The bridging role of regional headquarters. Multinational companies in the Asia-Pacific region

What is it about?

Large multinational companies (MNCs) are strongly formalized, often standardized, and complex with multiple hierarchical levels. Over the past few decades, MNCs have strengthened their coordination and control systems by creating regional headquarters (RHQs). This research investigates how MNCs rearticulate control dimensions at RHQs, to coordinate and exert control over subsidiaries in the Asia-Pacific region. Based on a survey of 86 French MNCs in the Asia-Pacific region, this research applies a structural equation model in order to determine RHQs’ roles in the field of regional decision making, coordination and control. We find that large MNCs, with significant presence in Asia, transfer coordination and control to RHQs, in a way that leads us to propose the use of the expression “regio-centralization”. RHQs become socialization hubs, where most regional decisions are taken and where international managers meet. MNCs mobilize at the same time expatriates, short-term assignees, and local managers who intensively interact at RHQs. Thus, informal control at RHQs increases, partly substituting formal control by HQs. Smaller MNCs, without RHQs, on the contrary, base their control and coordination on the formalization of HQs-subsidiary relations, especially through strong reporting, in combination with centralized decision-making at HQs

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