Corporate headquarters in the twenty-first century: an organization design perspective

Sven Kunisch,Markus Menz,David Collis

doi:10.1186/s41469-020-00086-9

Sven Kunisch, Markus Menz + Show 1 more

Open Access

https://doi.org/10.1186/s41469-020-00086-9

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Abstract

The corporate headquarters (CHQ) of the multi-business enterprise, which emerged as the dominant organizational form for the conduct of business in the twentieth century, has attracted considerable scholarly attention. As the business environment undergoes a fundamental transition in the twenty-first century, we believe that understanding the evolving role of the CHQ from an organization design perspective will offer unique insights into the nature of business activity in the future. The purpose of this article, in keeping with the theme of the Journal of Organization Design Special Collection, is thus to invigorate research into the CHQ. We begin by explicating four canonical questions related to the design of the CHQ. We then survey fundamental changes in the business environment occurring in the twenty-first century, and discuss their potential implications for CHQ design. When suitable here we also refer to the contributions published in our Special Collection. Finally, we put forward recommendations for advancements and new directions for future research to foster a deeper and broader understanding of the topic. We believe that we are on the cusp of a change in the CHQ as radical as that which saw its initial emergence in the late nineteenth/early twentieth century. Exactly what form that change will take remains for practitioners and researchers to inform.

Highlights

The corporate headquarters (CHQ) is a key feature of diversified business organizations that have dominated the economies of developed countries for over a century (Chandler 1962, 1991; Menz et al 2015)
The corporate headquarters (CHQ) of the multi-business enterprise, which emerged as the dominant organizational form for the conduct of business in the twentieth century, has attracted considerable scholarly attention
We believe that we are on the cusp of a change in the CHQ as radical as that which saw its initial emergence in the late nineteenth/early twentieth century

Summary

Introduction

The corporate headquarters (CHQ) is a key feature of diversified business organizations that have dominated the economies of developed countries for over a century (Chandler 1962, 1991; Menz et al 2015). The CHQ is a distinctive feature of diversified business organizations including public corporations, privately owned companies, medium-sized firms, and many family businesses, which account for the majority of economic activity around the world today (McKinsey Global Institute 2013) Existing knowledge about this entity draws from various academic disciplines and theories including agency, contingency, information processing, and resource-based views (Kunisch et al 2015; Menz et al 2015). This prompted Rumelt et al (1994) to ask, “What is the function, or value added by the headquarters unit in a diversified firm?” as one of the four canonical inquiries in strategic management This is the corporate strategy and/or global strategy question, whose answer, drawn from the resource-based view of the firm (Barney 1991; Wernerfelt 1984), depends on the distinctive resources the entity possesses that improve the competitive position of each business in the portfolio (whether product, customer and/or geographic markets) and account for the raison d’être of the CHQ as building a “Corporate Advantage” (Collis 2014; Collis and Montgomery 1998, 2005). CHQ design is important, why it involves strategy work, what activities are needed at the CHQ level, and the problem of subtracted value

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