REGIONAL HEADQUARTERS

Divisional office that has been delegated authority from a company head office (headquarter) to carry out a number of tasks within a specific region

• Regiocentric = mix between polycentric and geocentric
• Regions > individual countries

(Polycentric: Host Country Orientation; Geocentric: World/Global Orientation)

• “Knowledge Brokers”
  • RHQs help fill knowledge gap between HQ and Subsidiaries by transferring knowledge to enhance efficiency
• Information-related Roles
  • Acquiring and generating information for subsidiaries or the HQ

• Minimization of information cost (Information cost = Observation Costs + Communication Costs)
• Locating firm in a strategic geographic area close enough to local market to reduce observation costs, but also close enough to HQ to reduce communication costs

• Entrepreneurial:
  • Scouting: seek new opportunities
  • Strategic Simulation: helps business understand local environment and changes to it
  • Signaling Commitment: demonstrate commitment to region
• Integrative
  • Coordination: sensibly fitting pieces of the value chain together
  • Pooling of Resources: make best use of regional resources

• Economies of Scale:
  • Increased operational efficiency by avoiding duplicate word
• Social Improvement:
  • Training and development of local human resources
• Exchange of Information:
  • Manage the communication flow of information between HQ and Subsidiaries
• Improved Control & Coordination:

• RHQs operate under a charter from HQ
  • Administrative: distribute corporate knowledge to regional subunits
  • Entrepreneurial: develop new knowledge and business
• Regional HQs gain more influence if they send the appropriate “signals” to HQs

RHQs influence is highest when those HQs operate with an entrepreneurial charter while being integrated into a relatively centralized organization

• Level of business-friendly policies
• Established infrastructure
• Availability of local skilled workforce
• Tax policies
• Standard of living