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Are large headquarters unproductive?

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  • Morikawa, Masayuki

Abstract

Headquarters play an important role in modern companies, but the downsizing of headquarters is often advocated as a way to improve organizational efficiency. Using a panel of Japanese companies for the period 2001–2011, this paper empirically analyzes the determinants of the size of headquarters functions and their relationship with productivity. The cross-sectional dispersion of the size of headquarters functions is very large even within an industry. The complication of businesses leads to smaller headquarters. Headquarters functions contribute positively to a company's TFP. Headquarters functions and ICT network have a complementary role for productivity.

Suggested Citation

  • Morikawa, Masayuki, 2015. "Are large headquarters unproductive?," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 422-436.
    • Handle: RePEc:eee:jeborg:v:119:y:2015:i:c:p:422-436
    DOI: 10.1016/j.jebo.2015.09.010
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    4. Morikawa, Masayuki, 2016. "Factoryless goods producers in Japan," Japan and the World Economy, Elsevier, vol. 40(C), pages 9-15.
    5. USHIJIMA Tatsuo, 2021. "The Liability of Aging in Internal Capital Markets," Discussion papers 21065, Research Institute of Economy, Trade and Industry (RIETI).
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    7. MIYAJIMA Hideaki & OGAWA Ryo & USHIJIMA Tatsuo, 2017. "Are Smaller (Larger) Corporate Headquarters Better?," Discussion papers 17004, Research Institute of Economy, Trade and Industry (RIETI).
    8. MOTOHASHI Kazuyuki, 2021. "Productivity of Firms Using Relief Policies During the COVID-19 Crisis," Policy Discussion Papers 21006, Research Institute of Economy, Trade and Industry (RIETI).
    9. Sven Kunisch & Markus Menz & David Collis, 2020. "Corporate headquarters in the twenty-first century: an organization design perspective," Journal of Organization Design, Springer;Organizational Design Community, vol. 9(1), pages 1-32, December.
    10. Morikawa, Masayuki, 2020. "Effects of outside directors on firms’ investments and performance: Evidence from a quasi-natural experiment in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 56(C).
    11. Morikawa, Masayuki, 2021. "Productivity of firms using relief policies during the COVID-19 crisis," Economics Letters, Elsevier, vol. 203(C).
    12. MORIKAWA Masayuki, 2016. "Location and Productivity of Knowledge- and Information-intensive Business Services," Discussion papers 16067, Research Institute of Economy, Trade and Industry (RIETI).
    13. Toshiyuki Matsuura, 2022. "Heterogeneous impact of import competition on firm organisation: Evidence from Japanese firm‐level data," The World Economy, Wiley Blackwell, vol. 45(7), pages 2251-2269, July.
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    More about this item

    Keywords

    Headquarters; Centralization; Decentralization; ICT network; TFP;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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