Spatial Organization of Firms: Internal and External Agglomeration Economies and Location Choices through the Value Chain

31 Pages Posted: 22 Jan 2013

See all articles by Juan Alcacer

Juan Alcacer

Harvard University - Strategy Unit

Mercedes Delgado

Copenhagen Business School

Date Written: September 1, 2012

Abstract

We explore the impact of geographically bounded intra-firm spillovers (internal agglomeration economies) and geographically bounded inter-firm spillovers (external agglomeration economies) on firms’ location strategies. Using data from the Census Bureau’s Longitudinal Business Database and the U.S. Cluster Mapping Project, we analyze organic expansions of biopharmaceutical firms (by both new establishments and employment increase in existing establishments) in the U.S. in 1993–2005. We consider all activities in the value chain and allow location choices to vary by R&D, manufacturing, and sales. Our findings suggest that (1) internal and external agglomeration economies have separate, positive impacts on location, with relevant differences by activity; (2) internal economies of agglomeration arise within an activity (e.g., among plants) and across activities (e.g., between manufacturing and sales); (3) the effects of internal economies across and within activities vary by activity and type of organic expansion; and (4) across-activity internal economies are asymmetric.

Keywords: location choices, agglomeration economies, value chain, organization theory

Suggested Citation

Alcacer, Juan and Delgado, Mercedes, Spatial Organization of Firms: Internal and External Agglomeration Economies and Location Choices through the Value Chain (September 1, 2012). US Census Bureau Center for Economic Studies Paper No. CES-WP-12-33, Available at SSRN: https://ssrn.com/abstract=2205180 or http://dx.doi.org/10.2139/ssrn.2205180

Juan Alcacer (Contact Author)

Harvard University - Strategy Unit ( email )

Harvard Business School
Soldiers Field Road
Boston, MA 02163
United States
617 495-6338 (Phone)
617 495-0355 (Fax)

Mercedes Delgado

Copenhagen Business School ( email )

Kilen
Frederiksberg, 2000
Denmark

HOME PAGE: http://www.delgadom.com/

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