Where do MNEs locate their headquarters? at home!

• Author: Klaus E. Meyer,Gabriel R.G. Benito
• Published date: 01 May 2016
• Date: 01 May 2016
• DOI: http://doi.org/10.1002/gsj.1115

WHERE DO MNES LOCATE THEIR HEADQUARTERS?

AT HO ME !

KLAUS E. MEYER

1

and GABRIEL R.G. BENITO

2

*

1

Department of Strategy and Entrepreneurship, China Europe International

Business School, Shanghai, China

2

Department of Strategy, BI Norwegian BusinessSchool, Oslo, Norway

INTRODUCTION

The question of where corporate headquarters (HQs)

of the largest multinational enterprises (MNEs) are

located around the world is intriguing to policy

makers, but it has received little scholarly attention

to date. However, do MNEs actually make deliberate

decisions about where to locate their HQs? We argue

that in some specific cases, MNEs do change the loca-

tion of their HQs, but inertial forces are strong, mak-

ing this a rare event. As a result,most MNEs’HQs are

where the MNEs were born, even many decades

later. In other words, most HQs are where the MNEs

are at home!

Menz, Kunisch, and Collis (2015: 642–643), who

recently summarized research on corporate headquar-

ters, define a corporateHQ ‘as the multimarket fi rm’s

central organizational unit, which is (structurally)sep-

arate from the product and geographic operatingunits,

and hosts corporate executives as well as central staff

functions that ful fill various internal and exte rnal

roles.’As a unit,a corporate HQ has a geographicallo-

cation, namelythat of where the top managementteam

has its regular workplace. Typically, that location co-

incides with where the company is registered, i.e., its

legal domicile. However, these two locations are not

always identical.

InternationalHQ relocation, thus, can referto either

a change in thelegal domicile of a corporation(i.e., the

country in which it is registered) or to a change in the

country where the organizational unit comprising its

top managementis physically located. Thisdistinction

is important because company directories sometimes

use the countryof registration as a company’slocation

information. For the theory of the MNE (Dunning,

1993; Rugman and Verbeke, 1992) and for strategic

management scholarship (Birkinshaw et al., 2006),

the relevant definition focuses on the location of the

operational unit called ‘HQ’because it reflects the lo-

cation of resources anddecision-making processes. In

contrast, scholarsof taxation or accounting may be in-

terested in thelegal residency which, to a larger extent,

is driven by tax optimization considerations (Desai

and Hines, 2002; Egger, Radulescu, and Strecker,

2013; Voget, 2011).

We are mainly interested in relocations of corpo-

rate HQ as an organizational unit from one country

to another, thus disregarding within-country reloca-

tions (see, e.g., Bel and Fageda, 2008; Strauss-Kahn

and Vives, 2009). An international HQ relocation

changes the nationality of an MNE, which challenges

elements of the theory of the MNE (Birkinshaw

et al., 2006; Mudambi, 2011; Vernon, 1992). An

MNE typically grows from its home locations to

spread its operations around the world while main-

taining a ‘home base’where not only its HQ is lo-

cated, but where it maintains critical units such as

Keywords: corporate headquarters; location; relocation; multi-

national companies

*Correspondence to: Gabriel R.G. Benito, Department of Strat-

egy, BI NorwegianBusiness School, Nydalsveien 37, 0484 Oslo,

Norway. E-mail:gabriel.r.g.benito@bi.no

Global Strategy Journal

Global StrategyJournal, 6:149–159 (2016)

Published onlinein Wiley Online Library (wileyonlinelibrary.com). DOI:10.1002/gsj.1115

Copyright © 2016 Strategic Management Society