EMB
TO MIGRATE OR NOT TO MIGRATE:
A DECISION-MAKING CHECK LIST:
Are the majority of your shareholders, competitors, or customers based abroad? If so, it could
make sense to shift your headquarters—or at least some headquarter activities—abro ad.
Does your company suffer from liability of origin? If your home country’s reputation is bad for
business, migrating could be a good move.
Do the rewards outweigh the costs? For instance, while migrating may provide you with a greater
talent and resource pool, you will likely be at the bottom of the pecking order.
Have you considered the long-term impact of migration on your company? While short-term impact
can be limited, over the long term, decision-making can be diluted and disconnects greater.
How will your country’s government perceive your decision to migrate? This should be considered,
especially if you intend for the bulk of your operations to remain in your home country.
What are your ambitions? To become a true global player, you will likely need to migrate to a global
hub, but if your aspirations are regional, migrating to a location closer to home could be the best option.
Can you achieve the global or regional success you seek from your home base? Migration is not
always required.
address local shortcomings, for example to secure financing
or underwriting. In turn, the local business environment
became more attractive on the global stage.
is much more expensive than migrating to another country
within the same region while migration to a regional hub
indicates regional rather than global ambitions.
If companies migrate not just their headquarters but other key
productive activities, then such benefits to the local economy
are not always realized. These days a firm—even a relatively
small local business—can easily choose to store its data on a
German server farm, buy its insurance from a Swiss company,
secure its financing from a London-based bank. And on looking
at the portfolio of locations where firm activities are located, a
firm can easily decide that it makes sense to simply move its
headquarters to London too.
BancABC and Econet Wireless serve as good examples of
successful regional migration. In 2000, both firms migrated from
Zimbabwe to Johannesburg. Although headquartered in South
Africa, Banc ABC does not serve a South African customer base.
Instead, it operates across Botswana, Mozambique, Tanzania,
Zambia and Zimbabwe. For its part, Econet Wireless is privately
held, although its subsidiary Econet Wireless Zimbabwe is still
listed on the Zimbabwean Stock Exchange. It operates across the
African continent, and its growing operations, many of which on
the back of mobile-enabled innovations such as cash transfers,
are managed from Johannesburg in South Africa. Interestingly,
however, as it has been exploring investments in other parts of
the world, the holding company moved its operations to the UK.
The migrating multinational question also falls within a wider
debate over the pros and cons of international business. For
countries that are able to withstand external competition,
international business can be a positive development, while for
economies with limited capacity on multiple fronts, it can spell
disaster. For instance, when structural adjustment programs
were introduced in Africa, many African economies were so
weak that bringing in international competition destroyed local
industries. Conversely, in economies where there was some
local capacity, they were able to improve because competition
forced them to be stronger, agile and more competitive. In the
migrating multinational context, the increased growth and global
foothold that a migrating company may develop could afford it a
competitive advantage that local firms cannot compete with.
EMB: So far we have explored migration to global hubs, but
what about migration within regions? HB: This topic is often
overlooked and relates not only to smaller companies, but also
to the many multinationals which should be viewed as regional
rather than truly global businesses. For example, their spread
may be limited to North and South America, or to Europe
and Africa, or across different parts of Asia. It is important to
draw distinctions between regional and global migration. Two
such distinctions are cost and aspirations. Going truly global
EMB: As with so many of the issues relating to emerging
markets, where migrating multinationals are concerned,
there is no one-size-fits-all approach, and no simple
answer. As the cases of SABMiller and Anglo-American
attest, migrating headquarters overseas can be the key
that unlocks great growth potential while also benefiting a
firm’s country of origin. Regional migration, too, can prove
the right move for some firms, as BancABC and Econet
Wireless have demonstrated. But in other situations,
migrating can also be damaging for company and home
economy alike, with financial and socio-economic costs
presenting in various forms. With this in mind, companies
looking to shift their headquarters must weigh up the pros
and cons with the utmost care, and ultimately decide if
migration is indeed the right path to success.
Helena Barnard. Professor at the Gordon Institute of Business Science (GIBS) University of Pretoria,
South Africa. There she is the Director of Research and responsible for the GIBS doctoral program.
She also serves on the editorial board of the Global Strategy Journal.
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