Toward a Theory of Regional Organization
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This paper explores the organizational adjustment in host regions when MNCs switch from their original strategy to a regional strategy.
MNCs set up sub-regional headquarters (e.g., Greater China sub-regional headquarters) under a regional headquarters (e.g., Asia regional headquarters). A sub-regional headquarters replaces a regional headquarters directly managing subsidiaries within the sub-region.
The emergence of sub-regional headquarters is in response to the need for a balance between global integration and local responsiveness. An increasing number of decisions are made by sub-regional headquarters, instead of by subsidiaries, a parent, or regional headquarters.
Industry characteristics and firm’s specific advantages (FSAs) affect the delegation of authority from a parent to regional and sub-regional headquarters.
KeywordsSub-regional headquarters (SRHQ) Regional strategy MNC Structure Subsidiary Integration-responsiveness framework Firm’s specific advantages
The constructive comments of the two reviewers are gratefully acknowledged. We also thank Chris Brainerd for proofreading the English.
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