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How the Parent Headquarters Adds Value to an MNC

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  • William G. Egelhoff

    (Fordham University)

Abstract

Recent views of the MNC as some kind of differentiated network raise questions about the value of a parent HQ and hierarchical structure in today’s MNCs. This paper attempts to address such questions by identifying and describing three broad tasks where hierarchical structures with a parent HQ should outperform a network structure. The tasks are: developing and implementing tight coupling within MNCs, identifying and defining economies of scale and scope, and identifying and incorporating significant innovation into MNC strategy. The paper uses an information processing perspective to conceptualize the important differences between hierarchical and network structures and to evaluate how well each structure fits the specific task situations. It concludes that hierarchical structures with a parent HQ are still required in today’s MNCs.

Suggested Citation

  • William G. Egelhoff, 2010. "How the Parent Headquarters Adds Value to an MNC," Management International Review, Springer, vol. 50(4), pages 413-431, August.
    • Handle: RePEc:spr:manint:v:50:y:2010:i:4:d:10.1007_s11575-010-0043-2
    DOI: 10.1007/s11575-010-0043-2
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    Cited by:

    1. Andreas P. J. Schotter & Maximilian Stallkamp & Brian C. Pinkham, 2017. "MNE Headquarters Disaggregation: The Formation Antecedents of Regional Management Centers," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1144-1169, December.
    2. Pla-Barber, José & Botella-Andreu, Ana & Villar, Cristina, 2021. "Intermediate units in multinational corporations: A resource dependency view on coordinative versus entrepreneurial roles," International Business Review, Elsevier, vol. 30(1).
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    4. Ilgaz Arikan & Ipek Koparan & Asli M Arikan & Oded Shenkar, 2022. "Dynamic capabilities and internationalization of authentic firms: Role of heritage assets, administrative heritage, and signature processes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(4), pages 601-635, June.
    5. Rost, Katja & Graetzer, Gitte, 2014. "Multinational Organizations as Rule-following Bureaucracies — The Example of Catholic Orders," Journal of International Management, Elsevier, vol. 20(3), pages 290-311.
    6. Björn Ambos & Volker Mahnke, 2010. "How Do MNC Headquarters Add Value?," Management International Review, Springer, vol. 50(4), pages 403-412, August.
    7. 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.
    8. Julian Birkinshaw & Tina C. Ambos & Cyril Bouquet, 2017. "Boundary Spanning Activities of Corporate HQ Executives Insights from a Longitudinal Study," Journal of Management Studies, Wiley Blackwell, vol. 54(4), pages 422-454, June.
    9. Perttu Kähäri & Iiris Saittakari & Rebecca Piekkari & Wilhelm Barner-Rasmussen, 2017. "Explaining Mandate Loss of Regional Headquarters: The Difference between Full and Partial Loss," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1206-1240, December.
    10. Dixit Manjunatha Betaraya & Saboohi Nasim & Joy Mukhopadhyay, 2018. "Subsidiary Innovation in a Developing Economy: Towards a Comprehensive Model and Directions for Future Research," FIIB Business Review, , vol. 7(2), pages 109-125, June.
    11. Christine Holmström Lind & Olivia H. Kang, 2017. "The Value-Adding Role of the Corporate Headquarters in Innovation Transfer Processes: The Issue of Headquarters Knowledge Situation," Management International Review, Springer, vol. 57(4), pages 571-602, August.
    12. Eva A. Alfoldi & Sara L. McGaughey & L. Jeremy Clegg, 2017. "Firm Bosses or Helpful Neighbours? The Ambiguity and Co-Construction of MNE Regional Management Mandates," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1170-1205, December.
    13. Randi Lunnan & Youzhen Zhao, 2014. "Regional headquarters in China: Role in MNE knowledge transfer," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 397-422, June.
    14. Leanne Chung, 2014. "Headquarters’ Managerial Intentionality and Reverse Transfer of Practices," Management International Review, Springer, vol. 54(2), pages 225-252, April.
    15. Zhang, Feng & Jiang, Guohua & Cantwell, John A., 2019. "Geographically Dispersed Technological Capability Building and MNC Innovative Performance: The Role of Intra-firm Flows of Newly Absorbed Knowledge," Journal of International Management, Elsevier, vol. 25(3), pages 1-1.
    16. Liu, Zuoming & Jayaraman, Vaidy & Luo, Yadong, 2017. "The unbalanced indirect effects of task characteristics on performance in professional service outsourcing," International Journal of Production Economics, Elsevier, vol. 193(C), pages 281-293.
    17. Chung-Jen Chen & Ya-Hui Lin & Shan-Huei Wang & Ruey-Shan Guo, 2022. "Parent-subsidiary linkage: How resource commitment and resource similarity influence firm performance," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 615-658, June.
    18. Jan Schmitt & Benoit Decreton & Phillip C. Nell, 2019. "How corporate headquarters add value in the digital age," Journal of Organization Design, Springer;Organizational Design Community, vol. 8(1), pages 1-10, December.
    19. Wang, Na & Wang, Yonggui, 2021. "Does parenting matter in subsidiary innovation in emerging economies? Exploring the role of parent superior competitiveness in affecting subsidiary contextual ambidexterity," International Business Review, Elsevier, vol. 30(1).
    20. Kunisch, Sven & Menz, Markus & Birkinshaw, Julian, 2019. "Spatially dispersed corporate headquarters: A historical analysis of their prevalence, antecedents, and consequences," International Business Review, Elsevier, vol. 28(1), pages 148-161.
    21. Emma Stendahl & Svante Schriber & Esther Tippmann, 2021. "Control changes in multinational corporations: Adjusting control approaches in practice," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(3), pages 409-431, April.

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