Power or Market? Location Determinants of Multinational Headquarters in China

Danny T Wang, Simon X Zhao, Flora F Gu and Wendy Y Chen
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Danny T Wang: Department of Marketing, School of Business, Hong Kong Baptist University, Kowloon Tong, Hong Kong, China
Simon X Zhao: Department of Geography, The University of Hong Kong, Pokfulam Road, Hong Kong, China
Flora F Gu: Department of Management and Marketing, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China
Wendy Y Chen: Department of Civil and Structural Engineering, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China

Environment and Planning A, 2011, vol. 43, issue 10, 2364-2383

Abstract: Multinational corporations (MNCs) have increasingly been establishing regional headquarters in China. However, no study has systematically examined how MNCs make strategic decisions about where to locate Chinese headquarters (CHQs) in this transition economy. The paper makes the first attempt to investigate the issue by focusing on two questions. First, what are the location-specific factors that determine where MNCs locate their CHQs? Second, how do these factors influence making the decision between Beijing and Shanghai, the two largest cities in China? We integrate existing literature and assess the differential roles of (1) path dependency, (2) institutional support, and (3) proximity to superior information. Data were collected through a large-scale survey of MNC CHQs in mainland China. The empirical analysis supports the three-dimensional framework and the central role of proximity to superior information in the decision-making process. The results advance existing understanding of MNC location decisions in China by revealing the unique interplay between power and market in this transition economy, and between Beijing and Shanghai, the two promising cities toward world city status, in particular.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envira:v:43:y:2011:i:10:p:2364-2383

DOI: 10.1068/a448

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