Locational changes of headquarters of multinational corporations : a theoretical study on the motives and reasons for relocating Finnish divisional headquarters abroad

One of the recent features in the internationalization and growth process of Finnis h multinational companies (MNCs) and also of other Nordic MNCs has been the relocating o f many of their product division headquarters (DHQs) abroad . This relocation has taken plac e from the divisions' home country primarily to Western European `international centers' of high - level international interaction or the `economic hub' areas formed by them of high-leve l international interaction (Helle, 1989, 1990). The phenomenon of relocating headquarters abroad has been little analyzed and there are only a few studies with some preliminary aspects concerning the possible background causes of the phenomenon . This research work seeks to deepen the understanding of the background aspect s and problems of DHQ relocation abroad . It penetrates some of the operational and cognitiv e aspects in a holistic mode, essentially from a theoretical point of view . The theoretical aspects consist of cognitive psychology, and the aspect of management research which is represented b y strategic reference point theory and transaction cost theory, both of which rest on behavioral psychology. In the theoretical approach, these are used as avenues of deduction : 1 . explanations given in public by managers of the relocated DHQ and received through the researcher's ow n personal interviews, 2a . literature representing logistic and cognitive information processing an d behavioral aspects in the field of management research, 2b . literature on spatio-temporal and other cognitive research in experimental psychology, and 3 . the researcher's own rather long experience as a consultant in relocation studies of firms in various industries . This theoretical approach results in propositions consisting of an holistic cognitive-logisti c paradigm, a conceptual framework, with reference to the MNC division's growth developmen t abroad . According to the paradigm, this growth development characteristically contain s recurrent dynamic and reciprocal cognitive-logistic information processes of the DHQ, and consequently decisions based on these processes . In operationalizing the paradigm presented a set of detailed propositions is introduced in a consequential and justified system . These propositions concern the 1 . logistic information process, and the 2 . cognitive information process. In an evolutive sequence this latter process consists of the 2a. identity formation, 2b . social cognition, and 2c . spatio-temporal cognition of DHQ management and staff . As a concluding argument for the propositions, it is maintained that in a situation of identit y changed by strong foreign growth and of the consequently changed social and environmenta l cognition of DHQ managers and staff, a strong need for new social knowledge arises . This need for new knowledge in carrying it intentionally into effect as a logistic information process i s perceived phenomenologically and experientially as an event in space and time by the manager s and staff of the DHQ. This perception, in the situation of a peripherally located and peripheral perceived DHQ, leads subsequently, under the various logistic information processing problem s perennially encountered, to the relocation of the DHQ . The DHQ relocation is thus proposed to be a result of a continued reciprocal and dynami c action between the cognitive information process and the logistic information process in th e course of sustained international growth of Finnish MNCs, and the relocation is intended t o reduce DHQ management's boundednes of rationality. It is argued in this hermeneutic and deductive research that the proposed paradigm represent s the explaining variable and the relocation decision of and by a DHQ represents the explaine d variable . The theoretical implications of the work include a comparison of the proposed paradigm with the stages-model of internationalization of the firm, an evaluation of the research results in respect to `managerial logics' of transnational corporations and the international location o f various functions of MNCs . The managerial implications include important understanding o f the organizational `self' through the cognitive-logistic paradigm . Some very central and timel y topics for further paradigm-based research work are put forward .

Grantor dc:publisher

Helsinki School of Economics

Year dc:date.issued

2001

Author dc:creator

• Euro, Kalevi

Advisor dc:contributor.supervisor

• Luostarinen, Reijo, professor

Contributors dc:contributor

• Aalto-yliopisto
• Aalto University

Language dc:language.iso

en

Repository record dc:identifier.uri

https://aaltodoc.aalto.fi/handle/123456789/11179

OAI identifier oai:identifier

oai:aaltodoc.aalto.fi:123456789/11179