Headquarters Location Research Project
The location of headquarters (HQ) and their management responsibilities are important for businesses and societies alike. Headquarters employ high-skilled employees, bring tax revenues and are important in attracting further investments into a location.
Where firms locate and relocate their headquarters depends on the interplay between physical and social aspects of a place. Both the organizational arrangements and firm’s engagement with stakeholders and society are important. In our research, we argue that the social aspects of a place constitute a key consideration in the firm’s location choice.
There is a global transformation of management activities. These activities are increasingly becoming disaggregated both geographically and organizationally within multinational corporations and their value chains. This disaggregation of management activities is gaining relevance as digital solutions are becoming more common due to Covid-19 pandemic.
The traditional headquarters building – the home of the whole executive team – might thus become a relic of the past.
What does location mean?
Both large and small firms today are more capable of spreading their management activities across various geographic locations. For us, location denotes not only the physical, geographical aspects of location and its material elements, but also the perceptual “sense of place”. Emotional connections, feelings of belonging as well as perceived rights and responsibilities are projected on the multiple spaces that businesses occupy. A firm's choice to relocate its headquarters thus depends on the interplay between physical and social aspects of a place and we argue that the social aspects, including political and emotional factors, constitute a key consideration in strategic decisions.
In this research project, we examine the geographical and organizational arrangements of international firms’ headquarters and management activities as well as their locations. We define physical aspects of location as the availability of physical resources including labor and infrastructure. Social aspects, in turn, refer to the social, political and emotional factors associated with a location. In addition, we examine how internal and external stakeholders of international firms such as employees, customers, suppliers and owners perceive a location and how this then impacts the location choice.
Silicon Valley is a mindset, not a location
The shifting of firm location: from a physical setting to a perceptual sense of place
Locations are not passive, fixed entities. Emotional connections, a feeling of belonging, or the affiliated rights and responsibilities towards a place comprise the social aspects of location that are perceived by different stakeholders.
International firms influence the characteristics of their locations, such as the cities in which they reside as well as their legal surroundings. Especially large multinational corporations have become politicized actors that actively engage with local policymakers to create more value from their locations. In this research project, we do not only study this bargaining process but also how it shapes the internal and external stakeholders’ sense of place and the location of headquarters.
We are also interested in the sense of place of startup companies and its influence on their location decision. These founders are not bound to certain locations and have the liberty to select where to establish their activities from day one.
Objective and scope of work
In this project, we cover two types of organizations: established multinationals operating in multiple locations, thus bound by their previous decisions, and startups that have yet to make their international location decisions.
This project aims to contribute to the field of international business, economic geography, and strategic management by providing an integrative theoretical framework on the shifting meaning of firm location and its implications for policymakers.
We examine the shifting meaning of firm location in three parts:
- physical aspects of location in the geographical and organizational arrangement of management activities
- perceptual aspects of location
- location as a concept that calls for problematization in international business research
The project is run in four work packages (WP) in 2019-23. We explore and define the physical and social aspects of firm location, and conceptualize the meaning of location in international business activities. We have received funding from the Marcus Wallenberg Foundation and from the Academy of Finland.
WP1 This sub-project focuses on foreign-owned corporations in Finland. The objective is to identify what kinds of headquarters and managerial responsibilities do foreign-owned corporations have in Finland, and why, as well as how they have evolved over time.
WP2 The disaggregation of management activities geographically and organizationally is at the heart of this sub-project. The objective is to conduct in-depth analyses within multinational corporations to understand how they perceive locations, and make sense of their perceptual and physical aspects.
WP3 This sub-project explores how headquarters have been moving in Europe in the last twenty years. We focus on the external perceptual aspects of location, i.e., how the headquarters relocation announcements have been portrayed, represented, articulated and interpreted in the national media, international financial press, and firm announcements. The objective is to identify headquarters relocations happened in Europe during 2000-2019 using media databases LexisNexis and Factiva, and conduct textual analysis on the most interesting cases.
WP4 The last sub-project focused on the perspective of start-ups on location issues. We are interested in how start-up entrepreneurs establishing their first operations look for a location to internationalize and whether physical and perceptual locational attributes are important for their locational decisions. The objective is to capture the locational footprint of start-ups before it becomes ‘contaminated’ by locational decisions already made by conducting a conjoint experiment at Slush annual entrepreneurship event in Helsinki.
Rebecca Piekkari is the principal investigator in this project and Professor of International Business at Aalto University School of Business. She has written extensively on the organization of multinational corporations and its evolution over time. Her research has been published in the leading journals of management and international business such as Academy of Management Review, Journal of Business Ethics, Journal of International Business Studies, Journal of Management Studies.
Perttu Kähäri is a Professor of Practice in International Business at Aalto University School of Business. He has a long practical experience of working in multinationals in various executive roles at corporate and regional headquarters as well as in local units. His research interests are related to management of multinationals, headquarters’ location and relocation, start-up internationalization and global logistics.
Iiris Saittakari is a postdoctoral researcher in International Business at Aalto University School of Business. She defended her doctoral dissertation titled “The location of headquarters: Why, when and where are regional mandates located?” in May 2018. Her research interests are related to headquarters’ location and relocation, knowledge flows, foreign multinationals in small open economies and global value chains.
Olga Lavrusheva is a postdoctoral researcher in International Business at Aalto University School of Business. She defended her doctoral thesis "Essays on Vitality and Consumption" and obtained Ph.D. degree from Marketing Department of Aalto University School of Business in April 2020.
Tiina Ritvala is an Associate Professor of International Business at Aalto University School of Business. Her research focuses on international cross-sector partnerships and conflict, industry emergence, institutional change and sustainability in international business.
Paulina Junni is an Assistant Professor of International Business at Aalto University School of Business. Her research interests relate to the strategic and sociocultural aspects of mergers and acquisitions, knowledge transfer, absorptive capacity, organizational ambidexterity, and strategic agility.
Linyu Liu is a doctoral candidate in International Business at Aalto University School of Business. Her research interests lie in subsidiary power and influence, micro-political games within multinationals, and talent management in times of digitalization.
Jo Angouri - Professor at University of Warwick
Jan Schmitt - Post doctoral researcher at WU Vienna
This subproject examines the dynamics of foreign-owned companies’ international management responsibilities in Finland and contributes to the discussion on what makes Finland an attractive location for headquarters and other management responsibilities.
This research is part of the Headquarters Location Research Project conducted at the International Business (IB) Unit of Aalto University School of Business. The project is funded by the Academy of Finland and the Marcus Wallenberg Foundation.