises, 1999–2008," IFPRI discussion papers 1593, International Food Policy Research Institute (IFPRI).
    3. Kimberly A. Clausing, . "Does tax drive the headquarters locations of the world’s biggest companies?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.

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