The Spatial Organization of Multinational Firms

34 Pages Posted: 18 Jan 2011

Multiple version iconThere are 3 versions of this paper

Date Written: December 17, 2010

Abstract

Using six years of firm-level data covering 224 regions of the enlarged European Union, we evaluate the importance to a firm of locating its activities (production, headquarters, R&D, logistics and sales) close together. We find that, after controlling for regional characteristics, being closely located to a previous investment positively affects firm location choice. However, the impact of distance is dependent on the type of investment (production or service). While within-firm co-location is important for both service and production activities, only production plants are likely to be located close to prior production investments. In this latter case, national borders have a surprisingly positive effect, increasing the probability of choosing a nearby location, but on the other side of the border.

Keywords: Functional fragmentation, vertical linkages, location choice

JEL Classification: F23, L22, R3

Suggested Citation

Defever, Fabrice, The Spatial Organization of Multinational Firms (December 17, 2010). Available at SSRN: https://ssrn.com/abstract=1742249 or http://dx.doi.org/10.2139/ssrn.1742249

Fabrice Defever (Contact Author)

City University London ( email )

Northampton Square
London, EC1V OHB
United Kingdom

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