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Why Do Some Multinational Corporations Relocate Their Headquarters Overseas?

Author Info

Listed author(s):
  • 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.

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File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp54.pdf
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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 54.

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Length: 40 pages
Date of creation: 28 Mar 2006
Handle: RePEc:hhs:cesisp:0054
Contact details of provider: Postal:
CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/

More information through EDIRC

Keywords: Multinational Corporation; Headquarters; Corporate Strategy; Internationalization;

Find related papers by 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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  1. Marco Pagano & Ailsa A. Röell & Josef Zechner, 2002. "The Geography of Equity Listing: Why Do Companies List Abroad?," Journal of Finance, American Finance Association, vol. 57(6), pages 2651-2694, December.
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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 20 Nov 2014.
  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. 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).
  4. 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.
  5. 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.
  6. 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.
  7. Deschryvere, Matthias, 2009. "Mobility of Corporate Headquarter Functions: A Literature Review," Discussion Papers 1203, The Research Institute of the Finnish Economy.
  8. repec:spr:manint:v:50:y:2010:i:4:d:10.1007_s11575-010-0044-1 is not listed on IDEAS
  9. repec:spr:manint:v:50:y:2010:i:4:d:10.1007_s11575-010-0040-5 is not listed on IDEAS
  10. 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.
  11. repec:hig:wpaper:38man2015 is not listed on IDEAS
  12. 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.
  13. Zoltan J. Acs & Siri Terjesen, 2007. "Born Local: Two Avenues to Internationalization," Jena Economic Research Papers 2007-022, Friedrich-Schiller-University Jena.
  14. 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.
  15. 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.
  16. 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.

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