Advertisement

Management International Review

, Volume 50, Issue 1, pp 5–33 | Cite as

Toward a Theory of Regional Organization

The Emerging Role of Sub-regional Headquarters and the Impact on Subsidiaries
  • Guey-Huey LiEmail author
  • Chwo-Ming Yu
  • Dah-Hsian Seetoo
Research Article

Abstract

  • 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.

Keywords

Sub-regional headquarters (SRHQ) Regional strategy MNC Structure Subsidiary Integration-responsiveness framework Firm’s specific advantages 

Notes

Acknowledgements

The constructive comments of the two reviewers are gratefully acknowledged. We also thank Chris Brainerd for proofreading the English.

References

  1. Baden-Fuller, C. W., & Stopford J. M. (1991). Globalization frustrated: The case of white goods. Strategic Management Journal, 12(7), 493−507.CrossRefGoogle Scholar
  2. Bartlett, C., & Ghoshal, S. (1989). Managing across borders. The transnational solution. Boston, MA: Harvard Business School Press.Google Scholar
  3. Benito, G., Grogaard, B., & Narula, R. (2003). Environmental influences on MNE subsidiary roles: Economic integration and the Nordic countries. Journal of International Business Studies, 34(5), 443−456.Google Scholar
  4. Birkinshaw, J. (1996). How multinational subsidiary mandates are gained and lost. Journal of International Business Studies, 27(3), 467−495.CrossRefGoogle Scholar
  5. Birkinshaw, J., Morrison, A., & Hulland, J. (1995). Structural and competitive determinants of a global integration strategy. Strategic Management Journal, 16(8), 637−655.CrossRefGoogle Scholar
  6. Buckley, P. J., Clegg, J., Forsans, N., & Reilly, K. T. (2001). Increasing the size of the “Country”: Regional economic integration and foreign direct investment in a globalised world economy. Management International Review, 41(3), 251−274.Google Scholar
  7. Business International Corporation. (1989). Managing today’s international company: The new role of headquarters. New York: Business International Corporation.Google Scholar
  8. Devinney, T. M., Midgley, D. F., & Venaik, S. (2000). The optimal performance of the global firm: Formalizing and extending the integration-responsiveness framework. Organization Science, 11(6), 674−695.CrossRefGoogle Scholar
  9. Doz, Y. (1976). National policies and multinational management. Unpublished doctoral dissertation, Harvard Business School.Google Scholar
  10. Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(4), 532−550.CrossRefGoogle Scholar
  11. Enright, M. J. (2005). Regional management centers in the Asia-Pacific [Special issue]. Management International Review, 45(1), 59−82.Google Scholar
  12. Enright, M. J., & Scott, E. E. (2000). The RHQ question. Business Asia, 32(25), 1−4.Google Scholar
  13. Gates, S. R., & Egelhoff, W. G. (1986). Centralization in headquarters-subsidiary relationships. Journal of International Business Studies, 17(2), 71−92.CrossRefGoogle Scholar
  14. Ghemawat, P. (2001). Distances still matters. Harvard Business Review, 79(8), 137−144.Google Scholar
  15. Ghemawat, P. (2003). Semiglobalization and international business strategy. Journal of International Business Studies, 34(2), 138−152.CrossRefGoogle Scholar
  16. Heenan, D. A. (1979). The regional headquarters decision: A comparative analysis. Academy of Management Journal, 22(2), 410−415.CrossRefGoogle Scholar
  17. Hewett, K., Roth, M. S., & Roth, K. (2003). Conditions influencing headquarters and foreign subsidiary roles in marketing activities and their effects on performance. Journal of International Business Studies, 34(6), 567−585.CrossRefGoogle Scholar
  18. Hout, T., Porter, M. E., & Rudden, E. (1982). How global companies win out. Harvard Business Review, 60(5), 98−108.Google Scholar
  19. Kobrin, S. J. (1991). An empirical analysis of the determinants of global integration [Special issue]. Strategic Management Journal, 12, 17−31.CrossRefGoogle Scholar
  20. Kriger, M. P., & Rich, P. J. J. (1987). Strategic governance: Why and how MNCs are using boards of directors in foreign subsidiaries. Columbia Journal of World Business, 22(4), 39−46.Google Scholar
  21. Langley, A. (1999). Strategies for theorizing from process data. Academy of Management Review, 24(4), 691−710.CrossRefGoogle Scholar
  22. Lasserre, P. (1996). Regional headquarters: The spearhead for Asia Pacific markets. Long Range Planning, 29(1), 30−37.CrossRefGoogle Scholar
  23. Lasserre, P., & Probert, J. (1998). Competing in Asia Pacific: Understanding the Rules of the Game. Long Range Planning, 31(1), 30−50.CrossRefGoogle Scholar
  24. Levitt, T. (1983). The globalization of markets. Harvard Business Review, 61(3), 92−102.Google Scholar
  25. Lofland, J., & Lofland, L. (1984). Analyzing social settings: A guide to qualitative observation and analysis. Belmont, CA: Wadsworth.Google Scholar
  26. Malnight, T. W. (1995). Globalization of an ethnocentric firm: An evolution perspective. Strategic Management Journal, 16(2), 119−141.CrossRefGoogle Scholar
  27. Morrison, A. J., Ricks, D. A., & Roth, K. (1991). Globalization versus regionalization: Which way for the multinational? Organizational Dynamics, 19(3), 17−29.CrossRefGoogle Scholar
  28. Morrison, A. J., & Roth, K. (1992). A taxonomy of business-level strategies in global industries. Strategic Management Journal, 13(6), 399−418. CrossRefGoogle Scholar
  29. Oh, C. H., & Rugman, A. M. (2007). Regional multinationals and the Korean cosmetic industry. Asia Pacific Journal Management, 24(1), 27−42.CrossRefGoogle Scholar
  30. Ohmae, K. (1985). Triad power: The coming shape of global competition. New York: Free Press.Google Scholar
  31. Ohmae, K. (1989). Managing in a borderless world. Harvard Business Review, 67(3), 152−161.Google Scholar
  32. Paik, Y., & Sohn, J. H. D. (2004). Striking a balance between global integration and local responsiveness: The case of Toshiba Corporation in redefining regional headquarters’ role. Organizational Analysis, 12(4), 347−359.Google Scholar
  33. Pearce, R., & Tavares, T. (2000). Emerging trading blocs and their impact on the strategic evolution of multinationals. Managerial Finance, 26(1), 26−40.Google Scholar
  34. Perry, M., Yeung, H., & Poon, J. (1998). Regional office mobility: The case of corporate control in Singapore and Hong Kong. Geoforum, 29(3), 237−255.CrossRefGoogle Scholar
  35. Porter, M. (1980). Competitive strategy. New York: Free Press.Google Scholar
  36. Porter, M. (1985). Competitive advantage. New York: Free Press.Google Scholar
  37. Prahalad, C. K. (1975). The strategic process in a multinational corporation. Unpublished doctorial dissertation, Harvard Business School.Google Scholar
  38. Prahalad, C. K., & Doz, Y. (1987). The multinational mission: Balancing local demands and global vision. New York: Free Press.Google Scholar
  39. Roth, K., & Morrison, A. J. (1990). An empirical analysis of the integration-responsiveness framework in global industries. Journal of International Business Studies, 21(4), 541−564.CrossRefGoogle Scholar
  40. Rugman, A. M., & Brain, C. (2003). Multinational enterprises are regional, not global. Multinational Business Review, 11(1), 3−12.Google Scholar
  41. Rugman, A. M., & Hodgetts, R. (2001). The end of global strategy. European Management Journal, 19(4), 333−343.CrossRefGoogle Scholar
  42. Rugman, A. M., & Verbeke, A. (2001). Subsidiary-specific advantages in multinational enterprises. Strategic Management Journal, 22(3), 237−250.CrossRefGoogle Scholar
  43. Rugman, A. M., & Verbeke, A. (2004). A perspective on regional and global strategies of multinational enterprises. Journal of International Business Studies, 35(1), 3−18.CrossRefGoogle Scholar
  44. Rugman, A. M., & Verbeke, A. (2007). Liabilities of regional foreignness and the use of firm-level versus country-level data: A response to Dunning et al. (2007). Journal of International Business Studies, 38(1), 200−205.CrossRefGoogle Scholar
  45. Schlie, E., & Yip, G. (2000). Regional follows global: Strategy mixes in the world automotive industry. European Management Journal, 18(4), 343−354.Google Scholar
  46. Schutte, H. (1995). Henkel’s strategy for Asia-Pacific. Long Range Planning, 28(1), 95−103.CrossRefGoogle Scholar
  47. Schutte, H. (1997). Strategy and organisation: Challenges for European MNCs in Asia. European Management Journal, 15(4), 436−445.CrossRefGoogle Scholar
  48. Schutte, H. (1998). Between headquarters and subsidiaries: The RHQ solution. In J. Birkinshaw & N. Hood (Eds.), Multinational corporate evolution and subsidiary development. Hampshire: Macmillan Press.Google Scholar
  49. Yeung, H. W., Poon, J., & Perry, M. (2001). Towards a regional strategy: The role of regional headquarters of foreign firms in Singapore. Urban Studies, 38(1), 157−183.CrossRefGoogle Scholar
  50. Yip, G. S. (1989). Global strategy…In a world of nations? Sloan Management Review, 31(1), 29−41.Google Scholar

Copyright information

© Gabler-Verlag 2009

Authors and Affiliations

  1. 1.Department of Communications Management, College of Journalism and CommunicationsShih-Hsin UniversityTaipeiTaiwan
  2. 2.Department of Business Administration, College of CommerceNational Chengchi UniversityTaipeiTaiwan

Personalised recommendations