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The Spatial Organization of Multinational Firms

Author

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  • Fabrice Defever

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.

Suggested Citation

  • Fabrice Defever, 2010. "The Spatial Organization of Multinational Firms," CESifo Working Paper Series 3304, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3304
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp3304.pdf
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    References listed on IDEAS

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    1. Strauss-Kahn, Vanessa & Vives, Xavier, 2009. "Why and where do headquarters move?," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 168-186, March.
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    Cited by:

    1. Anca Cristea, 2015. "The effect of communication costs on trade in headquarter services," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(2), pages 255-289, May.
    2. Andrea Ascani & Riccardo Crescenzi & Simona Iammarino, 2015. "Economic Institutions and the Location Strategies of European Multinationals in their Geographical Neighbourhood," LEQS – LSE 'Europe in Question' Discussion Paper Series 97, European Institute, LSE.
    3. Nick Pantaleo & Finn Poschmann & Scott Wilkie, 2013. "Improving the Tax Treatment of Intellectual Property Income in Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 379, April.
    4. Franz-Josef Bade & Eckhardt Bode & Eleonora Cutrini, 2015. "Spatial fragmentation of industries by functions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(1), pages 215-250, January.
    5. Crescenzi, Riccardo & Pietrobelli, Carlo & Rabellotti, Roberta, 2012. "Innovation drivers, value chains and the geography of multinational firms in European regions," LSE Research Online Documents on Economics 53193, London School of Economics and Political Science, LSE Library.
    6. Yamashita, Nobuaki & Matsuura, Toshiyuki & Nakajima, Kentaro, 2014. "Agglomeration effects of inter-firm backward and forward linkages: Evidence from Japanese manufacturing investment in China," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 24-41.
    7. Toshihiro Okubo & Eiichi Tomiura, 2016. "Multi-plant operation and corporate headquarters separation: Evidence from Japanese plant-level," Keio-IES Discussion Paper Series 2016-016, Institute for Economics Studies, Keio University.
    8. OKUBO Toshihiro & TOMIURA Eiichi, 2016. "Multi-plant Operation and Corporate Headquarters Separation: Evidence from Japanese plant-level panel data," Discussion papers 16002, Research Institute of Economy, Trade and Industry (RIETI).
    9. Gumpert, Anna, 2014. "The organization of knowledge in multinational firms," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100332, Verein für Socialpolitik / German Economic Association.
    10. Okubo, Toshihiro & Tomiura, Eiichi, 2016. "Multi-plant operation and headquarters separation: Evidence from Japanese plant-level panel data," Japan and the World Economy, Elsevier, vol. 39(C), pages 12-22.
    11. Riccardo Crescenzi & Carlo Pietrobelli & Roberta Rabellotti, 2014. "Innovation drivers, value chains and the geography of multinational corporations in Europe," Journal of Economic Geography, Oxford University Press, vol. 14(6), pages 1053-1086.
    12. Gumpert, Anna, 2015. "The organization of knowledge in multinational firms," Discussion Papers 33/2015, Deutsche Bundesbank.
    13. Teodora Dogaru & Martijn Burger & Bas Karreman & Frank Oort, 2015. "Functional and Sectoral Division of Labour within Central and Eastern European Countries: Evidence from Greenfield FDI," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 106(1), pages 120-129, February.
    14. Defever, Fabrice & Heid, Benedikt & Larch, Mario, 2015. "Spatial exporters," Journal of International Economics, Elsevier, vol. 95(1), pages 145-156.
    15. repec:bla:jomstd:v:54:y:2017:i:8:p:1271-1302 is not listed on IDEAS
    16. Anna Gumpert, 2015. "The Organization of Knowledge in Multinational Firms," CESifo Working Paper Series 5401, CESifo Group Munich.
    17. Tanaka, Kiyoyasu, 2016. "Do international flights promote FDI? : the role of face-to-face communication," IDE Discussion Papers 554, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    18. Gumpert, Anna, 2017. "The Organization of Knowledge in Multinational Firms," Rationality and Competition Discussion Paper Series 29, CRC TRR 190 Rationality and Competition.
    19. Davide Castellani & Katiuscia Lavoratori, 2017. "Location of R&D abroad. An analysis on Global Cities," John H Dunning Centre for International Business Discussion Papers jhd-dp2017-03, Henley Business School, Reading University.
    20. repec:eee:reveco:v:54:y:2018:i:c:p:193-205 is not listed on IDEAS
    21. Dachs, Bernhard, 2017. "Internationalisation of R&D: A Review of Drivers, Impacts, and new Lines of Research," MPRA Paper 83367, University Library of Munich, Germany.
    22. René Belderbos & Helen S. Du & Anthony Goerzen, 2017. "Global Cities, Connectivity, and the Location Choice of MNC Regional Headquarters," Journal of Management Studies, Wiley Blackwell, vol. 54(8), pages 1271-1302, December.
    23. Davide Castellani & Giulio Giangaspero & Antonello Zanfei, 2013. "Heterogeneity and distance. Some propositions on how differences across regions, firms and functions affect the role of distance in FDI location decisions," Working Papers 1308, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.

    More about this item

    Keywords

    functional fragmentation; vertical linkages; location choice;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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