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The spatial organization of multinational firms

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  • Defever, Fabrice

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

  • Defever, Fabrice, 2010. "The spatial organization of multinational firms," LSE Research Online Documents on Economics 121933, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:121933
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    More about this item

    Keywords

    functional fragmentation; vertical linkages; location choice;
    All these keywords.

    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
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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