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CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology KTH/CESIS Working Paper Series in Economics and Institutions of Innovation

No 54:
WHY DO SOME MULTINATIONAL CORPORATIONS RELOCATE THEIR HEADQUARTERS OVERSEAS?

Julian Birkinshaw (), Pontus Braunerhjelm (), Ulf Holm () and Siri Terjesen

Abstract: This paper examines the decision by a multinational corporation (MNC) to relocate its business unit and/or corporate HQ overseas. We argue that business unit HQs move overseas in response to changes in the internal configuration of their unit’s activities and the demands of the product markets in which they operate, whereas corporate HQs move overseas is response to the demands of external stakeholders, in particular global financial markets and shareholders. Using data on 125 business unit HQs and 35 corporate HQs, we test and find support for these arguments. The research highlights important differences between corporate- and business-level strategy, and it suggests ways in which the theory of the MNC needs to be reconsidered.

Keywords: Multinational Corporation; Headquarters; Corporate Strategy; Internationalization; (follow links to similar papers)

JEL-Codes: D21; F23; G34; L22; O31; O33; (follow links to similar papers)

40 pages, March 28, 2006

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