The Changing Firm Landscape and Firm Location Behaviour

Abstract

The landscape of firms in the Netherlands is changing in such a way that small firms increasingly dominate the Dutch economy. This development suggests a re-evaluation of how firm location decisions are made, which factors are important and consequently the dynamics in firm location and relocation. This chapter argues that the borders of the firm become permeable as the average firm size declines: Non-firm considerations, including residential preferences and other job locations in the family, play an increasingly important role in the firm location decision process. Also, the physical spaces of the residence and the firm premises overlap more often than ever. Rather than regarding the location of the firm as a reflection of the optimal firm location, it is arguably better viewed as a part of the larger locational puzzle people and households face.