How corporate headquarters add value in the digital age

Abstract

How will digitalization influence the role of corporate headquarters (CHQs) and their relationships with their operating units? We recently asked 67 senior CHQ managers this question. The results suggest that CHQs expect to become more powerful and more involved in their operating units. These conclusions seem to be driven by perceptions that the ongoing digitalization will provide CHQ managers with more timely and better information. In this "Point of View," we discuss the potential pitfalls of such a narrative. We also offer ideas for how to avoid mistakes and ensure that CHQs increase their value-added in times of digitalization. In particular, we suggest that CHQs place emphasis on social interactions for data to be effectively collected and analyzed, for decision-making power to be adequately allocated, and for CHQ involvement to be informed and necessary.

Chief Digital Officers: An Analysis of the Presence of a Centralized Digital Transformation Role

“…Third, our findings inform the debate about centralized versus decentralized responsibilities (e.g., Foss et al, 2015), which is proliferating, especially in the context of digital transformation (Nell et al, 2021; Schmitt et al, 2019). While the creation of a central role in the TMT is one option that firms can select when coping with digital transformation, decentralized units may also drive digital initiatives and gain power (e.g., Tumbas et al, 2018).…”

Dealing with headquarters in the multinational corporation: a subsidiary perspective on organizing costs

“…Likewise, clear and specific formalized processes and communication protocols help securing timely and correct information as well as facilitating coordination. The strategic consultancy Roland Berger reported in their 2013 report of 86 large multinational companies that there is a trend towards stronger and more centralized HQ (Zimmermann and Huhle 2013), which has also been noted in other studies (Kunisch et al 2012(Kunisch et al , 2014Schmitt et al 2019;Young and Goold 1993;Young et al 2000). Based on results from our study, this trend supports increased value creation in subsidiaries through a reduction in information costs.…”

Total expenses for managerial remuneration in foreign manufacturing subsidiaries during the COVID-19 pandemic: a pilot exploration of applied policies

“…For multinational corporations, the major question in the application of this policy lies in the managerial body, which has the authority to apply the policy to subsidiaries. Given the recent trends in the internal organization of multinational corporations that include tighter control over subsidiaries' activities and greater centralization of resources (see Pla-Barber et al, 2021;Schafheitle et al, 2020;Schmitt et al, 2019;Stendahl et al, 2021), only corporate headquarters have the authority to implement alternatives to the commonly applied policies of cost-cutting and "hard HRM" during crises. Notes 1.…”