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© 2014 British Academy of Management and John Wiley & Sons Ltd. Published by John Wiley & Sons Ltd, 9600 GarsingtonRoad, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
International Journal of Management Reviews, Vol. 17, 356–381 (2015)DOI: 10.1111/ijmr.12044
Changes at Corporate Headquarters:Review, Integration and Future Research
Sven Kunisch, Markus Menz and Björn AmbosUniversity of St. Gallen, Dufourstrasse 40a, 9000 St. Gallen, Switzerland
Corresponding author email: sven.kunisch@unisg.ch
In modern corporations, the corporate headquarters (CHQ) unit is consideredcentral to the fortunes of the overall firm. In light of ever-changing environments,changes at the CHQ have become a crucial concern in management research andpractice, and scholars have studied a variety of changes at the CHQ. Despite thecommon focus on the CHQ entity and the potential for cross-fertilization acrossseveral research tracks, a coherent picture of this dispersed body of knowledge islacking. This paper reviews 25 years of research on changes at the CHQ. In so doing,it advances a common language and an overarching framework that integrates theexisting knowledge in the intellectual domains of strategy, organizational design andinternational business research. On this basis, the authors suggest directions forfuture research to advance knowledge of: (1) the pressure for and resistance tochanges at the CHQ; (2) interrelationships among changes at the CHQ; (3) changeprocesses at the CHQ; (4) agents involved in changes at the CHQ; and (5) adaptiveand disruptive effects of changes at the CHQ. Overall, the study provides a concep-tual basis for combining the existing knowledge of changes at the CHQ and serves asa guide for future research.
Introduction
With the emergence of the modern corporation(Chandler 1962; Melman 1951; Sloan 1964), the cor-porate headquarters (CHQ) unit has taken centrestage with respect to the fortunes of the overall firm(e.g. Chandler 1991; Collis et al. 2007; Gooldand Campbell 1987). As firms are faced with ever-changing internal and external environments, schol-ars and practising managers have become highlyinterested in changes at the CHQ (e.g. Economist
2008, 2014; Ferlie and Pettigrew 1996). However,despite the considerable importance of research onchanges at the CHQ and the increasing amount ofscholarly work in this field, we lack a systematicreview that synthesizes the dispersed body ofknowledge.
The existing studies have contributed to severalresearch streams, including research focused onstrategy, organization, international business andagglomeration. Initial research on changes at theCHQ was probably fuelled by observations that thesize of the CHQ changed significantly during the late1980s and early 1990s (e.g. Ferlie and Pettigrew1996) and that a considerable number of large firmswere moving their CHQs to new locations (e.g. Baaijet al. 2004; Strauss-Kahn and Vives 2009; Voget2011). Yet, cases and trend data demonstratethat changes at the CHQ have become frequent,multifaceted phenomena that span a variety ofCHQ characteristics, such as structures, activities,
The authors thank the Editor Caroline Gatrell, the AssociateEditor Thomas Baker and the anonymous reviewers for theguidance and the valuable comments throughout the reviewprocess. The authors are grateful to Michael Boppel,Andrew Campbell, David J. Collis, Steven W. Floyd, TomiLaamanen, Sebastian Raisch, Metin Sengul and Carola Wolffor their very helpful feedback on earlier versions of themanuscript.
Changes at Corporate Headquarters
locations and relationships with subsidiaries (e.g.Kramer 1999; Kunisch et al. 2012; Young et al.2000). It thus comes as no surprise that scholars haveinvestigated a broad range of phenomena in the lastdecade, such as changes in the CHQ’s roles (e.g.Grant 2003), changes in CHQ–subsidiary relation-ships (e.g. Ambos et al. 2010; Ambos et al. 2011;Joseph and Ocasio 2012) and changes in the CHQ’slocation (e.g. Baaij et al. 2012a,b; Birkinshaw et al.2006; Laamanen et al. 2012).
Although the existing studies explore a variety ofchanges at the CHQ, they all share a common focuson the CHQ as an entity that fulfils various roles andrepresents the location of the firm’s legal entity(e.g. Birkinshaw et al. 2006; Collis et al. 2007). Tocapture the wide scope of these studies, we adopt abroad definition of ‘changes at the CHQ’ as altera-tions in the state or quality of the attribute(s) of theCHQ entity over time. An alteration in the state of theCHQ refers to a shift in particular CHQ conditionsbetween two specific points in time (e.g. changes inthe number of CHQ staff or changes in the CHQ’slocation). Such alterations can be understood as dis-crete changes. An alteration in the quality of theCHQ refers to a change in a distinctive attribute ofthe CHQ (e.g. changes in the CHQ’s capabilities).Such alterations can be understood as continuouschanges. Using ‘changes at the CHQ’ as an umbrellaterm avoids unnecessarily restricting the scope of thestudy, and directs us to classify the literature withrespect to the characteristics of the CHQ entity. Thisapproach is appropriate for this study’s purpose andcomparable to that found in similar studies (e.g.Ginsberg 1988).
While an understanding of the various phenomenais in itself a good reason for scholarly investigationof changes at the CHQ (e.g. Birkinshaw et al. 2006;Ferlie and Pettigrew 1996), research in this area isvital for at least two additional reasons. First, studiesof changes at the CHQ can enhance scholarly under-standing of the functioning of the CHQ, which is acentral component in many theories of the firm(Kleinbaum and Stuart 2014; Menz et al. 2013). Theuse of a change perspective provides an alternativeway to explore phenomena even when the primaryfocus is on non-temporal issues (Ancona et al. 2001,p. 660). For example, Birkinshaw et al. (2006,p. 697) revealed the importance of the CHQ’s exter-nally oriented role by showing that CHQs move over-seas ‘as a response to the perceived demands andopportunities offered by overseas shareholders andcapital markets’. Second, the CHQ offers a compel-
ling context in which to study strategic andorganizational change. For example, changes at theCHQ hold significant symbolic value for internal andexternal stakeholders (e.g. Laamanen et al. 2012),and such changes tend to embody organizationalchange in general (e.g. van Marrewijk 2009). Thus,studies of the conditions that enable or hinderchanges at the CHQ can advance scholars’ under-standing not only of the CHQ in particular, but alsoof organizational change in general.
Despite the importance of research on changes atthe CHQ, the existing knowledge has evolved onseveral parallel, albeit related, research tracks thatcover different characteristics of the CHQ. Giventheir common focus on the CHQ entity, theseresearch tracks harbour the potential for cross-fertilization and need to be combined in order toadvance the cumulative knowledge of changes at theCHQ. The main purpose of this paper, therefore, is toconsolidate the dispersed insights of previous studieson changes at the CHQ.
Based on a comprehensive review of 25 years ofresearch into changes at the CHQ, we summarizethe body of knowledge and propose an integrativeframework that not only allows for cross-fertilization,but also serves as a basis for future research. Specifi-cally, we identify three interrelated research domains.Each of these domains has distinct research foci thatcould be transferred to research in the other domains.Based on these general findings, we suggest direc-tions for future research in line with the integrativeframework to advance knowledge of: (1) the pressurefor and resistance to changes at the CHQ; (2) interre-lationships among changes at the CHQ; (3) changeprocesses at the CHQ; (4) agents involved in changesat the CHQ; and (5) adaptive and disruptive effectsof changes at the CHQ. In sum, the study providesa conceptual basis for combining the existingknowledge of changes at the CHQ and serves as aguide for future research.
Methodology
In order to systematically review the extant know-ledge on changes at the CHQ, we follow a struc-tured approach (e.g. Cropanzano 2009; Short 2009;Tranfield et al. 2003; Webster and Watson 2002).Our review includes research published over a spanof 25 years (1987 to 2012). As a starting point, wefocused on two prominent publications related tothe study of changes at the CHQ: Porter’s (1987)
© 2014 British Academy of Management and John Wiley & Sons Ltd.
357
S. Kunisch et al.
study of corporate strategy, and Ginsberg’s (1988)study of measuring and modelling strategic change.This starting point coincides with two influentialbooks on the topic written by Goold and Campbell(1987) and Pettigrew (1985), which we include inthe formal review. Furthermore, the starting pointroughly coincides with the beginning of an unprec-edented era of globalization (Roth 2011). Since1987, many companies have not only diversifiedtheir products but also entered new geographicalmarkets – a trend that is believed to result inchanges at the CHQ (e.g. Baaij et al. 2012a,b;Ferlie and Pettigrew 1996).
The process of finding studies for the reviewinvolved two main steps. First, we identified relevantpublications in academic and practice-oriented jour-nals. We searched the EBSCOHost Business SourcePremier and the ISI Web of Knowledge databases,which provide access to the leading journals.We considered all journals with 2011 ISI JournalCitation Report impact factors of more than 0.5 inthe categories of Area Studies, Business, Businessand Finance, Economics, Geography, Management,Planning and Development, and Urban Studies. Forthe search, we used several synonyms for ‘CHQ’ and‘change’. Scholars have used a variety of terms whendescribing and analysing the CHQ (cf. Menz et al.2013), including ‘strategic apex’ (Mintzberg 1979),‘central administrative office’ (Aarland et al. 2007;Davis and Henderson 2008; Montague 1986), ‘cor-porate centre’ (Baaij et al. 2004; Hansen and Peytz1991), ‘corporate parent’ (Campbell et al. 1995a,b)and ‘headquarters’ (Henderson and Ono 2008;Strauss-Kahn and Vives 2009). Recently, scholarshave used the term ‘corporate headquarters’(Birkinshaw et al. 2006; Collis et al. 2007, 2012;Foss 1997; Garvin and Levesque 2008; Young et al.2000) to distinguish the headquarters (HQ)of the overall firm from those of business units(BUs) or regional headquarters. Similarly, we usedseveral synonyms for change, including ‘chang*’,‘transform*’, ‘modif*’, ‘restruct*’, ‘redesign*’ and‘relocat*’. We searched for any combination of thetwo sets of synonyms, such as ‘corporate headquar-ter* chang*’, ‘strategic apex restruct*’, ‘corporatecentre relocat*’ and ‘corporate parent transform*’.To ensure that we included all relevant studies, wealso worked forward by searching those studies thatcited the articles identified.
Second, two of the authors manually screened thepublications uncovered in the first step and excludedthose that did not cover changes at the CHQ. To be
included in this review, a study had to deal with sometype of ‘dynamism’ related to the characteristics ofthe CHQ. We adopted a broad definition of ‘dyna-mism’ to avoid unnecessarily restricting the review.We therefore considered works dealing with varioustypes of change, such as radical and incrementalchange, continuous and discrete change, and plannedand unplanned change (e.g. George and Jones 2000;Mintzberg and Westley 1992). As this review focuseson the firm and organizational (unit) levels ratherthan on the individual or team levels, we did notinclude research on corporate-executive turnover.Although corporate executives are an importantelement in CHQ definitions, executive-successionresearch has developed into an independent researchstream (for reviews, see Giambatista et al. 2005;Hutzschenreuter et al. 2012; Kesner and Sebora1994). However, we included research on executivesuccession when it involved other aspects of changeat the CHQ. In addition, because the nature of theCHQ differs greatly from that of divisional HQs (e.g.Birkinshaw et al. 2006), we did not consider researchthat exclusively explored changes at the divisionalHQ level.
This identification process resulted in a finalset of 66 publications. Given the broad scope ofCHQ change phenomena, the research reviewed inthis paper has been published in journals in avariety of fields (for an overview of the journalsand articles, see Figure S1 and Table S1). Thisvariety is also reflected in our analysis of theliterature.
To organize the discussion, we sorted the contri-butions into three domains based on their primaryfocus: (1) the strategy domain, in which the CHQ isreferred to as a corporate-level (or firm-level) entitythat is responsible for the overall firm; (2) theorganizational-design domain, which pertains to thedesign characteristics of the CHQ as a distinctorganizational unit at the top of the corporate hier-archy; and (3) the physical domain, in which theCHQ is referred to as a physical entity with a geo-graphical location (often linked to the location of alegally registered entity). As illustrated in Table 1and described in the literature review, the threedomains differ in their conceptualizations of theCHQ, their main research foci and their measure-ments of changes at the CHQ. In the following, wereview and discuss the studies in each of thedomains, which is an approach similar to that foundin other literature reviews (e.g. Purkayastha et al.2012).
© 2014 British Academy of Management and John Wiley & Sons Ltd.
358
Changes at Corporate Headquarters
Research in the strategy domain
Changes at the CHQ can be conceptualized as stra-tegic changes at the corporate level. The CHQ’smanagement of the overall firm is an importantaspect of a firm’s corporate strategy and its interna-tional strategy. The concepts of corporate strategy(e.g. Goold et al. 1994; Porter 1987) and multina-tional company (MNC) strategy (e.g. Bartlett andGhoshal 1989) typically incorporate two elements:(1) the company’s set of product and regionaldomains; and (2) the CHQ’s management of the setof individual domains. Accordingly, strategic changeat the corporate level occurs along these two ele-ments (e.g. Ginsberg 1988). Changes at the CHQthus reflect strategic choices made at the corporatelevel related to the value-adding strategy. Studies inthis area are broadly concerned with changes in howthe CHQ manages the overall firm, includingchanges in the functions and roles of the CHQ, andchanges in corporate growth strategies. Table 2 sum-marizes the relevant studies in the strategy domain.
Characteristics
An important theme in this domain is the evolutionof the roles and management styles of the CHQ. Overtime, the ‘general office’ (Chandler 1962) and the‘strategic apex’ (Mintzberg 1979) have developedinto the CHQ of today’s large corporations. Based on
his original work (Chandler 1962) and on Goold andCampbell’s (1987) research into the role of the CHQ,Chandler (1991) argues that the CHQ has two basicroles: an entrepreneurial (value-adding) role and anadministrative (loss-preventing) role (see also Foss1997). He also argues that industry characteristicsshape how firms in those industries develop andimplement the two basic CHQ roles. With respect tothe entrepreneurial role, Hungenberg (1993) arguesthat, because the pressure for the CHQ to add valuehas increased, firms need to define an effective rolefor their CHQs, as well as an efficient scope and size.In a similar vein, scholars have explored the evolu-tion of individual CHQ units, such as the strategydepartment. In particular, Grant (2003) studies stra-tegic planning systems and finds that three key roleshave emerged: (a) strategic planning as a context forstrategic decision-making; (b) strategic planning as acoordination mechanism; and (c) strategic planningas a control mechanism.
A common finding in prior research on CHQ rolesis that fundamental changes rarely occur, whileminor changes occur more often. Goold and Luchs(1992), for example, investigate different CHQ man-agement styles and postulate that they rarely change.In a conceptual article focused on CHQ learning,Goold (1994) argues that some types of CHQ learn-ing are fairly easy, while others are difficult or evenimpossible. Specifically, he argues that, as the firmventures into unfamiliar territory, the CHQ finds it
Table 1. Three domains of changes at the CHQ
Strategy domain Organizational-design domain Physical domain
CHQ concept • Strategic entity• Both a unit- and a company-level
concept• Internal and external focus
• Organizational entity• Unit-level concept
• Internal focus (internal alignment)
• Physical/legal entity• Both a unit- and a
company-level concept• External focus
Main concerns • How the CHQ manages the overallcompany– Roles/functions– Styles– Activities
• Organizational design of the CHQ– Informal design (e.g. culture)– Formal design (e.g. structure,
systems)– People (e.g. staffing)
• Physical location of theCHQ– Legal registration of the
firm– Location– Physical buildings
Examples of changes • Corporate management styles• Value-adding strategy (e.g. growth via
M&A vs. organic growth)• Intensity of corporate-level specialism
• Number of CHQ staff, CHQfunctions, CHQ costs
• Level of formalization andcentralization
• Configuration of the CHQ–subsidiaryrelationship
• Location of the CHQ• Number of CHQ locations• CHQ mobility
Exemplary studies • Goold (1994)• Campbell et al. (1995a,b)• Grant (2003)
• Ambos et al. (2010)• Gospel and Sako (2010)• Kleinbaum and Stuart (2014)
• Baaij et al. (2012a,b)• Birkinshaw et al. (2006)• Laamanen et al. (2012)
© 2014 British Academy of Management and John Wiley & Sons Ltd.
359
S. Kunisch et al.
Tabl
e2.
Pre
viou
sst
udie
sin
the
stra
tegy
dom
ain
Aut
hor(
s)(y
ear)
aR
esea
rch
focu
sbT
heor
yM
etho
dK
eyfi
ndin
gsre
late
dto
chan
ges
atth
eC
HQ
c
Goo
ldan
dC
ampb
ell
(198
7)
CH
Qm
anag
emen
tst
yles
(I-B
;II
)Pa
rent
ing
theo
ry;
cont
inge
ncy
theo
ryE
mpi
rica
lst
udy
(qua
lita
tive)
:16
larg
eco
mpa
nies
Com
pani
esra
rely
chan
geth
eir
CH
Qm
anag
emen
tst
yles
and
then
only
wit
hco
nsid
erab
ledi
fficu
lty.
Suc
hch
ange
sge
nera
llyad
dres
sst
rate
gic
plan
ning
,fi
nanc
ial
cont
rol
and
stra
tegi
cco
ntro
l.C
hand
ler
(199
1)C
HQ
role
s;m
anag
emen
tst
yles
(II)
Con
ting
ency
theo
ryC
once
ptua
lst
udy
Ove
rti
me,
the
char
acte
rist
ics
ofth
ein
dust
ries
inw
hich
firm
sop
erat
esh
ape
the
deve
lopm
ent
and
impl
emen
tati
onof
the
two
basi
cC
HQ
role
s(e
ntre
pren
euri
alan
dad
min
istr
ativ
e).
Cou
lson
-Tho
mas
(199
2)C
orpo
rate
visi
onan
dm
issi
on(I
-B)
n/a:
desc
ript
ive
Thr
eesu
rvey
sT
hela
ckof
TM
Tco
mm
itm
ent
and
the
lack
ofco
mm
unic
atio
nsk
ills
are
maj
orba
rrie
rsto
visi
on/m
issi
onch
ange
atth
eC
HQ
leve
l.G
oold
etal
.(1
993a
,b)
CH
Qm
anag
emen
tst
yles
(I-A
;I-
B)
Pare
ntin
gth
eory
;co
ntin
genc
yth
eory
Em
piri
cal
stud
y(q
uali
tativ
e):
16m
ajor
UK
firm
sC
ompa
nies
rare
lyin
trod
uce
maj
orch
ange
sin
thei
rC
HQ
man
agem
ent
styl
es(s
trat
egic
plan
ning
,fi
nanc
ial
cont
rol
and
stra
tegi
cco
ntro
l)ex
cept
inti
mes
ofcr
isis
(poo
rpe
rfor
man
ce)
orT
MT
chan
ges.
Hun
genb
erg
(199
3)C
HQ
role
s;C
HQ
size
(I–I
I;II
)n/
a:de
scri
ptiv
eC
once
ptua
lst
udy
wit
hil
lust
rativ
eca
ses
Two
mai
nfo
rces
affe
ctch
ange
sat
the
CH
Q.
Inst
itut
iona
lch
ange
sin
crea
sing
lyre
quir
eth
eC
HQ
toad
dva
lue,
whi
leen
viro
nmen
tal
chan
ges
have
redu
ced
the
prac
tica
bili
tyof
cent
ral
prob
lem
-sol
ving
.G
oold
(199
4)C
HQ
lear
ning
(‘pa
rent
alle
arni
ng’)
(I–I
II;
III)
Org
aniz
atio
nal
lear
ning
Qua
lita
tive:
case
stud
ies
Apr
econ
diti
onfo
rsu
cces
sful
CH
Qle
arni
ngis
reco
gnit
ion
ofth
ene
edto
lear
n.S
ome
type
sof
CH
Qle
arni
ngar
ere
lativ
ely
easy
,w
hile
othe
rsar
eha
rdor
even
impo
ssib
le.
Cam
pbel
let
al.
(199
5a)
Pare
ntin
gch
arac
teri
stic
s(I
-A;
I-B
;II
)Pa
rent
ing
theo
ry;
orga
niza
tion
alad
apta
tion
view
;co
ntin
genc
yth
eory
Em
piri
cal
stud
y:ca
sest
udy
CH
Qs
cons
tant
lym
odif
yan
dfi
ne-t
une
thei
rpa
rent
ing,
but
fund
amen
tal
chan
ges
only
occu
rw
hen
CE
O/T
MT
chan
ges
take
plac
ebe
caus
e‘p
aren
ting
’is
buil
ton
deep
lyhe
ldva
lues
and
beli
efs.
Goo
ldet
al.
(200
1)C
HQ
rede
sign
s;C
HQ
role
s(I
-A;
II)
Pare
ntin
gth
eory
;co
ntin
genc
yth
eory
Mix
edst
udy:
tren
dsof
600
com
pani
es;
illu
stra
tive
case
stud
y
CE
Och
ange
prom
pts
reas
sess
men
tof
CH
Qro
les
and
stru
ctur
e.C
HQ
rede
sign
sar
eba
sed
onth
ree
CH
Qro
les:
min
imum
corp
orat
epa
rent
,va
lue-
addi
ngpa
rent
ing
and
shar
edse
rvic
es.
Gra
nt(2
003)
Str
ateg
icpl
anni
ngsy
stem
s(I
-A;
II)
No
expl
icit
theo
ry:
proc
ess
theo
ryE
mpi
rica
lst
udy:
in-d
epth
case
stud
ies
ofei
ght
larg
eoi
lco
mpa
nies
Fun
dam
enta
lch
ange
sin
the
natu
rean
dro
les
ofst
rate
gic
plan
ning
syst
ems
have
occu
rred
sinc
eth
een
dof
the
1970
s.
Dur
mus
oglu
etal
.(2
008)
CH
Qst
rate
gy(I
I–II
I)N
oex
plic
itth
eory
:co
ntro
lth
eory
Em
piri
cal
stud
y:ca
sest
udie
sof
thre
eB
Us
ofon
eM
NC
Sev
eral
fact
ors
infl
uenc
est
rate
gyim
plem
enta
tion
bydi
ffer
ent
BU
saf
ter
chan
ges
inth
epr
oduc
t-in
nova
tion
stra
tegy
atth
eC
HQ
.S
luyt
erm
anan
dW
ubs
(201
0)C
HQ
role
s(I
–II;
II)
No
expl
icit
theo
ryTw
oca
sest
udie
s:R
oyal
Dut
chS
hell
,S
ara
Lee
Cha
nges
are
are
spon
seto
glob
aliz
atio
nan
dan
atte
mpt
toad
vanc
egl
obal
izat
ion
proc
esse
sby
sim
ulta
neou
sly
buil
ding
inte
rnat
iona
lin
stit
utio
nsan
dch
angi
ngel
emen
tsof
the
nati
onal
busi
ness
syst
em.
Asp
ara
etal
.(2
011)
CH
Qbu
sine
ssm
odel
(II)
No
expl
icit
theo
ry:
man
ager
ial
cogn
itio
n,or
gani
zati
onal
chan
ge
Em
piri
cal
stud
y:hi
stor
ical
case
stud
yof
Nok
ia,
1987
–199
5
Bus
ines
sun
its
can
feed
stra
tegi
cal
tern
ativ
esan
dca
pabi
liti
esin
toco
rpor
ate-
leve
lch
ange
thro
ugh
peop
lean
dco
gnit
ive
min
d-se
tex
chan
ges
betw
een
busi
ness
and
CH
Qle
vels
.
a Inch
rono
logi
cal
orde
r.b T
hech
arac
ters
inpa
rent
hese
sin
the
seco
ndco
lum
nre
fer
toFi
gure
1.c In
clud
esdi
rect
and
indi
rect
quot
es.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
360
Changes at Corporate Headquarters
more difficult to learn. The most significant learningchallenges for the CHQ seem to arise in situationswhere deeply held assumptions and beliefs are ques-tioned, and the learning situation simultaneouslyrequires that perceived truths be forgotten, at least tosome extent. Along the same lines, Campbell et al.(1995a, p. 132) claim that good ‘parents constantlymodify and fine-tune their parenting, but fundamen-tal changes in parenting seldom occur, usually onlywhen the chief executive and senior managementteam are replaced’. Moreover, the privileged status ofthe CHQ is believed to shield it ‘from the rigors ofthe market’ (Campbell et al. 1995b, p. 82). Overall,these findings imply a certain amount of inertiaat the CHQ level because fundamental changes inthe CHQ’s value-adding strategy are difficult toimplement.
Antecedents
Changes at the CHQ can be fostered or impeded bychanging and enduring conditions in the firm’sinternal environment. First, and perhaps mostimportantly, changes in the firm’s strategic leader-ship are associated with changes at the CHQ. Mostresearchers agree that fundamental changes at theCHQ only occur when top executives (the CEO ormembers of the top-management team (TMT)) arereplaced. For example, when investigating differentmanagement styles, Goold and Luchs (1992)observe that change occurs only as a result of acrisis, or in conjunction with a new CEO or turn-over in the TMT. Furthermore, Goold et al. (2001)assert that CEO changes lead to a reassessment ofthe roles and composition of the CHQ. An implicitassumption is that CEO and TMT changes serveas adaptation mechanisms that facilitate changesin cognitive orientations and mental models(Wiersema and Bantel 1992, 1993), as well as inthe power structures at the top (e.g. Shen andCannella Jr. 2002). Relatedly, Coulson-Thomas(1992) identifies a lack of TMT commitment and alack of communication skills as major impedimentsto changes in the firm’s vision or mission at theCHQ level.
Second, changes in the corporate portfolio arerelated to changes in CHQ functions and roles. Forexample, Campbell et al. (1995a) suggest that com-panies would rather change their business portfoliosthan their corporate management styles in order toestablish internal fit. This implies that the costs ofchanging the business portfolio are lower than the
costs of changing the CHQ’s parenting style.1 Theseauthors join Goold (1994) in arguing that parentingcharacteristics are based on deeply held values andbeliefs that impede the implementation of change.Overall, the extant research largely focuses onchanges in the firm’s product and market portfolios,while little is known about whether and how changesin the firm’s geographical scope affect the CHQ.
Third, prior performance may affect changes at theCHQ. Specifically, the firm’s prior performance isassociated with strategic change at the CHQ. Asnoted earlier, Goold et al. (1993a,b) suggest thatcompanies rarely change their CHQ managementstyles except when responding to a crisis (e.g.poor firm performance) or to changes in the TMT.Interestingly, little is known about the consequencesof (poor) CHQ performance.
In addition, changing and enduring conditions inthe firm’s external environment are associated withpressure for and resistance to change at the CHQ.Several external factors are associated with strategicchange at the CHQ, including the situation in finan-cial markets and macroeconomic conditions. Forexample, Durmusoglu et al. (2008, p. 387) study aconglomerate that changed its strategy from growthvia mergers and acquisitions (M&A) to organicgrowth through new product development. They findthat this ‘change in the parent company’s strategy’was driven by a change in the financial markets andin analysts’ expectations. Relatedly, institutionalchange can foster a rethinking of the CHQ’s value-adding role (e.g. Hungenberg 1993).
Outcomes
A few studies empirically investigate the outcomesof strategic changes at the CHQ. Durmusoglu et al.(2008) study whether a change in the product-innovation strategy at the CHQ resonates in the sameway among different operating units. They find dif-ferences in how the operating units ‘reshape theirstructure and resource allocation, changing variousdimensions of their innovation strategy while alsofitting the competitive structure in their individual,non-high-tech, traditional manufacturing industriesas they respond to the corporate mandate’ and that‘[. . .] even with the immense power corporatehas [. . .], some still dance to their own tune’
1We thank an anonymous reviewer for drawing our attentionto the implicit assumptions of this assertion.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
361
S. Kunisch et al.
(Durmusoglu et al. 2008, p. 387). This study there-fore serves as an example of the intermediate out-comes at the BU level.
With respect to performance outcomes, scholarsgenerally assume that changes at the CHQ are ameans to (re-)establish fit. The underlying argumentrelies on contingency logic, and its premise thatinternal and external fit lead to superior performance(Donaldson 1987, 2001). For example, Campbellet al. (1995a) postulate that a fit between the CHQ’sparenting style and the firm’s business portfolio cancreate value, whereas a lack of fit can destroy value.However, empirical evidence from large-scalesamples on the performance implications of strategicchanges at the CHQ is lacking.
Discussion
Collectively, the extant studies make important con-tributions to the CHQ and strategic-change litera-tures. Specifically, two insights appear to be key.First, while the majority of studies on corporate-levelstrategic change focus on changes in the businessportfolio as one aspect of corporate strategy, theresearch reviewed here highlights strategic change atthe CHQ unit as an important dimension ofcorporate-level strategic change. This research sug-gests that firms rarely implement fundamentalchanges at the CHQ level. Second, corporate-levelactors play a crucial role. In fact, if strategic changesoccur at the CHQ, they are usually driven by theseactors.
Despite these contributions, research in the strat-egy domain has certain limitations. While manyinsights are based on illustrative case studies,large-scale, quantitative research is relatively scarce.Specifically, empirical tests of the performanceimplications of strategic change at the CHQ remainvery limited. Perhaps as a consequence, we have onlyinconclusive findings on the benefits and costs ofstrategic changes at the CHQ. In addition, with theexception of a few studies (e.g. Goold 1994), weknow little about the processes associated with suchchanges.
Research in the organizational-design domain
Changes at the CHQ can also be conceptualized aschanges in organizational design. Organization theo-rists typically distinguish between the unit and
organizational-design levels, and among variouscomponents of design (e.g. Nadler et al. 1992).Although the two design levels are interrelated,‘effective design at the unit level of the organizationis crucial to success’ (Nadler et al. 1992, p. 35). Thisis especially true for the CHQ units of large firms(Campbell et al. 1995b; Porter 1987). Studies in thisarea investigate changes in several organizational-design components, such as the work, the people, andthe formal and informal organizational designs at theCHQ. Such changes in the formal and informalorganizational designs include changes in the levelsof formalization and centralization, as well aschanges in the relationship between the CHQ and itssubsidiaries. Table 3 provides a summary of thestudies in the organizational-design domain.
Characteristics
A common theme in this domain is the pendulumbetween decentralization and centralization. Basedon these two extremes of organizational change,Ferlie and Pettigrew (1996) identify several generictrends that still appear to be prevalent. The first trendis downsizing (Ferlie and Pettigrew 1996, p. 497).For example, in the 1980s, volatility in productmarkets and the search for new competitive advan-tages led to reorganizations in many large firms(Aksoy and Marshall 1992). The restructuring ofmany of these firms, such as BP, Unilever, ICI andNatWest, often included significant staff reductions(Young 1993). A second trend is decentralizing whileretaining core central control (Ferlie and Pettigrew1996, p. 498), which refers to the allocation ofgreater responsibility and authority to BUs, while thecore coordination tasks remain centralized at theCHQ. Proponents of centralization usually makevalue-adding and synergy arguments in favour of thistrend, and support for this trend can be found instudies on specific CHQ functions, such as humanresources (e.g. Hendry 1990), strategic planning (e.g.Grant 2003), information technology (e.g. Donovan1988), and research and development (e.g. Park andGil 2006; Reger 2004).
These general trends are reflected in variouschanges in the formal design of the CHQ, such aschanges in the number of staff or the number ofcorporate functions. A few surveys provide trenddata on changes in formal CHQ designs. Forexample, Collis et al. (2007) report on internationaltrends in formal CHQ organizational designs, such aschanges in the number of CHQ staff and corporate
© 2014 British Academy of Management and John Wiley & Sons Ltd.
362
Changes at Corporate Headquarters
Tabl
e3.
Pre
viou
sst
udie
sin
the
orga
niza
tion
al-d
esig
ndo
mai
n
Aut
hor(
s)(y
ear)
aR
esea
rch
focu
sbT
heor
yM
etho
dK
eyfi
ndin
gsre
late
dto
chan
ges
atth
eC
HQ
c
Pett
igre
w(1
985,
1987
)C
entr
aliz
atio
n,bu
reau
crac
yan
dco
ntro
l(I
I)P
roce
ssth
eory
Em
piri
cal
stud
y:lo
ngit
udin
alca
sest
udy
ofon
efi
rm(I
CI)
Env
iron
men
tal
chan
gean
dpr
essu
rear
ene
eded
for
inte
rnal
stra
tegi
cch
ange
.S
ubst
anti
alch
ange
sse
emto
only
occu
rw
hen
firm
sar
ein
seve
reec
onom
icdi
fficu
ltie
s.To
mas
ko(1
987)
CH
Qst
aff
and
CH
Qfu
ncti
ons
(II;
II–I
II)
No
expl
icit
theo
ry:
man
ager
ial
Ane
cdot
al;
case
exam
ples
The
dece
ntra
liza
tion
ofC
HQ
func
tion
sha
sse
vera
lob
ject
ives
.The
HR
func
tion
isim
port
ant
insu
stai
ning
ale
anC
HQ
,w
hich
can
bem
uch
hard
erth
anac
hiev
ing
ale
anC
HQ
.D
onov
an(1
988)
Cen
tral
izat
ion
ofC
HQ
reso
urce
san
dco
ntro
l(I
)n/
a:de
scri
ptiv
en/
a:de
scri
ptiv
eTe
chno
logi
cal
chan
ge,
and
stra
tegi
can
dor
gani
zati
onal
fact
ors
are
driv
ing
the
dece
ntra
liza
tion
ofco
mpu
ting
pow
erfr
omth
eC
HQ
tode
cent
rali
zed
unit
s.O
hmae
(198
9)C
HQ
task
san
dce
ntra
liza
tion
ofde
cisi
on-m
akin
g(I
I;II
–III
)
No
expl
icit
theo
ry:
cont
inge
ncy
theo
ry,
man
ager
ial
Not
expl
icit
lysp
ecifi
ed;
case
stud
ies
The
rest
ruct
urin
gof
the
CH
Qin
tose
vera
lre
gion
alH
Qis
impo
rtan
tfo
ra
com
pany
’ssu
cces
sful
tran
siti
onin
toa
glob
alpl
ayer
.
Hen
dry
(199
0)C
HQ
func
tion
/pr
oces
ses
(HR
);de
cent
rali
zati
on(I
–II;
II)
No
expl
icit
theo
ry:
inte
rnal
labo
urm
arke
tE
mpi
rica
lst
udy
(qua
lita
tive)
:10
larg
eor
gani
zati
ons
Dec
entr
aliz
atio
nin
the
1980
spr
ompt
edre
thin
king
ofth
ero
le,
stat
usan
dac
tivit
ies
ofth
eH
Rfu
ncti
on.
Ow
ing
tode
cent
rali
zati
on,
ther
eis
asi
gnifi
cant
shif
tin
the
corp
orat
eH
Rro
le.
Ste
war
tII
I(1
990)
Dec
entr
aliz
atio
nof
auth
orit
yan
dow
ners
hip
(II–
III)
n/a:
desc
ript
ive
n/a:
illu
stra
tive
case
sT
heC
HQ
can
add
valu
eth
roug
h:en
trep
rene
uria
lm
otiv
atio
nof
BU
man
ager
s;ba
lanc
e-sh
eet
rest
ruct
urin
gan
dst
rict
fina
ncia
lco
ntro
l;an
dde
cent
rali
zing
auth
orit
yan
dow
ners
hip.
Use
eman
dG
ottl
ieb
(199
0)D
ecis
ion-
mak
ing
auth
orit
y;C
HQ
staf
f(I
–II;
II)
Age
ncy
theo
ry:
owne
rshi
p-di
scip
line
dal
ignm
ent
Qua
lita
tive
(int
ervi
ews
and
docu
men
ts):
12co
mpa
nies
Focu
son
shar
ehol
der
valu
e,am
ong
othe
rs,
fost
ered
dece
ntra
lizi
ngof
deci
sion
-mak
ing
auth
orit
y;co
ntra
cted
CH
Qm
anag
ers
and
staf
ffu
ncti
ons,
and
crea
ted
mec
hani
sms
for
inte
rnal
owne
rshi
p.A
lexa
nder
(199
1)C
HQ
cont
rol;
cent
rali
zati
onof
deci
sion
-mak
ing
(I–I
I)C
onti
ngen
cyth
eory
;tr
ansa
ctio
n-co
stth
eory
;bo
unde
dra
tion
alit
y
Em
piri
cal
stud
y:pa
nel
data
from
97m
ulti
-hos
pita
lsy
stem
s
Org
aniz
atio
nsse
lect
ivel
yde
cent
rali
zeun
der
cond
itio
nsof
incr
easi
ngun
cert
aint
y,bu
tor
gani
zati
onal
age,
disp
ersi
onan
din
itia
lco
ntro
lar
rang
emen
tsm
oder
ate
the
dire
ctio
nan
dm
agni
tude
ofsu
chch
ange
s.A
ksoy
and
Mar
shal
l(1
992)
CH
Qst
aff
and
func
tion
s(I
–II)
Eco
nom
ics
Em
piri
cal
stud
y:su
rvey
ofC
HQ
sof
20la
rge
firm
sin
the
UK
The
num
ber
ofC
HQ
staf
fin
larg
efi
rms
has
decl
ined
subs
tant
ially
owin
gto
corp
orat
ere
stru
ctur
ing.
Inad
diti
on,
CH
Qfu
ncti
ons
have
been
dele
gate
dto
oper
atin
gun
its
orou
tsou
rced
.M
alje
rs(1
992)
Cor
pora
tecu
ltur
e;de
cent
rali
zati
on(I
–II;
II)
n/a:
desc
ript
ive
n/a:
illu
stra
tive
case
(Uni
leve
r)M
&A
incr
ease
sne
edfo
rcu
ltur
alch
ange
tobu
ild
aco
mm
onco
rpor
ate
cult
ure
toav
oid
the
dang
erof
beco
min
gto
ode
cent
rali
zed.
Tom
asko
(199
2)C
orpo
rate
rest
ruct
urin
g;C
HQ
staf
f(I
I)N
oex
plic
itth
eory
:m
anag
eria
lA
necd
otal
;su
ppor
ted
wit
hex
ampl
esIm
prov
emen
tsin
the
basi
cm
anag
emen
tpr
oces
ses
are
ases
sent
ial
asch
ange
sin
the
orga
niza
tion
alst
ruct
ure.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
363
S. Kunisch et al.
Am
burg
eyan
dD
acin
(199
4)D
ecen
tral
izat
ion
(I–I
I;II
–III
)C
onti
ngen
cyth
eory
Em
piri
cal
stud
y(q
uant
itat
ive)
:26
2la
rge
firm
s;ob
serv
edov
er28
year
s
Whi
leth
ere
isa
reci
proc
alre
lati
onsh
ipbe
twee
nst
rate
gyan
dst
ruct
ure,
ther
eis
ahi
erar
chic
alre
lati
onsh
ipbe
twee
nth
emin
term
sof
the
mag
nitu
dean
dti
min
gof
chan
ge.
Agh
ion
and
Tir
ole
(199
5)C
HQ
cont
rol
(I–I
I)C
ontr
olth
eory
The
ory
buil
ding
;fo
rmal
mod
elli
ngG
row
than
dot
her
fact
ors
lead
toco
rpor
ate
rest
ruct
urin
gan
da
refo
cusi
ngon
core
com
pete
nces
,w
hich
may
lead
firm
sto
crea
tepr
ofit
cent
res,
and
toab
ando
nth
eU
-for
min
favo
urof
the
M-f
orm
.C
ibin
and
Gra
nt(1
996)
Dec
entr
aliz
atio
n,co
ntro
l,cu
ltur
e(I
–II;
II)
Org
aniz
atio
nal
chan
geE
mpi
rica
lst
udy:
in-d
epth
case
stud
ies
ofei
ght
larg
eoi
lco
mpa
nies
Cor
pora
tere
stru
ctur
ing
invo
lves
atr
ansi
tion
from
one
stra
tegy
-str
uctu
reco
nfigu
rati
on(t
head
min
istr
ativ
e-pl
anni
ngm
odel
)to
anot
her
confi
gura
tion
(the
mar
ket-
resp
onsi
vene
ssm
odel
).Y
oung
(199
8)C
HQ
size
(num
ber
ofC
HQ
staf
f)(I
–II;
II)
Pare
ntin
gth
eory
;co
ntin
genc
yth
eory
Con
cept
ual
stud
yA
sth
eC
HQ
can
bedi
fficu
ltto
chan
ge–
chan
geis
view
edas
ath
reat
toes
tabl
ishe
dem
pire
s–
benc
hmar
ksca
npr
ovid
ea
less
emot
iona
lw
ayof
chal
leng
ing
the
stat
usqu
o.G
oold
and
Cam
pbel
l(2
002)
Org
aniz
atio
nal
(re)
desi
gnof
pare
nts
(II)
Pare
ntin
gth
eory
;co
ntin
genc
yth
eory
Not
expl
icit
lysp
ecifi
ed;
case
stud
ies
Com
pani
essh
ould
adop
ta
prac
tica
lap
proa
chto
orga
niza
tion
alre
desi
gnan
dtr
ym
inor
desi
gnch
ange
sbe
fore
mak
ing
maj
orde
sign
chan
ges.
Kon
tes
(200
4)C
HQ
activ
itie
s,or
gani
zati
onal
stru
ctur
e,m
odel
(I–-
II;
II)
n/a:
desc
ript
ive
n/a:
desc
ript
ive
The
reis
ane
edfo
rC
HQ
rede
sign
s,as
firm
sch
ange
sign
ifica
ntly
over
tim
e.T
here
are
two
mai
nta
sks:
crea
ting
ane
wC
HQ
mod
elan
dre
plac
ing
the
old
CH
Qm
odel
.R
eger
(200
4)D
ecen
tral
izat
ion;
corp
orat
eR
&D
func
tion
(I–I
I;II
;II
–III
)
No
expl
icit
theo
ryC
once
ptua
lst
udy
wit
han
illu
stra
tive
case
(Phi
lips
Ele
ctro
nics
)
Sin
ceth
eea
rly
1980
s,gl
obal
R&
Dun
its
inM
NC
sha
vebe
enre
orga
nize
dto
war
dsco
rpor
ate-
wid
ece
ntre
sof
exce
llen
ce,
whi
chin
crea
ses
the
need
for
vari
ous
coor
dina
tion
mec
hani
sms.
Coo
ke(2
006)
Cor
pora
teH
Rfu
ncti
on(I
I;II
–III
)N
oex
plic
itth
eory
Qua
lita
tive:
sing
leca
sest
udy
ofan
MN
CW
hen
sepa
rati
ngth
eH
Rfu
ncti
onin
tost
rate
gic,
oper
atio
nal
and
adm
inis
trat
ive
part
s,th
efi
nanc
ial
and
emot
iona
lco
stof
mov
ing
toa
shar
ed-s
ervi
ces
mod
elca
nou
twei
ghth
eta
ngib
leco
stsa
ving
s.M
orga
nan
dK
rist
ense
n(2
006)
CH
Q–s
ubsi
diar
yre
lati
onsh
ips
(II–
III)
Inst
itut
iona
lth
eory
:in
stit
utio
nal
dual
ity
Con
cept
ual;
theo
rybu
ildi
ngD
ueto
mic
ropo
liti
csbe
twee
nth
eC
HQ
and
MN
Csu
bsid
iari
es,
the
inst
itut
iona
lco
ntex
tspr
oduc
etw
oty
pes
ofsu
bsid
iari
es:
‘boy
scou
t’an
d‘s
ubve
rsiv
est
rate
gy’
subs
idia
ries
.Pa
rkan
dG
il(2
006)
R&
Dfu
ncti
on;
stru
ctur
ean
dpr
oces
ses
(I–I
I;II
)n/
a:de
scri
ptiv
en/
a:il
lust
rativ
eca
se(S
amsu
ng)
Key
driv
ers
ofch
ange
wer
eco
nsen
sus
onth
ene
edfo
rch
ange
,st
rong
top-
man
agem
ent
lead
ersh
ip,
clos
eal
ignm
ent
betw
een
R&
Dan
dth
eB
Us,
acti
onab
lepl
anni
ng,
and
perf
orm
ance
man
agem
ent.
Col
lis
etal
.(2
007)
CH
Qsi
ze,
stru
ctur
ean
dpe
rfor
man
ce(I
I)In
form
atio
npr
oces
sing
;ag
ency
,tr
ansa
ctio
nco
st,
cont
inge
ncy
theo
ries
;re
sour
ce-b
ased
view
Em
piri
cal
stud
y:su
rvey
of60
0co
rpor
atio
nsin
seve
nco
untr
ies
The
stud
yre
port
son
inte
rnat
iona
ltr
ends
inch
ange
sat
the
CH
Q.
Cou
ntry
tren
dsw
ere
sim
ilar
toth
ose
evid
ent
inth
eov
eral
lsa
mpl
e,w
ith
the
exce
ptio
nof
the
US
and
Chi
le.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
364
Changes at Corporate Headquarters
Tabl
e3.
Con
tinu
ed
Aut
hor(
s)(y
ear)
aR
esea
rch
focu
sbT
heor
yM
etho
dK
eyfi
ndin
gsre
late
dto
chan
ges
atth
eC
HQ
c
Har
reld
etal
.(2
007)
CH
Qst
rate
gyde
part
men
t;C
HQ
staf
f(I
I–II
I)D
ynam
icca
pabi
liti
esn/
a:de
scri
ptiv
e(c
ase
desc
ript
ion)
The
intr
oduc
tion
ofB
Uex
peri
ence
dm
anag
ers
tran
sfor
med
the
plan
ning
cult
ure
ofth
eC
HQ
’sst
rate
gyde
part
men
tfr
omac
adem
icto
acti
onor
ient
ed.
Luo
(200
7)C
HQ
–sub
sidi
ary
rela
tion
ship
s(I
–II)
No
expl
icit
theo
ry:
theo
ryof
inte
rnat
iona
lbu
sine
ssC
once
ptua
l;th
eory
buil
ding
Alo
ngw
ith
the
com
peti
tive
and
regu
lato
ryen
viro
nmen
tch
ange
s,m
any
MN
Cs
have
shif
ted
thei
rdo
min
ant
stra
tegi
esfr
om‘f
orei
gnin
vest
ors’
only
to‘s
trat
egic
insi
ders
’.B
orin
iet
al.
(200
9)C
HQ
–sub
sidi
ary
rela
tion
ship
s(I
–II)
The
ory
ofin
tern
atio
nal
busi
ness
Em
piri
cal
stud
y:30
Bra
zili
anM
NE
san
d66
subs
idia
ries
,su
rvey
The
subs
idia
ry’s
com
peti
tive
cont
ext
and
exte
rnal
netw
ork
are
the
mos
tim
port
ant
elem
ents
for
com
pete
nce
deve
lopm
ent,
and
for
tran
sfer
toan
dre
cogn
itio
nby
the
CH
Q.
Am
bos
etal
.(2
010)
CH
Q–s
ubsi
diar
yre
lati
onsh
ips
(I–I
I)R
esou
rce-
depe
nden
ceth
eory
;se
lf-
dete
rmin
atio
nth
eory
Em
piri
cal
stud
y:25
7su
bsid
iari
esin
thre
eco
untr
ies,
surv
ey
Sub
sidi
arie
sin
flue
nce
thro
ugh
init
iativ
eson
lyin
crea
ses
ifth
eC
HQ
isin
tere
sted
.Whi
lesu
bsid
iary
init
iativ
esha
vea
dire
ctef
fect
onsu
bsid
iary
auto
nom
y,th
eyal
soin
duce
CH
Qco
ntro
l,w
hich
decr
ease
ssu
bsid
iary
auto
nom
y.C
olli
ngs
etal
.(2
010)
CH
Qst
aff
(sta
ffing
flow
s/po
lici
es)
(I–I
I)R
esou
rce-
base
dvi
ew;
neo-
inst
itut
iona
lth
eory
Em
piri
cal
stud
y:21
3M
NE
sin
Irel
and,
surv
eyFi
rms
are
like
lyto
expl
oit
the
reso
urce
sof
subs
idia
rym
anag
ers
thro
ugh
‘inp
atri
ate
assi
gnm
ents
’at
the
CH
Qan
dat
othe
rsu
bsid
iari
esif
the
subs
idia
ryis
larg
ean
dw
ell
inte
grat
edw
ith
othe
rs.
Gos
pel
and
Sak
o(2
010)
CH
Qac
tivit
ies;
HR
func
tion
(I–I
I)C
onti
ngen
cyth
eory
,tr
ansa
ctio
n-co
stth
eory
,re
sour
ce-b
ased
view
Em
piri
cal
stud
y:P
roct
er&
Gam
ble
and
Uni
leve
rA
high
degr
eeof
cent
rali
zati
onfo
ster
san
inte
rnal
shar
ed-s
ervi
ces
cent
rera
ther
than
outs
ourc
ing.
Ade
cent
rali
zed
envi
ronm
ent
favo
urs
outs
ourc
ing
rath
erth
angl
obal
lyst
anda
rdiz
esy
stem
san
dpr
oces
ses.
Jose
phan
dO
casi
o(2
012)
CH
Q–B
Ure
lati
onsh
ips;
CH
Qat
tent
ion
(II;
II–I
II)
M-f
orm
Indu
ctiv
eca
sest
udy
ofG
E’s
gove
rnan
cesy
stem
,19
51–2
001
The
rear
eth
ree
type
sof
coll
ectiv
eve
rtic
alin
tera
ctio
nsbe
twee
nth
eC
HQ
and
Bus
thro
ugh
chan
nel
inte
grat
ion,
whi
chhe
lpex
plai
nst
rate
gic
adap
tive
chan
geat
the
BU
leve
l.K
lein
baum
and
Stu
art
(201
4)C
omm
unic
atio
nne
twor
ksof
CH
Qst
aff
(II)
Net
wor
kth
eory
Em
piri
cal
stud
y:3.
3m
illi
one-
mai
ldy
ads
amon
g24
,090
empl
oyee
sin
one
com
pany
A‘c
orpo
rate
impr
imat
ur’
exis
tson
the
CH
Qst
aff’
sne
twor
kst
ruct
ures
(rel
ativ
eto
BU
s,C
HQ
staf
fha
vem
ore
cent
rali
zed
and
broa
der
netw
orks
)th
atre
mai
nsev
enw
hen
the
peop
lem
ove
back
toth
eB
U.
a Inch
rono
logi
cal
orde
r.b T
hech
arac
ters
inpa
rent
hese
sin
the
seco
ndco
lum
nre
fer
toFi
gure
1.c In
clud
esdi
rect
and
indi
rect
quot
es.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
365
S. Kunisch et al.
functions, and changes in CHQ costs (see also Younget al. 2000). They find that, relative to five yearsbefore the study, 42% of the CHQ had fewer staff,32% had the same number of staff, and 26% hadmore staff. Trends in the individual countries weresimilar to those evident in the overall sample, withthe exception of the US and Chile, where approxi-mately 50% of firms reported increases in thenumber of CHQ staff.
Antecedents
Several internal factors can be associated withorganizational design changes at the CHQ level. First,a few studies explore the role of corporate-levelfactors, including corporate strategy and corporaterestructuring. For example, Aksoy and Marshall(1992) suggest that corporate restructuring, thedelegation of tasks to operating companies and out-sourcing have led to a substantial decrease in thenumber of CHQ staff in large firms. Cibin and Grant(1996) study corporate restructuring in eight interna-tional oil majors from 1980 to 1992. They linkchanges in corporate strategy – especially a narrowingof the firm’s scope – to various changes at the CHQ,including decentralization, a lower level of formality,a lower level of specialization, the introduction ofnon-hierarchical systems of coordination and control,and a redefinition of the roles of the TMT and CHQstaff. In addition, they link changes in business-levelstrategies to strategic change at the CHQ.
Second, several firm characteristics are alsoimportant, especially firm growth and prior firm per-formance (e.g. Aghion and Tirole 1995; Maljers1992; Young and Goold 1993). For example, growthderived through M&A activities increases the needfor cultural change in order to build a common cor-porate culture and avoid the danger of becomingoverly decentralized (Maljers 1992). In addition,prior performance affects changes in the organi-zational design of the CHQ. Substantial changesseem to only occur when firms face severe economicdifficulties (Pettigrew 1985, 1987). Along the samelines, Young and Goold (1993) argue that the drivingforces of CHQ downsizing stem not only fromcorporate styles, but also from cost and efficiencypressures.
Third, several studies consider the operating units’characteristics, such as subsidiary size, CHQ–subsidiary relationships and relationships with othersubsidiaries. For example, firms are likely to exploitthe resources of a subsidiary manager through
assignments to the CHQ or other subsidiaries if thesubsidiary is large and well integrated with othersubsidiaries (Collings et al. 2010). Interestingly,Kleinbaum and Stuart (2014) uncover a ‘corporateimprimatur’ in the CHQ staff’s network structuresthat remains even when the focal employees moveback to their original operating units. Based on anetwork analysis of 3.3 million email interactionsamong 24,090 employees in a single firm, the authorsfind clear differences in the network structure of BUstaff and CHQ staff: CHQ staff members have morecentralized and broader networks.
Finally, as in the strategy domain, a few studiespoint to the crucial role of strategic leadership. Morespecifically, in a comprehensive single case study onthe role of leadership in change processes, Pettigrew(1985, 1987) finds that revolutionary periods ofchange are associated with changes in leadership andpower in the firm. Relatedly, Young (1998) arguesthat changes at the CHQ are viewed as a threat to theestablished empires of those who are running thefirm. The author thus suggests that firms should useexternal benchmarks as a less emotional way ofchallenging the status quo at their CHQs. In a similarvein, Goold and Campbell (2002) propose that com-panies should take several rational steps when engag-ing in organizational redesign and try minor designchanges before making major changes in order toavoid disruptions.
In addition, several external factors are associatedwith organizational-design changes at the CHQ. Inthe 1980s and 1990s, for example, an increased focuson shareholder value triggered a review of CHQactivities (e.g. Useem and Gottlieb 1990). Notably,an increasing degree of internationalization fostereddecentralization in formerly centralized functionssuch as R&D (e.g. Park and Gil 2006; Reger 2004).Similarly, technological changes and the develop-ment of new information technologies are associatedwith decentralization in functional activities (e.g.Donovan 1988; Rajan and Wulf 2006). Anotherimportant factor is the market environment (e.g.Cibin and Grant 1996; Luo 2007; Pettigrew 1985,1987). For example, Pettigrew (1985, 1987) findsthat periods of high-level change activity are associ-ated with economic recessions that affect industries,markets and prices, and thus firms’ relative perfor-mance. Similarly, Cibin and Grant (1996) reveal thatincreased competition and instability are linked tochanges at the CHQ. Alexander (1991) analysespanel data from 97 multihospital systems in a studyof adaptive change in control practices between the
© 2014 British Academy of Management and John Wiley & Sons Ltd.
366
Changes at Corporate Headquarters
CHQ and operating divisions. He finds that ‘organi-zations generally practice selective decentralizationunder conditions of increasing uncertainty butorganizational age, dispersion, and initial controlarrangements significantly moderate the directionand magnitude of such changes’ (Alexander 1991,p. 162).
Outcomes
Some studies explore the consequences of changesin the CHQ’s organizational design. In particular,several intermediate outcomes at the CHQ and BUlevels have been revealed. For example, Harreldet al. (2007, p. 34) find that appointing managerswith business-level experience can transform theculture in the corporate strategy department. Theyobserve that the ‘presence [of such managers] hastransformed the department’s formerly academicplanning culture to one that is much more action-oriented’. Joseph and Ocasio (2012) describe threetypes of interactions between the CHQ and theBUs, and suggest that these types of interactionvary in terms of their effectiveness for the adaptionof strategic change at the BU level. Amburgey andDacin (1994) study intermediate outcomes atthe firm level, and find a reciprocal relationshipbetween strategy and administrative structure.However, in terms of the magnitude and timing ofchanges in strategy and structure, they find a hier-archical relationship, with strategy being a moreimportant determinant of structure than structure isof strategy.
Unfortunately, we could not identify any studies ofthe performance outcomes of changes in the CHQ’sorganizational design. However, one study does pos-tulate a range of objectives for changes at the CHQthat reflect potential intermediate and performanceconsequences. In this study, Tomasko (1987, p. 36)identifies a range of objectives for firms attemptingto turn CHQ functions into ‘businesses’ that providetheir services not only internally, but also to custom-ers outside the firm. These objectives includedecreased overhead costs, additional profits, broaderCHQ services than the company could afford if ser-vices were only offered internally, higher customerorientation among CHQ staff and higher retention ofhigh-quality staff. In a similar vein, Stewart III(1990) argues that the CHQ can increase shareholdervalue by motivating BU managers, restructuring thebalance sheet and engaging in strict financial control,and decentralizing authority and ownership. Future
studies might consider these objectives as potentialoutcomes of changes at the CHQ.
Discussion
Collectively, these studies develop vital insights withrespect to the CHQ and organizational-change litera-tures. First, a number of corporate-level factorsincrease the need for changes at the CHQ, includingchanges in corporate strategy, corporate restructur-ing and growth. Relatedly, CHQ–subsidiary relation-ships are important. Second, a common themecentres on the interrelationships among changes invarious aspects of the CHQ unit’s formal and infor-mal designs, the culture and the people.
However, research in this domain has some short-comings. First, as with research in the strategydomain, research on the effects of changes in theorganizational design of the CHQ is relatively scarce.For example, some scholars argue that, if companiesgreatly reduce the size of their CHQs, they mightlose important corporate capabilities (e.g. Colliset al. 2007; Raynor and Bower 2001). Yet, thereis a lack of empirical evidence on the inter-mediate and performance consequences of suchchanges. Second, with the exception of a few studies,little is known about the change agents. We thus lackspecific knowledge of which actors (i.e. externalconsultants) trigger and implement changes in theorganizational design of the CHQ.
Research in the physical domain
Finally, changes at the CHQ can be conceptualized asphysical changes, which include changes in geo-graphical location of the CHQ and changes in otherphysical artefacts, such as CHQ buildings. Moststudies in this domain have explored the effect ofCHQ relocation. Table 4 summarizes the relevantstudies in the physical domain.
Characteristics
Research on changes in the location of the CHQeither within one country (e.g. Davis and Henderson2008; Feldman and Bolino 1998; Holloway andWheeler 1991; Klier and Testa 2002; Voget 2011) oracross national borders (e.g. Baaij et al. 2004,2012a,b; Birkinshaw et al. 2006; Laamanenet al. 2012; Voget 2011) has increased in recentyears. Indeed, the phenomenon of CHQ relocation is
© 2014 British Academy of Management and John Wiley & Sons Ltd.
367
S. Kunisch et al.
Tabl
e4.
Pre
viou
sre
sear
chin
the
phys
ical
dom
ain
Aut
hor(
s)(y
ear)
aR
esea
rch
focu
sbT
heor
yM
etho
dK
eyfi
ndin
gsre
late
dto
chan
ges
atth
eC
HQ
c
Hol
low
ayan
dW
heel
er(1
991)
CH
Qre
loca
tion
s(I
–II)
Dis
pers
ion
theo
ryE
mpi
rica
lst
udy:
300
larg
efi
rms
from
1980
to19
87C
hang
esin
met
ropo
lita
nco
rpor
ate
dom
inan
cear
ecl
osel
yre
late
dto
spat
ial
shif
tsin
the
CH
Q’s
loca
tion
.G
hosh
etal
.(1
995)
CH
Qre
loca
tion
s(I
I–II
I)N
oex
plic
itth
eory
:fi
nanc
eE
mpi
rica
lst
udy:
even
tst
udy;
160
CH
Qre
loca
tion
sbe
twee
n19
66an
d19
92
The
stoc
k-m
arke
tre
acti
ons
toC
HQ
relo
cati
ons
are:
(1)
posi
tive
whe
nde
cisi
ons
are
attr
ibut
edto
cost
savi
ngs
and
(2)
nega
tive
whe
nde
cisi
ons
are
prom
pted
bym
anag
eria
lse
lf-i
nter
est.
Feld
man
and
Bol
ino
(199
8)E
mpl
oyee
mob
ilit
ydu
ring
relo
cati
ons
(III
)
No
expl
icit
theo
ryE
mpi
rica
lst
udy:
surv
eyof
380
empl
oyee
sof
ago
vern
men
tde
fenc
eag
ency
Em
ploy
eew
illi
ngne
ssto
mov
edu
ring
relo
cati
ons
isde
term
ined
byth
eir
(1)
atta
chm
ents
toth
epr
esen
tco
mm
unit
y,(2
)at
tach
men
tsto
the
curr
ent
orga
niza
tion
and
(3)
opti
ons
onth
ejo
bm
arke
t.
Shi
lton
and
Sta
nley
(199
9)C
HQ
loca
tion
deci
sion
s(I
–II;
II–I
II)
Clu
ster
theo
ry(c
ompe
titiv
esy
nerg
ies)
Em
piri
cal
stud
y:6,
525
CH
Qs
in19
96,
1,45
5C
HQ
ssu
rviv
edsi
nce
1986
Firm
ssp
atia
llycl
uste
rfo
rco
mpe
titiv
ead
vant
age
(Por
ter
1998
).C
ount
ies
wit
hC
HQ
sof
dive
rse
firm
ste
ndto
host
vari
ous
CH
Qs,
and
coun
ties
wit
hC
HQ
insp
ecifi
cin
dust
ries
attr
act
firm
sin
thos
ein
dust
ries
.G
arna
ut(2
002)
CH
Qre
loca
tion
s(I
–II;
II–I
II)
Eco
nom
ics
Naï
veth
eori
zing
(ded
uctiv
eth
eory
buil
ding
)R
egul
atio
ns(t
ore
duce
tran
spor
tan
dte
leco
mm
unic
atio
nsco
sts,
and
toin
crea
seth
eat
trac
tion
sof
peop
lew
ith
exec
utiv
ele
ader
ship
skil
ls)
posi
tivel
yin
flue
nce
CH
Qlo
cati
onde
cisi
ons.
Kli
eran
dTe
sta
(200
2)C
HQ
geog
raph
iclo
cati
ontr
ends
(I–I
I)
n/a:
desc
ript
ive;
com
peti
tive
adva
ntag
eE
mpi
rica
lst
udy:
larg
e,pu
blic
lytr
aded
US
com
pani
es
Tre
nds
for
pref
erre
dC
HQ
loca
tion
san
dth
ede
term
inan
tsof
CH
Qgr
owth
inm
etro
poli
tan
stat
isti
cal
area
s(M
SA
s)ar
e:po
pula
tion
and
chan
ges
inpo
pula
tion
,in
dust
ries
,an
dre
gion
s.B
aaij
etal
.(2
004)
CH
Qre
loca
tion
s(I
–II)
The
ory
onin
tern
atio
nal
busi
ness
(MN
C);
pare
ntin
gth
eory
Con
cept
ual
stud
y(i
nclu
ding
empi
rica
ltr
end
data
)A
conc
eptu
alfr
amew
ork
ofde
term
inan
tsof
CH
Qre
loca
tion
ssu
gges
tsfo
urse
tsof
fact
ors:
(1)
firm
spec
ifics
,(2
)in
dust
rysp
ecifi
cs,
(3)
met
ropo
lita
nsp
ecifi
cs,
and
(4)
nati
onan
dre
gion
spec
ifics
.B
rouw
eret
al.
(200
4)C
HQ
relo
cati
ons
(I–I
I)L
ocat
ion
theo
ries
:ne
ocla
ssic
al,
beha
viou
ral,
inst
itut
iona
l
Em
piri
cal
stud
y:5,
568
firm
s,21
coun
trie
sfr
om19
97to
1999
;su
rvey
Inte
rnal
fact
ors
(cha
nges
inth
ew
orkf
orce
)as
wel
las
exte
rnal
fact
ors
(gro
wth
thro
ugh
M&
A)
infl
uenc
eC
HQ
relo
cati
ons.
Firm
sse
rvin
gla
rger
mar
kets
relo
cate
mor
eof
ten.
Gre
gory
etal
.(2
005)
CH
Qre
loca
tion
s(I
–II)
n/a
Em
piri
cal
stud
y:16
7C
HQ
relo
cati
ons
over
six
year
sT
here
isli
ttle
evid
ence
ofim
prov
edop
erat
ing
perf
orm
ance
afte
rre
loca
tion
,an
dth
edi
stan
cebe
twee
nth
eol
dan
dne
wlo
cati
ons
has
nosi
gnifi
cant
impa
cton
perf
orm
ance
.B
irki
nsha
wet
al.
(200
6)C
HQ
relo
cati
ons
(I–I
I)In
tern
atio
nal
busi
ness
;in
stit
utio
nal;
corp
orat
est
rate
gyan
dgo
vern
ance
Em
piri
cal
stud
y:S
wed
ish
MN
Cs;
35C
HQ
san
d12
5B
UH
Qs;
surv
ey
CH
Qre
loca
tion
sar
ea
resp
onse
toth
epe
rcei
ved
dem
ands
and
oppo
rtun
itie
sof
fere
dby
over
seas
shar
ehol
ders
and
capi
tal
mar
kets
.
Pir
insk
yan
dW
ang
(200
6)C
HQ
geog
raph
icre
loca
tion
s(I
I–II
I)N
oex
plic
itth
eory
;fi
nanc
eE
mpi
rica
lst
udy
(qua
lita
tive)
:11
8fi
rms;
from
1992
to19
97
The
stoc
kre
turn
sof
firm
sw
ith
CH
Qs
inth
esa
me
geog
raph
ical
loca
tion
co-m
ove,
the
co-m
ovem
ent
ofth
est
ocks
ofth
eol
d(n
ew)
loca
tion
decr
ease
s(i
ncre
ases
)w
hen
firm
sre
loca
teth
eir
CH
Qs.
Bar
ner-
Ras
mus
sen
etal
.(2
007)
CH
Qre
loca
tion
s(I
–II;
II)
The
ory
ofin
tern
atio
nal
busi
ness
(MN
C)
Em
piri
cal
stud
y(q
uali
tativ
e):
mul
tipl
eca
sest
udy
ofFi
nnis
hM
NC
s
The
rear
esi
xke
ydr
iver
s(i
nter
nal
and
exte
rnal
),ea
chin
volv
ing
prag
mat
ican
dsy
mbo
lic
dim
ensi
ons
ofC
HQ
relo
cati
ons.
The
rear
ese
vera
lre
loca
tion
type
s,in
clud
ing
dire
ct,
hidd
en,
full
,pa
rtia
lan
dvi
rtua
l.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
368
Changes at Corporate Headquarters
Tabl
e4.
Con
tinu
ed
Aut
hor(
s)(y
ear)
aR
esea
rch
focu
sbT
heor
yM
etho
dK
eyfi
ndin
gsre
late
dto
chan
ges
atth
eC
HQ
c
Cox
and
Sch
ultz
(200
7)S
tock
-mar
ket
effe
cts
ofC
HQ
relo
cati
ons
(II–
III)
No
expl
icit
theo
ry:
mar
ket-
base
dvi
ewE
mpi
rica
lst
udy
(eve
ntst
udy)
:C
HQ
relo
cati
ons
ofU
Sfi
rms
from
1994
to20
05
The
reis
anov
eral
lpo
sitiv
ere
lati
onsh
ipbe
twee
nre
loca
tion
san
dst
ock
retu
rns.
Itis
mos
tpo
sitiv
eif
man
ager
ial
inte
rest
isth
ere
ason
,st
ill
posi
tive
ifco
sts/
cons
olid
atio
nis
the
reas
on,
and
nega
tive
ifsp
ace
isth
ere
ason
.
Dav
isan
dH
ende
rson
(200
8)
Spa
tial
aggl
omer
atio
nof
the
CH
Q(I
I–II
I)E
cono
mic
theo
ries
;ec
onom
icge
ogra
phy
Em
piri
cal
stud
y:U
SC
HQ
loca
tion
sfr
om19
77to
1997
infi
ve-y
ear
inte
rval
s
Ase
para
tion
ofce
ntra
lad
min
istr
atio
nfr
ompr
oduc
tion
can
bene
fit
the
CH
Q:
(1)
the
avai
labi
lity
ofdi
ffer
ent
loca
lse
rvic
e-in
put
supp
lier
san
d(2
)th
esc
ale
ofot
her
CH
Qac
tivit
ies
near
by.
Hen
ders
onan
dO
no(2
008)
CH
Qre
loca
tion
s(I
–II)
Eco
nom
icth
eori
es;
econ
omic
geog
raph
yE
mpi
rica
lst
udy:
488
US
man
ufac
turi
ngfi
rms
betw
een
1992
and
1997
Firm
sco
nsid
erth
ebe
nefi
ts(a
bili
ties
toou
tsou
rce
serv
ice
func
tion
sin
the
area
and
toga
ther
mar
ket
info
rmat
ion)
and
incr
ease
dco
mm
unic
atio
n/co
ordi
nati
onco
sts
ofse
para
ting
thei
rC
HQ
sfr
ompr
oduc
tion
site
s.D
esai
(200
9)C
HQ
relo
cati
ons
(I–I
I;II
)N
oex
plic
itth
eory
:th
eory
ofin
tern
atio
nal
busi
ness
Con
cept
ual;
illu
stra
tive
case
sFi
rms
unbu
ndle
thei
rC
HQ
func
tion
san
dre
allo
cate
them
oppo
rtun
isti
cally
acro
ssna
tion
s.A
firm
’sle
gal
hom
e,it
sfi
nanc
ial
hom
ean
dit
sho
mes
for
man
ager
ial
tale
ntno
long
erne
edto
beco
-loc
ated
.S
trau
ss-K
ahn
and
Viv
es(2
009)
CH
Qre
loca
tion
s(I
–II)
No
expl
icit
theo
ry:
new
econ
omic
geog
raph
ym
odel
Em
piri
cal
stud
y:26
,195
CH
Qin
276
US
area
sin
1996
and
2001
Lar
ger
and
youn
ger
CH
Qs,
larg
eran
dfo
reig
nfi
rms,
and
firm
scr
eate
dth
roug
hM
&A
relo
cate
mor
eof
ten.
Goo
din
fras
truc
ture
and
busi
ness
serv
ices
,lo
wta
xes/
wag
es,
indu
stri
alco
ncen
trat
ion
and
othe
rC
HQ
sat
trac
tC
HQ
.va
nM
arre
wij
k(2
009)
CH
Qbu
ildi
ngan
dde
sign
(art
efac
ts)
(II)
No
expl
icit
theo
ryE
mpi
rica
lst
udy
(qua
lita
tive)
:lo
ngit
udin
alca
sest
udy
The
CH
Qbu
ildi
ngis
aph
ysic
alem
bodi
men
tof
the
firm
’sor
gani
zati
onal
chan
gehi
stor
y.A
firm
’slo
cati
onin
ago
vern
men
tbu
ildi
ng(s
pati
alpo
siti
onin
g)is
are
flec
tion
ofth
epr
ivat
izat
ion
proc
ess.
Vog
et(2
011)
CH
Qcr
oss-
bord
erm
obil
ity
(I–I
I)N
oex
plic
itth
eory
:ec
onom
ics
Em
piri
cal
stud
y:14
0M
NC
s,19
97–2
007
The
addi
tion
alta
xdu
ein
the
hom
eco
untr
yha
sa
posi
tive
effe
cton
CH
Qre
loca
tion
,an
dco
ntro
lled
fore
ign
corp
orat
ion
legi
slat
ion
has
apo
sitiv
eef
fect
onth
enu
mbe
rof
relo
cati
ons.
Baa
ijet
al.
(201
2a)
CH
Qre
loca
tion
s(I
I)N
oex
plic
itth
eory
:ec
onom
ics
Em
piri
cal
stud
y:58
ofth
e10
0-la
rges
tD
utch
MN
Cs
The
inte
rnat
iona
liza
tion
ofm
arke
tsan
din
dust
ries
fost
ers
the
inte
rnat
iona
lre
loca
tion
ofC
HQ
part
s.S
trat
egic
bene
fits
and
cost
sex
ist,
and
ther
ear
eth
ree
opti
ons
for
CH
Qre
loca
tion
s.B
aaij
etal
.(2
012b
)C
HQ
relo
cati
ons
(I–I
I;II
–III
)N
oex
plic
itth
eory
:th
eory
ofin
tern
atio
nal
busi
ness
Em
piri
cal
stud
y(q
uant
itat
ive)
:58
ofth
e10
0-la
rges
tD
utch
MN
Cs
An
incr
ease
inth
efi
rm’s
degr
eeof
inte
rnat
iona
liza
tion
degr
eean
da
decr
ease
inth
epe
rcei
ved
hom
e-co
untr
yat
trac
tiven
ess
driv
eC
HQ
relo
cati
ons.
The
rear
ese
vera
lst
rate
gic
bene
fits
ofov
erse
asre
loca
tion
s.L
aam
anen
etal
.(2
012)
CH
Qre
loca
tion
s(I
–II)
No
expl
icit
theo
ry:
theo
ryof
inte
rnat
iona
lbu
sine
ss
Em
piri
cal
stud
y:52
cros
s-bo
rder
CH
Qre
loca
tion
sin
Eur
ope
from
1996
to20
06
Pus
hfa
ctor
sin
crea
seth
eli
keli
hood
ofC
HQ
relo
cati
on.
Pul
lfa
ctor
sin
crea
seth
eat
trac
tiven
ess
ofce
rtai
nC
HQ
loca
tion
s.C
atal
ysin
gfa
ctor
sin
crea
seth
ete
nden
cyto
relo
cate
.
a Inch
rono
logi
cal
orde
r.b T
hech
arac
ters
inpa
rent
hese
sin
the
seco
ndco
lum
nre
fer
toFi
gure
1.c In
clud
esdi
rect
and
indi
rect
quot
es.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
369
S. Kunisch et al.
striking in terms of the occurrence and scale of thechange. With regard to occurrence, some studies findthat between 5% and 6% of CHQs relocate each year(Strauss-Kahn and Vives 2009; Voget 2011).Feldman and Bolino (1998) report that US firmsspend over US$20 billion on corporate relocationsand uproot over 250,000 employees each year.In terms of scale, CHQ relocations are majororganizational events. Card et al. (2010, p. 222) usean example to illustrate the scale of CHQ relocations:‘Boeing was granted 50 million USD (about 100,000USD per job) in tax abatements to relocate its CHQfrom Seattle to Chicago. The move involved around500 top managers but no major production facilities’.
The geographical location of the CHQ matters formany reasons. For example, it affects the firm’scapital structure (Gao et al. 2011), its taxes, itsaccess to information (Lovely et al. 2005) and itsaccess to a wide range of resources, such as humancapital (for a comprehensive review on agglomera-tion research, see McCann and Folta 2008). Onestudy has explored the actual CHQ building as aphysical embodiment of the firm’s organizational-change history (van Marrewijk 2009). The studyfinds that a firm’s proximity to government buildings(spatial positioning) reflects its privatization process.In other words, changes in the corporate architecturemanifest as physical embodiments of organizationalchange at large. Given the importance of CHQ loca-tion changes, management scholars have attemptedto improve our understanding of CHQ mobility. Forexample, Birkinshaw et al. (2006, p. 682) note that‘the phenomenon of HQ relocation is on the rise, andas such it merits careful academic consideration’.
Antecedents
Several factors in the firm’s internal environmentinfluence CHQ relocation. First, managerial interestscan drive CHQ relocation decisions (e.g. Cox andSchultz 2007; Ghosh et al. 1995). Second, ownershipand shareholder characteristics can influence suchdecisions. For example, Birkinshaw et al. (2006,p. 697) find that companies move their CHQ overseasmainly in ‘response to the perceived demands andopportunities offered by overseas shareholders andcapital markets’. This finding ‘underlines the impor-tance of the externally facing role of the [CHQ], asthe interface between the activities of the MNC’sbusiness units and the capital markets’ (Birkinshawet al. 2006, p. 697), and thus serves as a goodexample of how research on changes at the CHQ can
inform our knowledge about the CHQ in general.Third, several firm characteristics are associated withCHQ relocations. For example, larger and youngerCHQs relocate more often, as do CHQs of largerfirms, foreign firms and firms created through M&Aactivity (Strauss-Kahn and Vives 2009). Along theselines, Brouwer et al. (2004) identify two internalfactors – changes in the workforce, and externalgrowth through M&A – that affect CHQ relocations.
In addition, certain conditions in the firm’s exter-nal environment, such as regulations and the capitalmarkets, are associated with CHQ relocations. Withrespect to regulations, conceptual and empiricalstudies suggest that taxes and company laws influ-ence decisions to relocate CHQs (e.g. Baaij et al.2004; Laamanen et al. 2012). For example, Garnaut(2002, p. 447) suggests that ‘reforms to reduce trans-port and telecommunications costs and to increasethe attractions of residence in Australia of peoplewith skills that are important in executive leadershipwould have positive effects’. Another set of factorsrelates to the elements associated with the marketenvironment, including capital markets, market sizeand the extent of internationalization. For example,Brouwer et al. (2004) find that market size is posi-tively related to the frequency of CHQ relocations.Interestingly, in a study of BU HQ and CHQ reloca-tions, Birkinshaw et al. (2006) find that the presenceof international customers and competition affect therelocation of BU HQs, but not of CHQs. Their find-ings highlight the difference between the corporateand the BU levels.
Many studies suggest that a mix of factors in theinternal and external environments may be linked toCHQ relocations. For example, Barner-Rasmussenet al. (2007) identify six key internal and externaldrivers: the control and integration of subsidiaries,the desire to induce HR-related change, the demandsof owners and other stakeholders, a physical pres-ence in a relevant area, the costs and spatial structureof management, and quality-of-life considerations.Each of these drivers has a pragmatic dimension anda symbolic dimension. Laamanen et al. (2012) iden-tify three sets of factors: push factors (high taxes anda high employment rate) increase the likelihood ofCHQ relocations; pull factors (central location andlow taxes) increase the attractiveness of CHQ loca-tions; and catalysing factors (export-oriented firmsand regional HQ) increase the tendency to relocate.Cox and Schultz (2007) distinguish among threemotivations for CHQ relocations and find that stock-holders react positively to relocations motivated by
© 2014 British Academy of Management and John Wiley & Sons Ltd.
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Changes at Corporate Headquarters
cost/consolidation and managerial interests, butnegatively to those motivated by space considera-tions. Strauss-Kahn and Vives (2009) find that firmsrelocate their CHQs to areas that offer certainbenefits, such as access to good airport facilities, lowtaxes, low wages, high levels of business services,same-industry specialization and the CHQs of indus-try competitors. More generally, Baaij et al. (2004)propose a conceptual framework with four categoriesof determinants of CHQ location decisions. Thesecategories include various factors in the firm’s inter-nal and external environments.
In addition, scholars have recently started to relaxthe assumption of a single CHQ entity and, instead,studied different parts of the CHQ. For example,Desai (2009) argues that firms can have multipleCHQs, which might include a legal home, a financialhome and a home for managerial talent, all of whichcan be relocated independently. Similarly, Baaij et al.(2012b) find that large firms are increasingly movingcore CHQ parts abroad; only the corporate legalentity tends to be kept ‘at home’. Furthermore, theirstudy reveals that different core CHQ parts have dif-ferent drivers of relocation, such as the degree towhich firms are internationalized and the perceivedattractiveness of their home countries.
Outcomes
Several studies explore the intermediate and perfor-mance outcomes of CHQ relocations. First, CHQrelocations affect various intermediate outcomes. Forexample, in their study of the determinants of CHQagglomeration, Davis and Henderson (2008) suggestthat the CHQ benefits from spatial separation fromits production sites in two important ways. First, thebroader range of expert services available for variousneeds improves the CHQ’s productivity. Second, theCHQ benefits from its close proximity to otherCHQs. However, Feldman and Bolino (1998) cautionthat the loss of key employees can become an issue.They find several important factors that affect anemployees’ willingness to move in conjunction witha CHQ’s relocation, including their relationshipswith the present community and the current organi-zation as well as the availability of job alternatives.Baaij et al. (2012a) list various benefits and costsassociated with relocations. In a related study, thesame authors argue that moving core CHQ partsoverseas can be beneficial for firms, because of bettercommunication and knowledge exchange with over-seas stakeholders, access to international resources,
and access to fiscal, legal and regulatory regimes(Baaij et al. 2012b).
Second, scholars relate CHQ relocations to variousperformance outcomes, such as operational perfor-mance (Gregory et al. 2005), tax savings (e.g.Laamanen et al. 2012) and, most frequently, stock-price effects (e.g. Cox and Schultz 2007; Ghosh et al.1995; Pirinsky and Wang 2006). For example,Pirinsky and Wang (2006) find that the stock returnsof firms with CHQs in the same geographical loca-tion co-move, and that the co-movement of the stocksin the old (new) location decreases (increases) whenfirms move their CHQs. Ghosh et al. (1995) catego-rize the motives for CHQ relocations into six groups:cost, agency, business growth, business decline, saleand no reason. They find that shareholder reactionsare positive when CHQ relocations are motivated bycost savings, whereas they are negative when reloca-tions are related to managerial self-interest. In asimilar study, Cox and Schultz (2007) find an overallpositive relationship between CHQ relocations andstock prices. More specifically, they find that share-holder reactions are most positive when relocationsare the result of managerial interest. The reactionsare also positive when cost/consolidation is thereason for the move and, to some extent, even whenno reason is given. However, the reaction is negativewhen space is the reason.
Discussion
Collectively, research in the physical domain contri-butes to knowledge of firm-level decisions. Mostimportantly, these studies improve scholarly under-standing of the contemporary phenomenon ofCHQ relocations, which seems on the rise. As CHQrelocations can have significant symbolic andorganizational implications, they merit careful schol-arly investigation (Birkinshaw et al. 2006). More spe-cifically, we are already aware that specific aspects ofthe firm and its location determine CHQ relocations.In general, these factors can increase the attractive-ness of a geographic location (country or region), andthus either decrease the likelihood of a CHQ reloca-tion or attract new CHQs. Thanks to the availability ofsecondary data, studies in this domain provide empiri-cal evidence on the performance consequences ofspecific aspects of CHQ change. Overall, there issome evidence that CHQ relocations have a positiveeffect on firm performance (e.g. stock-market reac-tions), although such reactions seem to depend on therationale behind the relocation decision.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
371
S. Kunisch et al.
Despite these valuable insights, future researchneeds to address three shortcomings. First, with theexception of a few studies (e.g. Baaij et al. 2012b;Desai 2009), extant research on CHQ relocations haslargely focused on the CHQ as a whole and has reliedon data on legal domiciles. Recently, however, somecompanies have reported that they have dual or evenmultiple CHQs. For example, in describing how aDutch company moved its global CEO and parts ofits CHQ to China, Birkinshaw (2010) points to thetrend of ‘second homes’ and dispersed CHQs. Somecompanies claim that they do not have a traditionalCHQ; instead they have opted for a virtual CHQ andthe rotation of TMT meetings around major sites(e.g. Baaij et al. 2012a; Birkinshaw et al. 2006).Baaij et al. (2012a) suggest the relocation of a TMTmember’s office, extensive reliance on travel andcommunication, and adopting second homes as alter-natives to full relocation. As there is little knowledgeof such practices, this area offers great potential forfuture empirical work. Second, as many studies focuson the short-term consequences at the firm level, wehave few insights into the intermediate or long-termeffects of CHQ relocations. It seems important alsoto study CHQ-specific outcomes, such as the effecton corporate culture (Feldman and Bolino 1998).Third, studies on CHQ relocation often apply cross-sectional designs, which prohibit us from establish-ing causal relationships (e.g. Birkinshaw et al. 2006).
Overall synthesis and futureresearch directions
Although the research in each of the three domainsreviewed here contributes to scholars’ understandingof changes at the CHQ, the collective impact of theextant literature has been limited by its independentdevelopment in separate research areas, each ofwhich has a certain scope in terms of research foci,methods and theories. In addition, research in thethree intellectual domains seems to be in differentstages of development, which are reflected not onlyin the studies’ focal topics, but also in the differentmethods used. For example, while most studies ofphysical change at the CHQ are large-scale empiricalstudies, a considerable number of studies of strategicand organizational-design changes are conceptualand rely on illustrative cases. Furthermore, acommon empirical issue, especially for studies in thestrategic and organizational-design domains, relatesto the limited availability of CHQ-related data.
However, firms have increasingly begun to discloseCHQ information in their annual reports and analystpresentations (e.g. Economist 2014), which offersnew opportunities for empirical research.
Organizing framework for research into changes atthe CHQ
Based on this literature review, we have developedan organizing framework that integrates the extantknowledge in the three research domains (seeFigure 1). The framework reflects the previousstudies’ main variables of interest and the relation-ships between those variables. The purpose of thisframework is to advance a more coherent perspectiveon changes at the CHQ that allows for learning andcross-fertilization of the three previously separateresearch domains, which we hope will stimulatefuture research.
The framework is composed of three components(the rectangles) and four forces (the diamonds).The latter illustrate the nature of the relationshipsbetween the components. The first component cap-tures the antecedents of changes at the CHQ (I).2
These factors arise from both changing and enduringconditions in the firm’s internal and external environ-ments. The internal factors (Ia) can be broadly differ-entiated into: (a) strategic leadership (CEO,TMT), (b)corporate strategy, (c) corporate governance and own-ership, and (d) firm characteristics (e.g. age, size,prior performance). External factors (Ib) can be cat-egorized into factors in (a) the regulatory environ-ment, (b) the market environment and (c) thetechnological environment. As discussed above,extant studies often consider various internal andexternal factors as antecedents of changes at the CHQ.
The second component of the framework incorpo-rates the characteristics of changes at the CHQ alongthe three content domains (II). The strategy domain(IIa) includes changes in the CHQ’s roles andstyles, and in its corporate growth strategies. Theorganizational-design domain (IIb) captures changesin the size and configuration of the CHQ, changes inlevels of formalization and centralization, and thedynamic relationships between the CHQ and theoperating units. The physical domain (IIc) refers tochanges in the CHQ’s (physical) artefacts, such as itslegal domicile and its physical building(s).
The three dimensions of changes at the CHQare interrelated. The strategy domain and the
2The characters in parentheses refer to Figure 1.
© 2014 British Academy of Management and John Wiley & Sons Ltd.
372
Changes at Corporate Headquarters
(II)
CH
AR
AC
TE
RIS
TIC
S(I
II)
OU
TC
OM
ES
(I)
AN
TE
CE
DE
NT
S
(III
a)
Inte
rmed
iate
Ou
tco
mes
-C
HQ
leve
l-
Bus
ines
s/ s
ubsi
diar
y le
vel
-F
irm le
vel
(III
b)
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rfo
rman
ce
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tco
mes
-C
HQ
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l-
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ines
s/ s
ubsi
diar
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irm le
vel
(Ia)
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rnal C
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text
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T)
-C
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rate
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nce
and
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ract
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tics
(Ib
) E
xte
rnal
Co
nte
xt
-R
egul
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n-
Mar
kets
-T
echn
olog
y
(C)
Ad
ap
tati
on
(D)
Dis
rup
tio
n
(A)
Pre
ssu
re f
or
ch
an
ge
∗
(B)
Resis
tan
ce t
o
ch
an
ge
Inte
r-
rela
tio
nsh
ips,
Acto
rs,
Pro
cesses
(IIb
) O
rgan
izati
on
al
Desig
n D
om
ain
-In
form
al d
esig
n-
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mal
des
ign
-P
eopl
e (e
.g. s
taffi
ng)
(IIc
) P
hysic
al
Do
main
-Lo
catio
n-
Agg
lom
erat
ion
-B
uild
ings
(IIa
) S
trate
gy
Do
main
-R
oles
-S
tyle
s-
Act
iviti
es
Fig
ure
1.O
rgan
izin
gfr
amew
ork
for
rese
arch
onch
ange
sat
the
CH
Q.
*The
grey
-sha
ded
area
shi
ghli
ght
the
oppo
rtun
itie
sfo
rfu
ture
rese
arch
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organizational-design domain are closely related. Asthe CHQ’s functions and roles translate into theCHQ organizational design (e.g. Collis et al. 2007),scholars often assume a hierarchical relationshipbetween strategy and structure. For example,Amburgey and Dacin (1994) find a reciprocal rela-tionship between strategy and administrative struc-ture, but a hierarchical relationship in terms of themagnitude and timing of these changes, with strategybeing a more important driver of structure thanstructure of strategy. In addition, the organizational-design domain and the physical domain are interre-lated. For example, a change in the geographicallocation of the CHQ represents a change in theCHQ’s proximity to the firm’s operating units andexternal markets (e.g. Laamanen et al. 2012; Landieret al. 2009). The decision to co-locate or geographi-cally separate administrative functions and produc-tions sites (e.g. Henderson and Ono 2008) isimportant for the firm, especially from an informa-tion and decision-making perspective. Finally, thestrategy domain and the physical domain are alsointerrelated. The geographical location of the CHQcarries significant signal value and is publiclyregarded as indicating the ‘nationality’ of thecompany (Laamanen et al. 2012). Hence, a change inthe location of the CHQ has consequences from asignalling point of view and, thus, represents a stra-tegic decision.
Even though there is a substantial amount ofresearch in each of the three domains, there arelimited insights into aspects that may benefit from oreven require cross-fertilization across them. This isparticularly true with respect to the interrelationshipsamong the three domains, the roles of internal andexternal actors, and the processes of change at theCHQ. For example, while research in the strategydomain stresses the crucial role of internal changeagents, such as the CEO and the TMT, in fostering orconstraining changes at the CHQ, change agentshave largely been neglected in the two other domains.In the subsequent section, we discuss these opportu-nities for future research and their potential to con-tribute to understanding of the changes at the CHQ.
The third component of the framework refers tothe outcomes (III). These outcomes can be broadlysplit into intermediate (IIIa) and performance (IIIb)outcomes. They can be further differentiated intooutcomes on the CHQ level, outcomes on theBU/subsidiary level and outcomes on the firm level.Overall, we have little conclusive knowledge aboutthe consequences of changes at the CHQ. While both
intermediate and performance outcomes should bestudied at different levels, there is a notable lack ofempirical research on performance outcomes at theCHQ and BU levels.
The framework’s diamonds portray the dynamicrelationships between these three components. Onthe one hand, the changing and enduring conditionsin the firm’s internal and external environmentscan influence pressure for as well as resistance tochanges at the CHQ (A; B). On the other hand, inter-mediate and performance outcomes arise from theadaption and disruption caused by changes at theCHQ (C; D). We believe that the extent to whichthese four forces affect changes at the CHQ and theiroutcomes – and how they do so – merit further inves-tigation in order to enhance scholars’ understandingof changes at the CHQ. We therefore return to theseforces in our discussion of research opportunities.
High-priority research opportunities
On the basis of our synthesis of the extant research,we have identified five important opportunities forfuture research, as indicated by the grey-shaded areasin the organizing framework (see Figure 1). Specifi-cally, we suggest that scholars focus on improvingour knowledge of: (1) the pressure for and resistanceto changes at the CHQ, (2) interrelationships amongchanges at the CHQ, (3) change processes at theCHQ, (4) agents involved in changes at the CHQ,and (5) adaptive and disruptive effects of changes atthe CHQ. Table 5 provides exemplary research ques-tions for each of these opportunities. When studyingthese and other phenomena described in this section,we encourage scholars to pay close attention to the fitamong the dynamic perspective on the CHQ, thetheories and the research methodology (Bergh 1993;Bergh and Fairbank 2002).
(1) Pressure for and resistance to changes at theCHQ: when do changes occur at the CHQ? Tosubstantiate knowledge of when changes occur at theCHQ, more conceptual and empirical research isneeded on the factors that increase pressure for andresistance to such changes. Studies of the paradox ofstability vs. change at the CHQ are critical forimproving the limited understanding of the triggersof and impediments to changes at the CHQ. Futureresearch can also help resolve inconsistenciesbetween findings from research on strategic changesand findings on other changes at the CHQ. Forexample, research in the strategic domain suggests
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that CHQ inertia exists, while research in theorganizational-design and physical domains does notnecessarily support this notion. Scholars shouldidentify and explore various additional internal andexternal antecedents to a variety of specific changesat the CHQ. Such antecedents may include size,functions and location.
In this vein, one important concern is the extent towhich changes at the CHQ are deterministic or basedon managerial choice. For example, we have littleknowledge of the conditions that lead to the creationof centralized functions, such as HR, IT or market-ing. On the one hand, it is widely believed thatchange is largely driven by institutional forces andthat the firm’s mimetic behaviour affects changes atthe CHQ (DiMaggio and Powell 1983; Ferlie andPettigrew 1996). On the other hand, changes at the
CHQ are typically driven by senior executives fromthe top down (Goold and Luchs 1992), which wouldsupport the managerial-choice perspective. The CHQoffers a compelling context for gaining additionalinsights into these competing views.
(2) Interrelationships among changes at the CHQ:what changes at the CHQ? Our framework indi-cates that changes can affect multiple dimensionsand multiple levels of the CHQ. While the continuedexamination of the individual dimensions of changesat the CHQ is appealing, we believe that studying thelinks between these interrelated dimensions iscrucial for extending the collective knowledge ofwhat changes at the CHQ.
Such research could address important questionsregarding whether change on one level triggers or
Table 5. High-priority opportunities for future research on changes at the CHQ
Research opportunities Exemplary research questions
(1) Pressure for andresistance tochanges at theCHQ
• How inert is the CHQ? Are some CHQ characteristics more inert or stable than others (e.g. artefacts, suchas location or physical attributes, vs. management styles)?
• When and why do firms establish new centralized corporate functions? When do they decentralize or evenshut down existing corporate functions?
• How do different institutional settings and forces affect changes at the CHQ over time? To what extent dobandwagon effects (‘fashions’) influence changes at the CHQ, such as changes in the CHQ design?
• How do shifts in the external environment, such as globalization and the rise of the BRIC countries, affectCHQ relocation decisions?
(2) Interrelationshipsamong changes atthe CHQ
• To what extent are changes at the CHQ interrelated? How do changes in one CHQ dimension triggerchanges in another? Do changes in the various CHQ dimensions occur simultaneously or successively?
• How do CHQ artefact changes serve as a catalyst for other changes at the CHQ?• When and why do corporations decide to relocate rather than redevelop their CHQs? When and why do
firms decide to establish new CHQ types, such as ‘second homes’ or ‘virtual (token) CHQs’?(3) Change processes
at the CHQ• How do changes at the CHQ occur? In other words, how do they unfold over time? Are there different
patterns, cycles or rhythms of changes at the CHQ? Do parts of the CHQ, such as corporate functions, havea life cycle?
• How do specific processes of change at the CHQ, such as initiation, decision-making and implementation,function?
• How do firms reverse change? Does adverse change occur?• What are the internal and external contingencies of the processes of change at the CHQ?
(4) Agents involvedin changes at theCHQ
• Who are the internal and external agents of change at the CHQ? How do they enact changes at the CHQ?• Does the CEO’s prior work experience inside or outside the focal firm, and at the CHQ or business levels
make a difference? What types of CEO succession lead to changes at the CHQ?• To what extent do specific (new) functional executives, such as chief strategy officers, affect changes at the
CHQ? How do they do so?• To what extent do external consultants and other external agents (e.g. activist shareholders) influence
changes at the CHQ? How do they do so? Do external change agents help overcome CHQ inertia? Doexternal agents foster mimetic changes at the CHQ?
(5) Adaptive anddisruptive changesat the CHQ
• When are changes at the CHQ adaptive and when are they disruptive? What are the merits or downsides ofstability at the CHQ?
• What are the intermediate consequences of changes at the CHQ, such as CHQ relocations? How do changesat the CHQ affect CHQ–subsidiary relationships, corporate culture, corporate capabilities and CHQ staffturnover?
• To what extent do decisions related to changes at the CHQ enhance firm performance? How do they do so?How do changes at the CHQ affect a firm’s operating performance and corporate value-added?
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requires changes on other levels. For example, acompany that decides to shift its CHQ from onelocation to another should consider several severestrategic and organizational implications. Forexample, in their study of CHQ relocations, Feldmanand Bolino (1998) explore several factors associatedwith the staff’s willingness to move during corporaterelocations. We believe that there are many otheropportunities to study such links, which could focuson questions such as: How do changes at the CHQserve as a catalyst for organizational change at large?When and why do corporations decide to move ratherthan redevelop their CHQs?
(3) Change processes at the CHQ: how does theCHQ change? Scholars’ understanding of the pro-cesses behind changes at the CHQ and, thus, of thequestion of how the CHQ actually changes, islimited, even though such knowledge is urgentlyneeded. We need to learn more about change patterns(Klarner and Raisch 2013) and various time-relatedaspects (Ancona et al. 2001) of changes at the CHQ.For example, scholars should investigate the evolu-tion of the CHQ as a whole, as well as the evolutionof its parts. Furthermore, we lack knowledge regard-ing changes in specific CHQ elements, such as thehurdles associated with launching and institutional-izing a corporate function within large companies(e.g. Campbell et al. 2011, 2012).
In order to study the process phenomena related tochanges at the CHQ, there is a need for rigorousqualitative research that develops theory and propo-sitions of changes at the CHQ based on rich casestudies. Studies in this vein that focus on specificprocesses of changes at the CHQ – such as changeinitiation, related decision-making and implementa-tion – may lay the groundwork for comprehensiveprocess models and, thus, offer the potential to con-tribute to scholars’ understanding of how changesunfold at the CHQ. Such studies should incorporatepotentially important internal and external contin-gencies, such as the industry’s dynamism and thefirm’s corporate strategy. For example, as priorresearch suggests that the role and design of the CHQdiffer across regions (Collis et al. 2012), the pro-cesses associated with changes at the CHQ may alsodiffer. This, therefore, calls for studies that includecase companies or large-scale data from multiplegeographical regions.
(4) Agents involved in changes at the CHQ: whointroduces change at the CHQ? Another importantarea for future research is the study of the internal
and external agents involved in changes at the CHQand, thus, of those who are engaged in these changes.With respect to internal change agents, futureresearch should further explore the role of the CEOand top management in changes at the CHQ. As theCEO is expected to be a driving force behind avariety of changes at the CHQ, especially when suc-cession occurs (e.g. Goold and Luchs 1992; Gooldet al. 2001; Laamanen et al. 2012), the study ofchanges at the CHQ as an intermediate outcome ofCEO succession appears promising. Such researchmay focus on such questions as: When do CEO suc-cessions lead to alterations in the roles and structuresof the CHQ? Does the new CEO’s prior work expe-rience inside or outside the focal firm and at the CHQor at the business levels make a difference? We alsoencourage scholars to study other agents of change atthe CHQ level, such as heads of corporate functionsand corporate strategists, including, for example,chief strategy officers (Menz and Scheef 2014).Future studies in this area will not only inform under-standing of how changes at the CHQ occur, but mayalso help open the ‘black box’ of how corporatemanagers affect outcomes, particularly those specificto top executives’ roles. They can, therefore, alsocontribute to upper-echelon research (Hambrick2007; Hambrick and Mason 1984; Menz 2012). Webelieve there is great potential for future empiricalwork in this area, especially for large-scale,hypothesis-testing studies.
In addition, while we have at least some know-ledge regarding internal change agents, we knowlittle about the external agents that may affectchanges at the CHQ. For example, external strategyconsultants often take part in large firms’ CHQchanges, as indicated by the frequent studies theypublish on the topic. We therefore encourage schol-ars to explore the role of potentially influential exter-nal change agents, such as consultants and activistshareholders. Studies in this vein should addresssuch questions as the extent to which external con-sultants and other external agents (e.g. activist share-holders) influence changes at the CHQ, and how theyaffect the respective outcomes.
(5) Adaptive and disruptive effects of changes at theCHQ: why does the CHQ change? An examinationof the literature shows that we have little conclusiveknowledge about the consequences of changes at theCHQ and, thus, regarding the question of why a CHQchanges. While there are recurring calls for speci-fic changes at the CHQ, such as downsizing
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(e.g. Economist 2008, 2014), we have hardly anyempirical evidence regarding the consequences ofsuch changes. We therefore encourage scholars toexplore the extent to which decisions related tospecific changes at the CHQ benefit performanceoutcomes, such as a firm’s operating performanceand corporate value-added, and how these benefitsarise. Given the distance between CHQ changes andperformance outcomes, we need to extend knowl-edge of the intermediate consequences of changes atthe CHQ, including their effect on CHQ–subsidiaryrelationships, organizational structures and corporateculture.
Along these lines, the extent to which changes atthe CHQ are adaptive or disruptive also requiresfurther investigation. Studies exploring the CHQ caninform knowledge on the more general puzzle ofwhether organizational change is adaptive or disrup-tive (e.g. Boeker 1997). Stability might ensure con-tinuity of the corporate culture and have otherimportant effects that may allow other parts of theorganizations to change. A few studies on specificCHQ concerns caution that changes at the CHQ canhave severe negative consequences (e.g. Wiersema2002). Therefore, scholars are encouraged to inves-tigate whether and when such changes are beneficial.The insights derived from such studies will also helpfirms diagnose the need for change or stability at theCHQ.
Conclusion
With the rise of large multi-product and multina-tional companies that are confronted with ever-changing environments, corporate managers andmanagement scholars alike have become moreinterested in understanding the conditions andforces that facilitate successful change at the CHQin large, public firms. In this paper, we havereviewed the existing knowledge on changes at theCHQ. We have also developed a framework thatcombines the variety of insights and serves as abasis for directing future research. The frameworkallows for the integration of research from thethree separate tracks of CHQ change: strategicchange; organizational-design change; and physical/geographical change. It thereby helps clarify severalquestions: To what extent do changes occur at theCHQ? On what levels do these changes take placeand in which directions? What triggers or impedesthese changes? What are the consequences of these
changes? It therefore not only provides scholarswith a comprehensive overview of the extantknowledge but also uncovers novel research oppor-tunities. As more research on changes at the CHQis needed to improve scholarly understanding of thecontemporary corporation, we hope that this reviewwill facilitate fellow scholars’ work.
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Supporting information
Additional Supporting Information may be found inthe online version of this article at the publisher’swebsite:
Table S1. Journal overviewFigure S1. Sample of works considered for thisreview by domain and year
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