Seminar- Two heads are better than one: determinants of MNEs’ second headquarters in the home region

You are cordially invited to attend a research seminar by Katiuscia Lavoratori. Please join us in Room 108 Henley Business School or follow the link in your calendar email invitations (Join Microsoft Teams Meeting) to join the seminar on Wednesday, 24th November at 12.30pm.

Please note: lunch and refreshments will be provided. It is important that you confirm if you are attending in-person to assure enough catering is supplied on the day. If you have any dietary restrictions, please let us know as soon as possible.

Second Headquarters (HQs) are known to appear with multinational international expansions into new markets and regions to cope with the growing complexity of the operations of the MNEs. However, some of them also appear in the home region of the MNE. Regional expansions can increase costs, coordination needs, and cause ‘complexity’ problems related to information processing capacity. We extend the complexity argument by including the value chain complexity within the home region, i.e. the proportion of high value-added FDI activities in the region.

We analyse data on 554 new HQ investment projects undertaken by 471 European MNEs (from fDi Markets). We find that the probability of having a second HQ in the home region increases with the increase in the number of subsidiaries performing activities with high information processing requirements, such as R&D and marketing activities.

Our study suggests that second HQs are an information processing response of MNEs to regional value chain complexity. The reason is that some subsidiary activities require more information processing effort than others. In this sense, we call for an extended understanding of the complexity argument including value chain activities, position or conditions of subsidiaries.