An Overview of German Centers of Corporate Dominance and Motives for Corporate Headquarters Relocation

Abstract

The purpose of this paper is to identify the centers of corporate dominance in Germany, and the main drivers of recent headquarter relocations within the country. The analysis is based on a literature review, a database comprising the 10,000 most significant companies in Germany and additional research for qualitative input to support the interpretation of the findings. The findings show that corporate dominance in Germany is decentralized. Centers with relative corporate dominance tend to host a higher proportion of public limited companies. These public limited companies had a turnover of over one billion Euros, and most of these companies were founded after the year 2000. The main drivers for recent HQ relocations were corporate restructuring (mergers and demergers) and the centralization of functions. Furthermore, it has been found that differences in the trade tax burden between municipalities have had no influence on recent relocation decisions within Germany.

To Relocate Or Not to Relocate: A Logit Regression Model of Factors Influencing Corporate Headquarter Relocation Decision in China

“…Overall, all employees and cadre group strongly endorsed all the four factors as important determinants of headquarter relocation in Quanzhou city as evident by the regression coefficients of factor ISR (cadre group = .449, full sample = . Balogun et al, 2019;Biyue, 2014;Tyll et al, 2018;Valentino et al, 2019). Next, international communication and market space results supported prior assertions (e.g., Adler & Florida, 2020;Martinez-Fernandez et al, 2012;Fujita & Thisse, 2006;Koven & Koven, 2018;Nell & Schmitt, 2018;Saarinen, 2020;Valentino et al, 2019).…”

“…Given the present results, past literature also supports that firms seek superior management resources (standardization, corporate culture and image development, and operating capital) to enhance their competitive advantage (cf. Balogun et al, 2019; Biyue, 2014; Tyll et al, 2018; Valentino et al, 2019). Next, international communication and market space results supported prior assertions (e.g., Adler & Florida, 2020; Martinez-Fernandez et al, 2012; Fujita & Thisse, 2006; Koven & Koven, 2018; Nell & Schmitt, 2018; Saarinen, 2020; Valentino et al, 2019).…”

“…For Austria, Nell and Schmitt (2018) found that both the inbound and the outbound relocation motives included value creation, increased proximity to crucial markets, access to highly skilled workers, cost reduction, cheap labor, low taxes, and expense savings. Tyll et al (2018) concluded that the primary drivers of headquarter relocations in Germany included demerger or mergers of corporates and function centralization. Still, regional differences in the tax policies played an insignificant role in relocation decisions.…”

“…These benefits may include support for technological innovation, capital operation, standardized management, and enterprise culture development (Duranton & Puga, 2005; see also, Fujita & Thisse, 2006). Tyll et al (2018) stated that the centralization of functions and processes during corporate mergers (through relocation) helps firms save operating costs through efficient systems, ultimately improving business expansion and image. Balogun et al (2019) argued that senior executives prefer locations with more excellent opportunities to develop corporate culture, enhance management systems, and improve capital operations.…”

“…Although relocations remain a significant but rare event in corporate history (Coeurderoy & Verbeke, 2016), this topic has been under-researched until relatively in recent years (Balogun et al, 2019; Laamanen et al, 2012). With the extant literature mainly representing either qualitative or conceptual papers, there is a severe deficiency of international studies and empirical models on headquarter relocation (Biyue, 2014; Tyll et al, 2018; Weiping, 2005). Contrary to other countries, headquarter relocation is a frequent phenomenon in China.…”