EIJS Working Paper Series,
Stockholm School of Economics, The European Institute of Japanese Studies

Abstract: Multinational Corporations (MNCs) that establish Regional Headquarters (RHQ) expect the RHQs to become a management centre in the region. In this paper, the author focuses on three expected roles, that of a decision-maker, a coordinator, and as a transferor of knowledge on local operations and markets to the MNC. An interview survey examines the existence and roles of RHQs, defines minimal conditions for being defined as a RHQ, and determines seven such companies to be RHQs. All seven RHQs can be described as coordinators. Some RHQs coordinate their subsidiaries by controlling the flow of parts/products. Other RHQs assign their managers two titles or positions for coordinating subsidiaries. In other words, one manager has two functions: managing the region and a local company at the same time. From the point of the knowledge-based management, however, RHQs do not seem to work well. Though they are expected to transfer local knowledge to headquarters and other subsidiaries in MNCs, they often fail to systematically do so. To sum up, the author claims that the function and role of RHQs as knowledge based management centres needs to be bolstered.

Keywords: regional headquarters; Japanese MNCs; headquarters-like function; coordinator; knowledge flow

JEL-codes: F23

18 pages, March 15, 2002

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