The ‘traditional’ distinction of compounds into endocentric (Eng. doorknob) and exocentric (pickpocket) is based on the presence or absence of a head constituent (Bloomfield, Language, Holt, New York, 1933); since the early eighties, the syntactic notion of ‘head’ has been extended also to derivation, claiming that English derivational suffixes, as e.g. -ness, are heads, either in an absolute sense or in a categorial sense (see Williams Linguist Inq 12:245–274, 1981; Lieber On the organization of the lexicon, Indiana university Linguistics Club, Bloomington, 1981; Lieber, in Yearbook of morphology 1989, Foris, Dordrecht, 1989; among others). In this paper, we shall first review some key issues in the morphological notion of head, illustrating well-known problematic cases, and then we shall discuss the Construction Morphology approach to headedness in derivation and compounding (Booij in The Oxford handbook of compounding, Oxford University Press, Oxford, 2009; Booij, in Cross-disciplinary issues in compounding, John Benjamins, Amsterdam, 2010a, 2010 Booij, Construction morphology, Oxford University Press, Oxford, 2010b). The stipulation of a hierarchical lexicon with subschemas expressing intermediate generalizations is a powerful theoretical device in accounting for a phenomenon as headedness variation, as we shall show with a Vietnamese case study; also, inconsistencies in word-class assignment in derivation will be dealt with in a constructionist perspective. Moreover, we shall discuss the consequences of a constructionist approach to the distinction between compounding and derivation.