Re-examining the global urban hierarchy of corporate geography: the rise of Pacific Rim cities and shifting command-and-control

The increased research focus on the networked perspective of the multinational enterprise (MNE) reflects a greater delegation of responsibility from corporate headquarters (CHQ) to subsidiary and intermediary units such as regional headquarters (RHQ). This shift has increased the intensity of political interactions between key actors within the MNE. Despite the recent rise in studies on the micro‐political perspective of the MNE to date, little empirical work has explored this issue in the context of the CHQ–RHQ relationship. Drawing insights from agency theory and micro‐politics, the authors focus on the context in which RHQs develop micro‐political strategies in order to manage the flow and exchange of knowledge with CHQ. They show how RHQ may exhibit a ‘dual agency’ role when dealing with CHQ, in that it is characterized as a principal and agent, each requiring different micro‐political knowledge strategies. As a principal, RHQ will develop micro‐political knowledge strategies to increase alignment with CHQ. As an agent, RHQ develops micro‐political knowledge strategies to pursue its self‐interests. Having identified different RHQ agency roles, the authors develop a conceptual model that outlines how alignment and self‐interest‐seeking behaviours from RHQ are manifest through different micro‐political knowledge strategies in its agency relationship with CHQ.

Global Cities, Connectivity, and the Location Choice of MNC Regional Headquarters

This paper analyzes the relocations of both corporate and regional headquarters (HQ) in a multi-country setting. On the basis of a dataset of 52 cross-border HQ relocations in Europe during 1996–2006, we document an increasing trend toward relocation, push and pull factors affecting HQ location choice, and catalyzing factors that affect the relocation decision. High taxes and a high employment rate represent push factors that we find to increase the likelihood of HQ relocation. In particular, at the mean rate of corporate tax, a one percentage point increase in tax translates into a 6.8% increase in HQ relocation likelihood. In contrast, central location and low taxes represent pull factors that increase the attractiveness of the HQ location. In terms of catalyzing factors, we find that export-oriented companies and regional HQ have a higher tendency to relocate. As a whole, we extend the existing research by putting forward a conceptual framework of HQ relocation decisions, and by providing novel empirical evidence on the HQ relocation phenomenon. Our findings contribute to an improved understanding of the determinants of corporate HQ relocation decisions, and provide important tax policy considerations for public policy decision-makers in individual European countries and in the European Commission.

PurposeThis paper aims to outline the current and future influence of digitalization on the corporate parenting styles (CPSs) of multinational corporations (MNCs).Design/methodology/approachThe authors used conceptual modeling in this study.FindingsThe authors identified five types of CPSs (Hypnos, Cronus, Rhea, Zeus and Athena). The overall impact of digitalization on CPSs is related to new, formidable opportunities for decreasing costs and increasing the efficiency of the intra-corporate transfer of knowledge and talent. Furthermore, digitalization leads to greater tightness in subsidiaries’ performance targets and greater intensity of control over subsidiaries’ activities, lower degrees of subsidiary autonomy and lower level of trust between the corporate headquarters and subsidiary managers. These effects endanger the existence of two CPSs (Hypnos and Athena) and significant changes for the other three CPSs.Practical implicationsDigitalization may lead to more homogeneous corporations, with the lower variety of CPSs and the greater centralization of decision-making in corporate and regional headquarters and stronger control on operations and performance of subsidiaries. Increased opportunities of a horizontal value transfer (knowledge) within the corporation will present an additional competitive advantage of subsidiaries of MNCs. The increased ability and willingness of corporate and regional headquarters of value appropriation from subsidiaries in different forms (profit, revenues, knowledge and talent) will force subsidiaries to use that additional competitive advantage to become more aggressive competitors in local and global markets.Originality/valueTo the best of the authors’ knowledge, this is the first attempt in the academic literature to predict the mutation of CPSs of MNCs under the impact of digitalization.

Operating in the middle-power position: Conceptualising the role of regional headquarters through loaned and owned power

Regionalization of operations is a trend among multinationals. Regional structures bridge the distance between the corporate headquarters and local subsidiaries and markets by acting as integral intermediaries. A growing number of multinationals from emerging markets establish their regional headquarters in Europe, yet little is known about the role of regional structures in emerging multinationals. One of key questions is, how much autonomy and influence does the regional headquarters have in managing regional operations? To examine the relationship between headquarters and regional headquarters we adopt the micro-political perspective. Based on a case study of a Brazilian multinational’s activities in Switzerland, this study contributes to the literature about the role of regional headquarters in the internationalization of multilatinas. It also explains how corporate headquarters achieved dominance over the European headquarters by deploying different power capabilities, mainly power over processes and power over meaning.

PurposeThe purpose of this study is to investigate strategic tensions arising between corporate headquarters (CHQs) and a subsidiary during disruptive events.Design/methodology/approachThis study adapted a case study approach combined with action research elements in the context of the COVID-19 pandemic. The focal company is an US information technology (IT)-company operating in Russia.FindingsDuring the COVID-19 pandemic, some sectors and industries, such as the IT sector, received a unique impetus for development. At the same time, our subsidiary started to develop and implement a set of measures to explore and exploit nascent business opportunities without waiting for the formal approval of “subsidiary initiatives” by the CHQs or regional headquarters (RHQs). The subsidiary was able to postpone the implementation of corporate-wide projects which it saw as not well suited to the host country market at that time.Originality/valueThis study presents subsidiaries not as passive receivers of orders from CHQs or RHQs, but as active partners in the corporate management hierarchy capable to mold effectively certain corporate-wide initiatives and policies.

The paper discusses the concept of “Headquarters Economy” on the current, and it put forward the idea of “Headquarters City” that achieves upgrading of urban function based on the advantages of corporate networks. Taking 45 Chinese cities as the analysis object, the paper uses 42 indicators to build indicator-system so as to assess urban environment of headquarters location. Beijing and Shanghai are the most attractive advantage to concentration of large corporate headquarters. Shenzhen and Guangzhou are in the second position, and the headquarters location conditions are significantly higher than other provincial capital cities. At the same time, other 15 cities among different administrative levels of the municipalities, sub-provincial capital cities and prefecture-level cities have the location advantages to gather the regional corporate headquarters, as Tianjin, Chongqing, Hangzhou, Suzhou, Nanjing etc.

How do regional headquarters influence corporate decisions in networked MNCs?

Managing a regional headquarters is not an easy task. In this chapter, we will draw attention to a few factors that are germane in managing a regional headquarters. These issues include managing the dual tension between subsidiaries on the one hand and corporate headquarters on the other hand. Furthermore, we will explore how much autonomy regional headquarters need to fulfil their tasks. We will then take a look at the roles and responsibilities that regional headquarters fulfil and how firms distribute their value-added activities across the network.

Multinational enterprises are aiming to strike a balance between local responsiveness and global integration. The establishment of regional offices allows multinational companies to have a local insight of the market, competition landscape and customer preferences. With such detailed insight, multinational companies are then able to formulate effective and responsive regional strategies. The importance and value of regional headquarters in the academic literature has generally focused on them in industrialized countries. The result is that we do not yet fully possess an overall framework for understanding how value and decisions are devolved, how location decisions are made and how their structures and strategies are evolving to accommodate the growth in emerging markets. The study examines the dominant criteria used by multinational enterprises to choose their locations for regional headquarters in Africa by examining South Africa as a host country for the continent. We find that the main criteria are linked to the advantages of agglomeration and the accompanying economies of scale, and a sound institutional framework which provides a predictable economic climate. In emerging markets which often suffer from institutional voids and thus higher country risk profiles, multinationals choose to locate in the environment which is most familiar to its home rules and use it as a springboard to do business in more ‘hostile’ milieus. The implications for managers looking to do business in Africa is to recognize that this is a continent still consolidating its transition to a sounder institutional environment. Given the unique business environment it will be a difficult region to manage successfully from centralized headquarters and thus using regional headquarters with local knowledge has real advantages.

Over the past several years, China has consistently maintained economic growth and at the same time emerged as a new global giant in the international arena, despite the distractions caused by the global financial crisis, which was triggered by the US Sub-prime Mortgage Crisis of 2007 and the recent bond crisis that emerged in the European Union in 2011. Concurrent with China's growing interaction with the global economy and robust growth of its domestic economy, competition for the status of national and even international financial centers in the region has become fierce. This study focuses on a ‘local’ examination of internal conditions for the emergence and growth of Chinese financial centers over the next 10–20 years. Cities contending for the top slot in the roster of Chinese cities, like Beijing, Shanghai and Shenzhen, are striving to become international financial centers and are trying to compete with Hong Kong. This study investigates the development potentials, future prospects and division of functions between different financial centers within China regarding Hong Kong, Beijing and Shanghai, with special reference to the role of information and locations of MNCs' regional headquarters.

Amazon's HQ2 in Arlington: New Digs, New Strategy?

The explosive growth of Japanese service sector activities overseas since 1985 has had a significant impact on Pacific Rim cities. However, previous accounts of Japanese direct foreign investment in services have been constrained by official statistics which provide comparative information only at a national level. This paper uses establishment level data to assess changes in the spatial patterns of Japanese service firms among 35 cities as well as changes in the hierarchy of cities in the Pacific during the years 1985 to 1995. The period saw important changes in Japan’s economy such as the emergence of a ‘bubble economy’ up to 1990 and domestic recession after that. The results show the importance of Hong Kong, Singapore and Los Angeles as centres of Japanese service firms. However, the analysis indicates that a shift occurred in Japanese service sector focus over the study period, across the Pacific Rim from North America and Oceania to cities of the Asia‐Pacific region. Along with that shift the concentration of services in just a few cities has remained unchanged, even though some new cities have emerged in importance.

Does headquarters location matter in corporate tax avoidance?