Sami Torstila’s paper accepted for publication in Journal of International Business Studies
14.09.2011
"Cross-border relocations of headquarters in Europe " by Tomi Laamanen (University of St. Gallen), Tatu Simula, and Sami Torstila was accepted for publication in Journal of International Business Studies. Journal of International Business Studies is on the list of 45 journals Financial Times uses to rank business schools, and is currently 3rd by impact factor (4.184) in the Business category of the ISI Journal Citation Reports.
Abstract
This paper analyzes the relocations of both corporate and regional headquarters in a multi-country setting. On the basis of a dataset of 52 cross-border headquarters relocations in Europe during 1996-2006, we document an increasing trend towards relocation, push and pull factors affecting headquarters location choice, and catalyzing factors that affect the relocation decision. High taxes and a high employment rate represent push factors that we find to increase the likelihood of headquarters relocation. In particular, at the mean rate of corporate tax, a one percent point increase in tax translates into a 6.8% increase in headquarters relocation likelihood. In contrast, central location and low taxes represent pull factors that increase the attractiveness of the headquarters location. In terms of catalyzing factors, we find that export-oriented companies and regional headquarters have a higher tendency to relocate. As a whole, we extend the existing research by putting forward a conceptual framework of headquarters relocation decisions and by providing novel empirical evidence on the headquarters relocation phenomenon. Our findings contribute to an improved understanding of the determinants of corporate headquarters relocation decisions and provide important tax policy considerations for public policy decision makers in individual European countries and in the European Commission.