The bridging role of regional headquarters. Multinational companies in the Asia-Pacific region

Bruno Amann (), Jacques Jaussaud and Johannes Schaaper
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Bruno Amann: IUT Paul Sabatier - Institut Universitaire de Technologie - Paul Sabatier - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse, LGCO - Laboratoire Gouvernance et Contrôle Organisationnel - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse
Johannes Schaaper: IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux

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Abstract: Purpose Large multinational companies (MNCs) are strongly formalized, often standardized and complex with multiple hierarchical levels. Over the past few decades, MNCs have strengthened their coordination and control systems by creating regional headquarters (RHQs). This study aims to investigate how MNCs rearticulate control dimensions at RHQs, to coordinate and exert control over subsidiaries in the Asia-Pacific region. Design/methodology/approach Based on a survey of 86 French MNCs in the Asia-Pacific region, this study applies a structural equation model to determine RHQs' roles in the field of regional decision-making, coordination and control. Findings Large MNCs, with a significant presence in Asia, transfer coordination and control to RHQs, in a way that leads us to propose the use of the expression "regio-centralization." RHQs become socialization hubs, where most regional decisions are taken and where international managers meet. MNCs mobilize at the same time expatriates, short-term assignees and local managers who intensively interact at RHQs. Thus, informal control at RHQs increases, partly substituting formal control by HQs. Smaller MNCs, without RHQs, on the contrary, base their control and coordination on the formalization of HQs-subsidiary relations, especially through strong reporting, in combination with centralized decision-making at HQs. Research limitations/implications This study is based on MNCs from one specific country, France, and focuses only on the dynamic Asia-Pacific host region. Coordination and control in less dynamic regions may reveal different results. Originality/value This study leads to a better understanding of how large MNCs reorganize dispersed activities in the Asia-Pacific region by creating RHQs, where important control and coordination functions are relocated.

Keywords: Centralization-formalization-socialization; Control; Multinational companies; Regional headquarters; Asia-Pacific region (search for similar items in EconPapers)
Date: 2020-10-26
New Economics Papers: this item is included in nep-ure
Note: View the original document on HAL open archive server: https://hal.science/hal-03264624v1
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Published in Multinational Business Review, 2020, 29 (1), pp.116-142. ⟨10.1108/mbr-11-2019-0144⟩

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Working Paper: The bridging role of regional headquarters.Multinational companies in theAsia-Pacific region (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03264624

DOI: 10.1108/mbr-11-2019-0144

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