For Ease of HQ Control? A Study of the Motives for Location Choice of HR Shared Services in MNEs

Abstract

Shared service centres (SSCs) have become an important mechanism for multinational enterprises (MNEs) to deliver HRM services to their dispersed operations. Location choice may be critical to understanding the motives behind utilising HR SSCs in MNEs, but few studies have explored this issue. We examine the factors and underlying motives for selecting a location for an SSC, drawing on a case study of six large MNEs from North America, Europe and Asia. Our study reveals that the concern of headquarters (HQ) for control over SSCs is an important motive in relation to location choices alongside cost efficiency and service quality. We also identify specific factors for SSC location decisions, associated with the HQ control motive, namely: home-country language capabilities, geographical proximity to the home country and time zone. Our findings offer a novel insight into the nature of an SSC by highlighting the significance of governance issues in managing SSCs within an MNE.