Reconceptualising Hierarchies: The Disaggregation and Dispersion of Headquarters in Multinational Corporations

• Author: Tomi Laamanen,Philip Kappen,Phillip C. Nell
• Date: 01 December 2017
• Published date: 01 December 2017
• DOI: http://doi.org/10.1111/joms.12313

Reconceptualising Hierarchies: The Disaggregation

and Dispersion of Headquarters in Multinational

Corporations

Phillip C. Nell

a,b

, Philip Kappen

c

and Tomi Laamanen

d

a

WU Wien (Vienna University of Economics and Business);

b

Copenhagen Business School;

c

Uppsala

University;

d

University of St. Gallen

ABSTRACT In this paper, we provide an introduction to the Special Issue entitled ‘Divide and

Rule? The Emergence and Implications of Increasingly Disaggregated and Dispersed

Headquarters Activities in Contemporary Firms’. The purpose is two-fold. First, we propose a

conceptualization of headquarters activities as a dynamic system in which activities can be

distributed organizationally and spatially. We explicitly break with the dominant view of the

prior research on ‘the headquarters’ as a single, identifiable unit in one specific location.

Second, building on the manuscripts accepted for publication in this Special Issue, we outline

research implications and put forward an agenda for research on the emergence and

continuous management of disaggregated and dispersed headquarters systems.

Keywords: agency theory, complexity, headquarters, information processing theory,

institutional theory, internationalization, multinational corporation, parenting, resource-based

view

INTRODUCTION

We launched this Special Issue in the Journal of Management Studies in recognition of the

need to revisit what we know about the role and organization of headquarters in multi-

national corporations (MNCs). This recognition stemmed from the fact that most of the

existing empirical and theoretical work has tended to employ a rather simplistic concept

of headquarters and its activities (Hoenen and Kostova, 2014; Zhou, 2014). Frequently,

corporate headquarters has been viewed as a single, identifiable unit at the apex of the

organization, which is located in one place and has dyadic relationships with its subsidia-

ries (e.g., Bouquet and Birkinshaw, 2008; Ciabuschi et al., 2011; Monteiro et al., 2008;

O’Donnell, 2000; Roth and O’Donnell, 1996). While using such a reductionist view of

Address for reprints: Phillip C. Nell, Institute for International Business, WU Wien (Vienna University of

Economics and Business), Welthandelsplatz 1, 1020 Wien, Austria (pnell@wu.ac.at).

V

C2017 John Wiley & Sons Ltd and Society for the Advancement of Management Studies

Journal of Management Studies 54:8 December 2017

doi: 10.1111/joms.12313

headquarters has been useful in generating valuable insights on headquarters–subsidiary

relationships and on the role and functioning of headquarters, this view seems to

increasingly clash with empirical observations. Recent research has shown that head-

quarters activities are often geographically dispersed and configured in increasingly

complex ways (Baaij and Slangen, 2013; Birkinshaw et al., 2006, 2017; Decreton et al.,

2017; Goold and Campbell, 2002; Zhou, 2014). For example, Desai (2009, p. 1284)

notes that we are now witnessing firms that are ‘Bermuda-incorporated, Paris-headquartered

(...), listed on the NYSE [New York Stock Exchange] with US-style investor protections and disclosure

rules, a chief information officer in Bangalore, a chief finance officer in Brussels and a chief operating

officer in Beijing’.

Hence, what seems to emerge is a reality in which not only regular value chain

activities but also headquarters activities (Baaij and Slangen, 2013) are increasingly

‘disaggregated’ (also referred to as ‘fine-sliced’) and ‘dispersed’ along organizational and geo-

graphical boundaries (Contractor et al., 2010). For example, Desai (2009), Baaij and

Slangen (2013), and Birkinshaw et al. (2006) provide interesting insights into how firms,

such as General Electric (GE), HSBC, IBM, Lenovo, Nokia, and Royal Dutch Shell,

have disaggregated and dispersed their financial, legal, and managerial headquarters

activities across different locations. Current research, however, falls short of accounting

for the implications of this new phenomenon, and numerous scholars have called for

more research on multi-layered hierarchical structures and the roles of multiple

(intermediary) headquarters and their (re)location patterns (Benito et al., 2011; Hoenen

and Kostova, 2014; Laamanen et al., 2012; Menz et al., 2015; Meyer and Benito, 2016;

Zhou, 2014).

Overall, we believe that there is a need for a deeper understanding of the emergence,

evolution, management, and consequences of organizationally disaggregated, geograph-

ically dispersed headquarters to further develop our current theorizing of organizations

and (international) management. To meet this need, we call for further research on dif-

ferent types of headquarters configurations to challenge the assumptions and boundary

conditions of existing theories in order to modify and extend them (Roth and Kostova,

2003). Moreover, although we frame our paper around MNCs, many of the themes dis-

cussed in this Special Issue on headquarters activities should also be applicable to

domestically operating large multi-business firms.

This Special Issue Introduction has two primary objectives. First, we build on the

abovementioned observations to deepen the understanding of headquarters in multi-

business firms and to contribute to theoretical and empirical developments in this area.

We put forward a conceptualization of the MNC headquarters as a dynamic system of

parenting activities. Extending the work by Contractor et al. (2010) published in 2010 in

the Special Issue on ‘Offshoring and Outsourcing’ in the Journal of Management Studies,we

suggest that, similar to regular value chain activities, headquarters activities can be

analysed by their degree of organizational disaggregation and geographic dispersion.

Second, we discuss some of the most interesting emerging themes in the context of

disaggregated and dispersed headquarters and identify potential theoretical lenses

through which they can potentially be studied. We showcase the contributions contained

in the Special Issue and elaborate on their contributions, highlighting the way they

move the field forward.

1122 P. C. Nell et al.

V

C2017 John Wiley & Sons Ltd and Society for the Advancement of Management Studies