The Decentering of the Global Firm

Mihir A. Desai

The World Economy, 2009, vol. 32, issue 9, 1271-1290

Abstract: This paper describes recent changes in the relationship between firms and nation states. Firms are typically linked to the nation in which they began and are considered to have fixed national identities. While firms have reallocated various activities around the world in response to value creation opportunities, they have largely retained their national identities and their headquarter activities have remained bundled in their home countries. This characterisation is increasingly tenuous. Firms are redefining their homes by unbundling their headquarters functions and reallocating them opportunistically across nations. A firm’s legal home, its financial home and its homes for managerial talent no longer need to be co‐located and, consequently, the idea of firms as national actors rooted in their home countries is rapidly becoming outdated. The implications for policymakers and researchers are outlined.

Date: 2009
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