Headquarter relocation in a modern MNC: Empirical study of reasons and consequences

Lina Krasavina & Ksenia Vedishcheva

Student thesis: Master thesis

Abstract

This Master Thesis examines the phenomenon of headquarter relocation, performed by large multinational companies, originating from different countries, and focuses on researching the reasons and consequences of this event. We provide the review of the relevant academic literature and set out a theoretical framework, covering the process of internationalization, headquarter definition and types, reasons and consequences of the headquarter relocation, revealing that there is a lack of research and empirical evidence on the two latter subjects. By the means of a multiple case study analysis we test the theoretical framework empirically. The research provides the thorough information on the headquarter relocation experiences of ten large multinational corporations. The analyses of the reasons for headquarter relocation reveals that the reasons are not limited by the well-known cost-cutting motivations, but on the contrary, are very diverse in their nature. The discussion brings us to two interesting findings. One is that the headquarter relocations are usually accompanied by other significant changes in the company. The companies often perform a restructuring simultaneously with the headquarter relocation. Another valuable finding is that companies tend to relocate their corporate HQs in a pursuit of benefits that allow expanding internationally. The analysis of the consequences of headquarter relocation suggests that there are not only positive outcomes of this event, for instance, the contribution to company‘s international expansion, but also rather negative ones, such as growing costs associated with an increased social and structural complexities. The relocation of the headquarter can have various effects on the company starting from layoffs of company employees and ending with the dissatisfaction provoked by the sudden changes in the regulations of the new host country, urging the company to reassess the pros and cons of being headquartered in this particular location. The main value of this Master Thesis is its contribution to the field of headquarter relocation research due to its unique scope that embraces the analysis of both reasons and consequences of this event.

EducationsMSc in International Marketing and Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2011
Number of pages118