Contemporary theories of entrepreneurship generally focus on the recognition of opportunities and the decision to exploit them. Although the entrepreneurship literature treats opportunities as exogenous, the prevailing theory of economic growth suggests they are endogenous. This paper advances the microeconomic foundations of endogenous growth theory by developing a knowledge spillover theory of entrepreneurship. Knowledge created endogenously results in knowledge spillovers, which allow entrepreneurs to identify and exploit opportunities.

Contemporary theories of entrepreneurship generally focus on the decision-making context of the individual. The recognition of opportunities and the decision to commercialize them is the focal concern. While the prevalent view in the entrepreneurship literature is that opportunities are exogenous, the most prevalent theory of innovation in the economics literature suggests that opportunities are endogenous. This paper bridges the gap between the entrepreneurship and economic literature on opportunity by developing a knowledge spillover theory of entrepreneurship. The basic argument is that knowledge created endogenously via R&D results in knowledge spillovers. Such spillovers give rise to opportunities to be identified and exploited by entrepreneurs. Our results show that there is a strong relationship between knowledge spillovers and new venture creation. JEL: O3 R1 J24 M13

This paper examines the decision by a multinational corporation (MNC) to relocate its business unit and/or corporate HQ overseas. We argue that business unit HQs move overseas in response to changes in the internal configuration of their unit's activities and the demands of the product markets in which they operate, whereas corporate HQs move overseas in response to the demands of external stakeholders, in particular global financial markets and shareholders. Using data onThis paper examines the decision by a multinational corporation (MNC) to locate its corporate or business unit headquarters overseas. It is concerned with understanding the factors that lead the executives of the MNC to shift their headquarters away from the traditional home country of operation, and in particular how the drivers for corporate HQ relocation are different from the drivers of business unit HQ relocation. The study is motivated by three lines of argument.First, the research contributes to our understanding of the role of the corporate HQ in the multibusiness firm. There is a well-established distinction in the strategic management literature between Keywords: multinational corporation; headquarters; corporate strategy; internationalization * Correspondence to: Julian Birkinshaw, London Business School, Regent's Park, London NW1 4SA, U.K. E-mail: jbirkinshaw@london.edu business unit strategy (concerned with the competitive positioning of a business within its chosen industry domain) and corporate strategy (which defines the scope of businesses in which the firm participates, and the ways in which value is added across those businesses; Bourgeois, 1980;Chandler, 1991;Hofer and Schendel, 1978). Research has examined the differences between these two levels of analysis, in terms of the content of strategy and the process of strategy-making. The current research continues in this tradition by focusing on the different roles of business unit and corporate HQs in a multinational corporation, and in particular on their relationships with various internal and external stakeholders. By examining the drivers of HQ relocation decisions, we are able to show that business unit HQs move overseas in response to changes in the internal configuration of their unit's activities and the demands of the product markets in which they operate, whereas corporate HQs move overseas in response to the demands of external stakeholders, in particular global financial markets and shareholders. This externally facing role is potentially an important addition to our understanding of the role of the corporate HQ in the multi-business firm (cf. Chandler, 1991;Foss 1997;Goold, Campbell, and Alexander, 1994).Second, geographical location affects firm competitiveness, so any decision to relocate specific activities overseas is potentially very important to the future success of the MNC. There are wellestablished theories of agglomeration in the literature, and it is now accepted that proximity to specialized labor, complementary suppliers and customers, and access to ...

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