Declining Markets, Resource Specificity, and Redeployment Decisions (original) (raw)

Identifying internal markets for resource redeployment

Strategic Management Journal, 2020

This paper explores one important way in which multi-business firms have advantages over single-business firms. By having flexibility to reallocate resources, such as human capital, production capacity, or equipment, between businesses in their portfolio, they may be able to efficiently expand in markets with strong opportunities and contract in less attractive markets. We provide empirical evidence confirming that compared to single-business firms in the same industry and of the same size, businesses in multi-business firms expand revenues 12 percent more aggressively, and retrench revenues 37 percent more aggressively, on average. This first generalizable test of the theory also reveals that the relative advantage of multi-business firms escalates with lower internal resource adjustment costs, higher external transaction costs, and greater opportunity differences with the portfolio. Managerial summary: In this paper we show an important way in which multi-business firms have advantages over single-business firms. By having flexibility to reallocate resources, such as employees, production capacity, or equipment, between businesses in their portfolio, they may be able to efficiently expand in markets with strong opportunities and contract in less attractive markets. We provide empirical evidence confirming that compared to similar singlebusiness firms in the same industry and of the same size, businesses in multi-business firms expand revenues 12 percent more aggressively, and retrench revenues 37 percent more aggressively, on average. The paper also provides theoretical predictions about when the advantage is most pronounced.

Why do some MNCs relocate their corporate headquarters?

This paper examines the decision by a multinational corporation (MNC) to relocate its business unit and/or corporate HQ overseas. We argue that business unit HQs move overseas in response to changes in the internal configuration of their unit's activities and the demands of the product markets in which they operate, whereas corporate HQs move overseas in response to the demands of external stakeholders, in particular global financial markets and shareholders. Using data on 125 business unit HQs and 35 corporate HQs, we test and find support for these arguments. The research highlights important differences between corporate-and business-level strategy, and it suggests ways in which the theory of the MNC needs to be reconsidered. This paper examines the decision by a multinational corporation (MNC) to locate its corporate or business unit headquarters overseas. It is concerned with understanding the factors that lead the executives of the MNC to shift their headquarters away from the traditional home country of operation, and in particular how the drivers for corporate HQ relocation are different from the drivers of business unit HQ relocation. The study is motivated by three lines of argument.

The firm relocation decision: An empirical investigation

The Annals of Regional Science, 2004

In the current paper, the determinants of firm relocation behaviour in twenty-one countries during the period 1997-1999 are analyzed. We demonstrate that internal growth factors measured by increases, but also decreases, in the workforce induce firm relocation. Firms that serve larger markets relocate more often. It is also demonstrated that relocations are often a result of acquisitions, mergers and take-overs, which are a consequence of external growth.

The effects of firm relocation on firm performance: A literature review

2005

On the one hand, the importance of the geographical and organizational position of a firm for organizational processes, like innovation, and firm performance has become more and more profound over time. On the other hand, the number of firm relocations has increased dramatically during the last decades. It therefore seems logical to study the effects of changes in a firm's geographical and organizational position as a result of relocation on the (innovative) performance of that firm. The goal of this paper is to provide an overview of the existing insights about these effects.

The International Relocation of Corporate Centres

European Management Journal, 2004

Empirical research reveals that relocations of corporate centres are most times confined to national borders. Until now, cross-border relocations are almost absent in the European Union, while in the United States relocations across State borders appear to be common. To contribute to a managerial understanding of these phenomena, we propose a conceptual framework of the determinants of the corporate centre location. Based on our analysis, we predict the stickiness of corporate centres of European Union-based corporations will diminish due to the European Union integration process and in particular triggered by the expected EU legislation regarding the removal of legal barriers against corporate mobility. 

Firm relocation: state of the art and research prospects

2002

This paper deals with firm relocation. Firm relocation is a particular form of locational adjustment of the firm and one of the possible ways to adjust to changes in markets, preferences of consumers, environmental regulations, technological progress etc. In section 2 we will treat the neo-classical, the behavioural, and the institutional approaches respectively. Next, a historical review of firm relocation

The International Relocation of Corporate Centres:: Are Corporate Centres Sticky

2004

Empirical research reveals that relocations of corporate centres are most times confined to national borders. Until now, cross-border relocations are almost absent in the European Union, while in the United States relocations across State borders appear to be common. To contribute to a managerial understanding of these phenomena, we propose a conceptual framework of the determinants of the corporate centre location. Based on our analysis, we predict the stickiness of corporate centres of European Union-based corporations will diminish due to the European Union integration process and in particular triggered by the expected EU legislation regarding the removal of legal barriers against corporate mobility. 

The firm relocation decision: a logit model

2002

This paper deals with the relocation of firms. There are indications from former research, that age, size and market are determinants of relocated companies. This paper aims to demonstrate that mobile firms are younger, more export oriented and more rapidly growing. With the use of two theories, Location theory and the theory of Organisational Ecology, it is tried to construct

Why do some multinational corporations relocate their headquarters overseas?

Strategic Management Journal, 2006

This paper examines the decision by a multinational corporation (MNC) to relocate its business unit and/or corporate HQ overseas. We argue that business unit HQs move overseas in response to changes in the internal configuration of their unit's activities and the demands of the product markets in which they operate, whereas corporate HQs move overseas in response to the demands of external stakeholders, in particular global financial markets and shareholders. Using data on 125 business unit HQs and 35 corporate HQs, we test and find support for these arguments. The research highlights important differences between corporate-and business-level strategy, and it suggests ways in which the theory of the MNC needs to be reconsidered. This paper examines the decision by a multinational corporation (MNC) to locate its corporate or business unit headquarters overseas. It is concerned with understanding the factors that lead the executives of the MNC to shift their headquarters away from the traditional home country of operation, and in particular how the drivers for corporate HQ relocation are different from the drivers of business unit HQ relocation. The study is motivated by three lines of argument.