Headquarters Economy Attributes and Strategy/Policy Foundations

This chapter highlights the advantages that stem from a headquarters economy compared to other regional economies such as industry clusters or creative economies. It then presents an overarching structure from which to consider public policies that can aid and sustain headquarters economies, and corporate strategies that tap into and aid headquarters economies. In doing this, the chapter highlights managers as key decision-makers who make purposeful choices of where they work and reside. It identifies four key constituents that affect such managerial choices. These constituents are companies, governments, non-governmental organizations, and other individuals within the managerial talent pool.

What Creates a Vibrant Headquarters Economy?

Building from experiences in the Minneapolis-St. Paul headquarters economy, this chapter advances the building blocks for what creates and sustains a headquarters economy. Managers possess skills that are applicable across a variety of industries. Companies often benefit when they hire managers with different experiences and skills than those existing in the company. This benefit is especially salient when companies hire managerial talent from outside of their industry. Regions with a diverse headquarters base and little outward migration of managerial talent magnify this beneficial effect of cross-industry managerial mobility. Together, managers, mobility, and migration can create a virtuous cycle that strengthens local companies and draws talent to a region.

What Does a Headquarters Economy Look Like?

This chapter describes the Minneapolis-St. Paul metropolitan area, and its economic and social vitality. It presents data on the significant concentration of many types of business headquarters in the region and describes the evolution of headquarters over time. Based on these data, the chapter describes why well-established explanations for the geographic concentration of business and headquarters activity fail to explain the Minneapolis-St. Paul experience (e.g., industry clusters or business incentives). The chapter describes the empirical regularities that a novel explanation for this headquarters economy has to explain. It highlights that a valid explanation will have to be one about creating and growing new businesses into large companies, and sustaining or reinventing large, established companies.

Prevalence of Headquarters Economies

This chapter presents metropolitan areas around the world with concentrations of headquarters of the world’s largest companies. From here, the chapter discusses how the insights from the research presented in the book can be applied across many different metropolitan areas. Of note is that a headquarters economy need not be an exclusive source of regional vitality. It can co-exist with other sources of regional vitality; however, focusing exclusively on these other sources can mask the importance of the headquarters economy dynamics. The chapter then revisits the importance of considering headquarters as pools of managerial talent and the implications that stem from this. It concludes by discussing limitations of the research and avenues for further development.

Headquarters as a Managerial and Administrative Talent Pool

This chapter introduces the concept of a headquarters economy—an economy that has a concentration of headquarters from diverse industries. The chapter advances the importance of viewing headquarters as pools of managerial and administrative talent in order to understand corporate headquarters, how they impact the regions in which they reside, and where they locate. The chapter also introduces the concept of “hidden headquarters.” These are important divisional, regional, or operational headquarters of companies with corporate headquarters elsewhere. Such headquarters are often overlooked yet they influence their regions like large corporate headquarters. Finally, the chapter outlines the structure of the book and describes the research design choices that shape the investigation.

Headquarters Economy

Regional economies characterized by concentrations of headquarters from diverse industries stand out as influential dynamic economies. However, there is little discussion about these “headquarters economies.” Why do some metropolitan areas develop vibrant headquarters economies whereas others do not? The answer lies in understanding the essence of headquarters—the managerial talent pool that guides and governs these companies. By investigating an exemplar headquarters economy—Minneapolis-St. Paul—this book demonstrates that this talent pool (Managers), its movement among companies and industries in a region (Mobility), and the nature of its inflow and outflow from a region (Migration) can create a virtuous cycle that strengthens regional companies and draws in additional talent. Comparing the migration pattern of educated, high-earning individuals across metropolitan areas in the United States, and drawing upon a proprietary survey of thousands of headquarters employees in Minneapolis-St. Paul, the book provides supportive evidence for this dynamic. A central insight of the research is that professional managerial talent is a determinant of regional vitality that has largely been overlooked. The underlying factors of managers, mobility, and migration, although here identified in the context of the Minneapolis-St. Paul headquarters economy, exist in metropolitan areas around the world. This demonstrates the scope of the research findings’ applicability, and highlights the benefit of focusing on these underlying factors.

What Creates a Vibrant Headquarters Economy?

This chapter presents data from a propriety survey of approximately 3,000 professional headquarters employees across twenty-three companies in the Minneapolis-St. Paul headquarters economy. The data confirm many expected demographics of this talent pool. They are highly educated, they are high-earning, they are predominantly in dual career relationships, and many are raising children. The data also verify the frequency with which this talent pool moves across companies and across industries. The data also show that different factors primarily affect the attraction and retention of talent to this region. Quality of life factors play a more prominent role in retention, whereas job opportunities play a more prominent role in attraction. Overall, the data show that this talent pool primarily values quality of life factors that center on economic opportunities, the ability to raise children, and well-being.