The Strategic Location of Regional Headquarters for Multinationals in Africa

Working Paper 276
Author(s): 
John M. Luiz and Busi Radebe
Publication date: 
March, 2012
Journal: 
Economics and Management journal
Classification-JEL: 

The study investigates the criteria used by multinational companies to identify the locations of their African regional headquarters (RHQs) and the importance that multinational companies assign to the respective regional offices. We find that multinationals do assign value to their RHQs but are always aiming to strike a balance between local responsiveness and global integration. The power of standardization and the introduction of relevant controls have allowed multinational companies to operate as a coherent unit in the different markets where they operate. The dominant criteria used by MNEs to choose their locations for RHQs in Africa are linked to the advantages of agglomeration and the accompanying economies of scale, and a sound institutional framework which provides a predictable business climate. Distance has become less important.

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