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Why Do Some Multinational Corporations Relocate Their Headquarters Overseas?

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  • Birkinshaw, Julian

    () (London Business School,)

  • Braunerhjelm, Pontus

    () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Holm, Ulf

    () (Department of Business Studies, Uppsala University,)

  • Terjesen, Siri

    (Cranfield School of Management)

Abstract

This paper examines the decision by a multinational corporation (MNC) to relocate its business unit and/or corporate HQ overseas. We argue that business unit HQs move overseas in response to changes in the internal configuration of their unit’s activities and the demands of the product markets in which they operate, whereas corporate HQs move overseas is response to the demands of external stakeholders, in particular global financial markets and shareholders. Using data on 125 business unit HQs and 35 corporate HQs, we test and find support for these arguments. The research highlights important differences between corporate- and business-level strategy, and it suggests ways in which the theory of the MNC needs to be reconsidered.

Suggested Citation

  • Birkinshaw, Julian & Braunerhjelm, Pontus & Holm, Ulf & Terjesen, Siri, 2006. "Why Do Some Multinational Corporations Relocate Their Headquarters Overseas?," Working Paper Series in Economics and Institutions of Innovation 54, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    • Handle: RePEc:hhs:cesisp:0054
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    Cited by:

    1. Du Rietz, Gunnar & Johansson, Dan & Stenkula, Mikael, 2013. "Swedish Labor Income Taxation (1862–2013)," Working Paper Series 977, Research Institute of Industrial Economics, revised 10 Sep 2015.
    2. Andersson, Linda & Karpaty, Patik, 2012. "Firm Level Effects of Offshoring of Goods and Services on Relative Labor Demand," Working Papers 2013:2, Örebro University, School of Business.
    3. repec:spr:manint:v:57:y:2017:i:6:d:10.1007_s11575-017-0325-z is not listed on IDEAS
    4. Olischer, Florian Thomas & Dörrenbächer, Christoph, 2013. "Concession bargaining in the airline industry: Ryanair's policy of route relocation and withdrawal," Working Papers 73, Berlin School of Economics and Law, Institute of Management Berlin (IMB).
    5. repec:bla:jomstd:v:54:y:2017:i:8:p:1271-1302 is not listed on IDEAS
    6. repec:bla:jomstd:v:54:y:2017:i:8:p:1206-1240 is not listed on IDEAS
    7. Linda Andersson & Patrik Karpaty & Selen Savsin, 2016. "Firm-level effects of offshoring of materials and services on relative labor demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 321-350, May.
    8. Xiaohua Yang & Siri Terjesen, 2007. "In search of confidence: Context, collaboration, and constraints," Asia Pacific Journal of Management, Springer, vol. 24(4), pages 497-507, December.
    9. Vaaler, Paul M. & Schrage, Burkhard N., 2006. "Legal System and Rule of Law Effects on US Cross-Listing to Bond by Emerging-Market Firms," Working Papers 06-0126, University of Illinois at Urbana-Champaign, College of Business.
    10. René Belderbos & Helen S. Du & Anthony Goerzen, 2017. "Global Cities, Connectivity, and the Location Choice of MNC Regional Headquarters," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1271-1302, December.
    11. Deschryvere, Matthias, 2009. "Mobility of Corporate Headquarter Functions: A Literature Review," Discussion Papers 1203, The Research Institute of the Finnish Economy.
    12. repec:spr:manint:v:50:y:2010:i:4:d:10.1007_s11575-010-0044-1 is not listed on IDEAS
    13. repec:spr:manint:v:50:y:2010:i:4:d:10.1007_s11575-010-0040-5 is not listed on IDEAS
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    15. repec:bla:jomstd:v:54:y:2017:i:8:p:1241-1270 is not listed on IDEAS
    16. Henry Wai-Chung Yeung, 2009. "Transnational Corporations, Global Production Networks, and Urban and Regional Development: A Geographer's Perspective on "Multinational Enterprises and the Global Economy"," Growth and Change, Wiley Blackwell, vol. 40(2), pages 197-226.
    17. Dellestrand, Henrik, 2011. "Subsidiary embeddedness as a determinant of divisional headquarters involvement in innovation transfer processes," Journal of International Management, Elsevier, vol. 17(3), pages 229-242, September.
    18. repec:bla:jomstd:v:54:y:2017:i:4:p:422-454 is not listed on IDEAS
    19. repec:hig:wpaper:38man2015 is not listed on IDEAS
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    21. Randi Lunnan & Youzhen Zhao, 2014. "Regional headquarters in China: Role in MNE knowledge transfer," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 397-422, June.
    22. Zoltan J. Acs & Siri Terjesen, 2007. "Born Local: Two Avenues to Internationalization," Jena Economic Research Papers 2007-022, Friedrich-Schiller-University Jena.
    23. 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.
    24. Abdoulaye Oury Bah & Xie Kefan & Oji-Okoro Izuchukwu, 2015. "Strategies and Determinants of Foreign Direct Investment (FDI) Attraction," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 1(5), pages 81-89, April.
    25. Vapola, Terhi Johanna & Paukku, Markus & Gabrielsson, Mika, 2010. "Portfolio management of strategic alliances: An international business perspective," International Business Review, Elsevier, vol. 19(3), pages 247-260, June.

    More about this item

    Keywords

    Multinational Corporation; Headquarters; Corporate Strategy; Internationalization;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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