Scandinavian Working Papers in Economics

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


Julian Birkinshaw (), Pontus Braunerhjelm (), Ulf Holm () and Siri Terjesen
Additional contact information
Julian Birkinshaw: London Business School,, Postal: Regents Park, London NW1 4SA United Kingdom,
Pontus Braunerhjelm: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Ulf Holm: Department of Business Studies, Uppsala University,, Postal: Box 513, SE 751 20 Uppsala Sweden
Siri Terjesen: Cranfield School of Management, Postal: Cranfield, Bedford, MK43 0AL, United Kingdom

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

JEL-codes: D21; F23; G34; L22; O31; O33

40 pages, March 28, 2006

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