The relocation of functional headquarters - on the drivers and implications of locating corporate functions abroad

The present study researches the relocation of functional commercial headquarters of Outokumpu Oyj to Brussels, Belgium in April 2008. The rationale behind this relocation can be largely based on increasing international competition, globalization and locational advantages. Moreover, one of the underlying reasons for the tendency of Finnish Multinational Corporations (MNC) to relocate parts of their corporate functions abroad is the need to be close to the most important markets. Also, as recruiting non Finns to Finland seems to pose problems, the recruitment of global talent becomes easier when parts of corporate functions are located abroad. Therefore, this study aims to clarify the need of Finnish MNCs to relocate abroad as well as the process within which this is taking place. The consequences and challenges presented in the new location are thereby a central topic in order to consult Outokumpu on possible problems ahead. In addition to data from newspaper articles, an interview and an Organizational Blog, the researcher’s personal work experience of 1,5 years at the commercial function at Outokumpu provides a reliable basis for discussion. The main findings of this study suggest that the relocation of functional headquarters bears significance throughout the group, particularly in the case of Outokumpu, where the structural changes help to realign the organization with a shift in strategic direction. The relocation of functional HQs can increase diversity in a MNC through an international location that attracts diverse and best global talent. Nevertheless, some of the downsides are the problems related to the dilemma of shared responsibilities due to the new unit and matrix structure. Moreover, the relocation goes hand in hand with a changing nature of corporate headquarters, which loose on power and control over operations, thus resulting in a decentralized structure while at the same time aiming to centralize a function. Particularly the issues of responsibility and control stand therefore against the multiple benefits of a more geocentric and global approach