Where Do Manufacturing Firms Locate Their Headquarters?

Posted: 5 Jan 2005

See all articles by J. Vernon Henderson

J. Vernon Henderson

London School of Economics & Political Science (LSE); National Bureau of Economic Research (NBER)

Yukako Ono

Federal Reserve Bank of Chicago

Date Written: November 2004

Abstract

Firms' headquarters [HQ] support their production activity, by gathering information and outsourcing business services, as well as, managing, evaluating, and coordinating internal firm activities. In search of a better location for these functions, firms often separate the HQ function physically from their production facilities and construct stand-alone HQs. By locating its HQ in a large, service oriented metro area away from its production facilities, a firm may be better able to out-source service functions in that local metro market and also to gather information about market conditions for their products. However if the firm locates the HQ away from its production activity, that increases the coordination costs in managing plant activities. In this paper we empirically analyze the trade-off of these two considerations.

Keywords: Headquarters, coordination, location decision, manufacturing

JEL Classification: L60, R0, R12

Suggested Citation

Henderson, J. Vernon and Ono, Yukako, Where Do Manufacturing Firms Locate Their Headquarters? (November 2004). Available at SSRN: https://ssrn.com/abstract=642602

J. Vernon Henderson

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yukako Ono (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60610
United States
312-322-5942 (Phone)

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