Power or market? Location determinants of multinational headquarters in China

Danny T Wang, Simon X. Zhao, Flora F. Gu, Wendy Y. Chen

    Research output: Contribution to journalJournal articlepeer-review

    15 Citations (Scopus)


    Multinational corporations (MNCs) have increasingly been establishing regional headquar-ters in China. However, no study has systematically examined how MNCs make strategic decisions about where to locate Chinese headquarters (CHQs) in this transition economy. The paper makes the first attempt to investigate the issue by focusing on two questions. First, what are the location-specific factors that determine where MNCs locate their CHQs? Second, how do these factors influence making the decision between Beijing and Shanghai, the two largest cities in China? We integrate existing literature and assess the differential roles of (1) path dependency, (2) institutional support, and (3) proximity to superior information. Data were collected through a large-scale survey of MNC CHQs in mainland China. The empirical analysis supports the three-dimensional framework and the central role of proximity to superior information in the decision-making process. The results advance existing understanding of MNC location decisions in China by revealing the unique interplay between power and market in this transition economy, and between Beijing and Shanghai, the two promising cities toward world city status, in particular.

    Original languageEnglish
    Pages (from-to)2364-2383
    Number of pages20
    JournalEnvironment and Planning A: Economy and Space
    Issue number10
    Early online date1 Oct 2011
    Publication statusPublished - Oct 2011

    Scopus Subject Areas

    • Geography, Planning and Development
    • Environmental Science (miscellaneous)


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