The Role of Ownership Characteristics in the Industrial Development of Israel's Peripheral Towns

Abstract

A framework for studying the ownership structure of industry in Israel's development towns is outlined, putting special emphasis on defining factors influencing entrepreneurship among residents of these towns, and relating these factors to theories of entrepreneurship in space, and to those of entrepreneurship among immigrant groups. Factors affecting external ownership of single-plant firms and location decisions of multiplant firms are considered in light of theories of industrial organization. Firms of different types are shown to react differently to the incentives of the Israeli spatial economic policy. Thus, whereas residents of the development towns benefit little from these capital incentives, nonlocally owned single-plant firms are most attracted by them. However, externally owned small single-plant firms have been shown to suffer from the greatest instability and to form very few local linkages. Another policy failure was the inability to attract government-owned military industries to the development towns.