Governance Costs, Determinants And Size Of Corporate Headquarters

Rolf Bühner

Schmalenbach Business Review (sbr), 2000, vol. 52, issue 2, 160-181

Abstract: This paper attempts to find empirically determinants of governance costs that have an impact on the size of corporate headquarters. The results suggest that firm size limits the size of headquarters through increasing influence costs, however efficient organization design can counter this tendency by a decentralized decision structure, which restricts discretion of headquarters’ intervention authority. A complementary activity structure can reduce inappropriate centralized intervention costs of headquarters. The empirical findings accentuate the proposed economic arguments of institutional contract theory.

Date: 2000
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