Are large headquarters unproductive?
Masayuki Morikawa, 19 June 2014
Headquarters play important strategic roles in modern companies, but downsizing of headquarters is often advocated as a cost-cutting measure. This column presents evidence from Japanese firm-level data that the size of headquarters is positively associated with firms’ overall productivity. Moreover, the benefits of ICT are greater for companies with relatively large headquarters. Downsizing headquarters to cut costs may thus be harmful for long-term company performance.
The role of headquarters
Headquarters – the core service sector inside companies – conduct a wide range of highly strategic activities, including:
Topics: Productivity and Innovation
Tags: centralisation, headquarters, ICT, Japan, Management, productivity, technology