Coordination at the Edge of the Empire: The Delegation of Headquarters Functions through Regional Management Mandates

Abstract

In this paper, we conceptualise the role of headquarters not as bound to a unique physical location but as a set of functions distributed across the multinational enterprise. Specifically, we investigate the phenomenon of delegating headquarters functions to local subsidiaries in the form of regional management mandates (RMMs), a new concept not addressed in prior research. Our work contributes to the literature by building a comprehensive typology of headquarters functions performed at various levels of the multinational enterprise and by developing propositions about the potential benefits and risks of using RMMs, drawing on various theoretical perspectives and a rich empirical case study. Our findings suggest that the use of regional management mandates offers several benefits for the MNE: (1) the ability to balance integration and responsiveness at levels below the efficient scale for dedicated regional headquarters; (2) the exploitation of local operational expertise on a regional level; (3) relieving headquarters of the burden of monitoring remote peripheral agents. At the same time, we also find evidence of risks and dangers associated with the use of regional management mandates. Our study develops a strong foundation for future research on the distributed nature of roles and functions of headquarters, while providing a novel perspective on how headquarters functions are enacted at the regional level.