The Spatial Organization of Multinational Firms
34 Pages Posted: 18 Jan 2011
There are 3 versions of this paper
The Spatial Organization of Multinational Firms
The Spatial Organization of Multinational Firms
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: Suggested Citation