Shift of the Corporate Headquarter Function and the Local Economy

Abstract

Loss of corporate headquarters from Osaka, the second largest city in Japan, to other cities has been a longstanding issue since 1960s. A considerable number of Osaka-based corporations have shifted their headquarters, or establish Tokyo headquarter while leaving Osaka headquarter in a ritual sense, which is unique situation in the international comparison among other second largest cities. This phenomenon is significant to the local economy, as loss of decision-making function affects the demand to local small businesses, as well as it deprives the capability of new business creation. Although there is no panacea to the problem, the local government faces the necessity to tackle the issue. With quantitatively identifying the shift of corporate headquarters in Osaka, this article attempts to examine changes in trends and factors of such shifts since 1980s, including a view of actual location of corporate executives and analysis by office functions. The research implies ongoing gradual shift of headquarter functions, driven by the needs of pursuing larger market and information gathering. Though it appears to be difficult to recover corporate headquarters already lost, it requires the local government policy to create incentives to provide economic rationality enough to attract headquarter functions. © 2006, JAPAN SECTION OF THE REGIONAL SCIENCE ASSOCIATION INTERNATIONAL. All rights reserved.