Location Of New Firms Research Articles

Entrepreneurship, the initial labor force, and the location of new firms

Entrepreneurship, the initial labor force, and the location of new firms

Institutions versus location of new firms: does distance matter? Evidence from the Polish economy

The research aim was to identify the effects of the institutional environment-supporting business activity on new firms' location. Using a series of negative binomial models, coupled with Hausman-Taylor estimations and Granger causality tests we studied the role of quality of institutions and distances to various types of institutions on the spatial distribution of new firms. The analysis also takes into consideration other location criteria, arising from the geographical location and socio-economic conditions in Poland's smallest administrative division unit, i.e., a municipality. The results revealed a positive role in the quality of institutions as firms' location criteria. Furthermore, the distance of firms to different institutions tended to be significant, albeit depending on these institutions' type. In this regard, the distance of numerous local institutions performing a broader spectrum of activities was a significant location criterion, while the distance to institutions focusing on a narrow range of activities (e.g., supporting innovations, R&D), dedicated to selected or supra-regional groups of clients, more frequently proved to be insignificant. Implications arising from the research can help local authorities, which take measures to improve the institutional environment supporting firms.

Location Decisions of New Manufacturing Firms in Ecuador. Agglomeration Mechanisms

This investigation seeks to explore the importance of agglomeration mechanisms in the location decisions of new manufacturing firms in Ecuador, based on sector and canton level data for the 2000–2010 period. A model is proposed to explore the relative importance of agglomeration mechanisms in location decisions of new manufacturing companies, a regression is performed using instrumental variables, the econometric estimation is developed, and an identification strategy is proposed. The results of the empirical analysis show that the learning mechanism, and history, have a positive and significant impact on the creation of new firms. An increase of 1% in the transfer of knowledge in the industries and cantons of the country is correlated with the increase in the location of new firms in the order of 9.2%. In turn, history has a positive and significant effect on the creation of new firms, in industries and cantons characterized by a past industrial environment. Even when the learning mechanism and history are controlled by provinces, sectors, and cantons, they continue to be the most important determinants of the location of new firms. This evidence could be attributed to the public investment in Ecuadorian industry in recent years. In this sense, the contribution of this work is found in the empirical distinction of the mechanism that favors or inhibits the location decisions of new companies. The analysis was replicated for a three-digit sectorial disaggregation level, to verify whether the agglomeration mechanisms operate differently on a different industrial scale. The results suggested that there were no differences to be considered. When the analysis was done excluding the cantons of Quito, Guayaquil, and Cuenca, given their high representation in terms of the birth of industries and employment, the results were consistent with those previously mentioned. However, it is so only with respect to history, which in this case accounts for 38.8% of the birth of firms; whereas, matching accounts for an order of 38.9% in the period of analysis. This result is explained in the context of the country’s industrial policy.

Location of New Firms: Influence of Commuting Behaviour

AbstractIn the entrepreneurship literature, it is generally assumed that an individual establishes a new firm in a location in which they have strong ties, normally in the municipality of residence or employment. We scrutinise this general assumption and show that firm location depends on individual characteristics, such as the commuting experience. Our results show that commuting influences the firm location choice. The probability of establishing a firm in the work municipality increases if the entrepreneur is a commuter, holding constant the type of region and unobservable and observable individual features.

What Underlies Localization and Urbanization Economies? Evidence from the Location of New Firms

The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries (three-digit level). First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. In a second step, we regress these estimates on industry characteristics that are related to the potential importance of three agglomeration theories, namely, labor market pooling, input sharing and knowledge spillovers. Localization effects are low and urbanization effects are high in knowledge-intensive industries, suggesting that firms (partly) locate in large cities to reap the benefits of inter-industry knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry-specific, suggesting that industries (partly) locate in specialized economic environments to share a common pool of specialized workers.

The mechanisms of agglomeration: Evidence from the effect of inter-industry relations on the location of new firms

The objective of this paper is to explore the relative importance of each of Marshall’s agglomeration mechanisms by examining the location of new manufacturing firms in Spain. In particular, we estimate the count of new firms by industry and location as a function of (pre-determined) local employment levels in industries that: (1) use similar workers (labor market pooling); (2) have a customer–supplier relationship (input sharing); and (3) use similar technologies (knowledge spillovers). We examine the variation in the creation of new firms across cities and across municipalities within large cities to shed light on the geographical scope of each of the three agglomeration mechanisms. We find evidence of all three agglomeration mechanisms, although their incidence differs depending on the geographical scale of the analysis.

Industrial Location at the Intra-Metropolitan Level: The Role of Agglomeration Economies

Arauzo-Carod J.-M. and Viladecans-Marsal E. Industrial location at the intra-metropolitan level: the role of agglomeration economies, Regional Studies. The objective of this paper is to analyse the influence of agglomeration economies on location decisions taken by new firms inside metropolitan areas. As it is assumed that these economies differ according to firms' level of technology, the sample comprises new firms from high-, intermediate- and low-technology industries. Of particularly interest is in analysing the effects of agglomeration economies that are felt over very short distances (inside the metropolitan areas). Introduced in the estimation is the effect of the central city as a determinant for the location of new firms in the rest of the metropolitan area. Arauzo-Carod J.-M. et Viladecans-Marsal E. Sites industriels au niveau intramétropolitain: le rôle des économies d'agglomération, Regional Studies. L'objectif de cet article est d'analyser l'influence des économies d'agglomération sur les décisions prises par de nouvelles entreprises concernant l'installation de leur site dans des zones métropolitaines. Partant de l'hypothèse que ces économies diffèrent en fonction du niveau technologique des entreprises, notre échantillon comprend des entreprises nouvelles d'un niveau technologique élevé, intermédiaire et bas. Nous nous intéressons particulièrement à l'analyse des effets des économies d'agglomération qui sont ressenties sur de très courtes distances (à l'intérieur des zones métropolitaines). Nous introduisons dans notre estimation l'effet de la ville centrale comme déterminant dans le choix des sites des nouvelles entreprises dans le reste de la zone métropolitaine. Sites industriels Ville Zone métropolitaine Économies d'urbanisation Arauzo-Carod J.-M. und Viladecans-Marsal E. Industriestandorte auf intrametropolitaner Ebene: die Rolle der Agglomerationswirtschaften, Regional Studies. Mit diesem Beitrag soll der Einfluss von Agglomerationswirtschaften auf die Standortentscheidungen von neuen Firmen in metropolitanen Gebieten untersucht werden. Da wir annehmen, dass diese Wirtschaften je nach dem technologischen Niveau der Firmen unterschiedlich ausfallen, enthält unsere Stichprobe neue Firmen aus Branchen mit hohem, mittlerem und niedrigerem technologischen Niveau. Insbesondere interessieren wir uns für die Analyse der Auswirkungen von Agglomerationswirtschaften, die über sehr kurze Entfernungen hinweg (innerhalb der metropolitanen Gebiete) spürbar werden. In unserer Schätzung berücksichtigen wir die Auswirkung der zentralen Stadt als Determinanten für den Standort neuer Firmen im übrigen metropolitanen Gebiet. Industriestandort Städte Metropolitane Gebiete Agglomerationswirtschaften Arauzo-Carod J.-M. y Viladecans-Marsal E. Localización industrial en un nivel intrametropolitano: el papel de las economías de aglomeración, Regional Studies. El objetivo de este artículo es analizar qué influencia ejercen las economías de aglomeración cuando las nuevas empresas eligen su localización en áreas metropolitanas. Suponiendo que estas economías difieren en función del nivel de tecnología de las empresas, en nuestra muestra abarcamos nuevas empresas de industrias con tecnologíaalta, intermedia y baja. Nos interesa en particular analizar los efectos de las economías de aglomeración que se hacen palpables sobre distancias muy cortas (dentro de áreas metropolitanas). En nuestro cálculo introducimos el efecto de la ciudad central como determinante para ubicar las nuevas empresas en el resto del área metropolitana. Ubicación industrial Ciudades Áreas metropolitanas Economías de aglomeración

US and EU experiences of tax incentives

The purpose of this paper is to shed light on the controversial issue of regional development incentives. Although extensive research has been conducted, a review of the literature gives an inconclusive answer to whether economic incentives are effective. Why do researchers arrive at different conclusions, even after analysing the same programmes? Among the problems that we find, for example, is the fact that for some researchers ‘effective’ means the significant location of new firms in targeted areas, while for others the creation of jobs regardless of whether new firms are arriving in a significant fashion. Furthermore, as we elaborate, the selection of an econometric model will have a significant impact on expected results. Different models, with different limitations, will lead researchers to evaluate the same incentive programme but arrive at different conclusions regarding its effectiveness. The contribution of the paper is to inform policymakers about the potential opportunities and pitfalls when designing incentive strategies. This is particularly relevant, given that both the US and Europe have been promoting incentives as a tool for regional economic development.

The Location of New Firms and the Life Cycle of Industries

Why does the location of new firms differ according to the characteristics of the industry? Is there a relation between a technologically dense base of firms and the urban environment in which they appear? Does the autonomy of new firms when deciding their location differ according to the characteristics of the industrial sector and the size of the firm? This paper approaches these questions in Spanish manufacturing sectors between the years 1980 and 1994. The results obtained indicate that decisions on location differ according to the technological density of the industries and their life cycle.

The confusing relationship between environmental policy and location behaviour of firms: A methodological review of selected case studies

The literature on the effects of environmental policy on the location behaviour of firms has so far failed to draw any firm conclusions. Different studies have shown that the effects may be zero, negative or positive. They always tend to be small. This paper argues that methodological issues form a major explanation for the contradictory results. It discusses the methodological strengths and weaknesses of data collection and secondary data analysis. Moreover, several typical studies are reviewed both in terms of methodology and findings. The paper finds that methodological issues tend to affect the results. The main substantive result is that at the present intensity of environmental policy plant closing is most likely to result, followed by reduced location of new firms whereas relocation is the least likely response. The results have to be interpreted with caution, however, because of methodological problems inherent to most studies.

Industrial Agglomeration under Cournot Competition

In a two-region model where regional incomes are endogenous and where firms compete a la Cournot, we first show that strategic interactions may induce firms to agglomerate in the initially developed region, if transportation costs are low or economies of scale high: in the region where more firms are established, price and individual market shares effects (intra-regional competition) are counterbalanced by higher global market shares and reduction in imports (inter-regional competition). It is then shown that a regional advantage in costs, productivity or size attracts the location of new firms in this region.

A Dynamic Analysis of Multiple-Center Formation in a City

An optimizing model of urban land development is presented where formation and growth processes of subcenters are described. The model determines the location of new firms and households so as to maximize the net rental revenue from land over the planning horizon. The conditions on parameter values for which subcenters can be formed are investigated by the simulation method. Furthermore, how the optimal subcenter location varies in response to changes in relevant parameters is examined.

Property Taxes and the Birth and Intraregional Location of New Firms

The purpose of this paper is to identify conditions that encourage local entrepreneurship and to test whether local property tax rates and abatement pro grams influence the birth and intraregional location of new firms This paper tests a model of the location of new firms in the machine tool and electronic components industries in 106 counties in the states of New Jersey, Maryland, Virginia, and the District of Columbia. The findings indicate that property tax rates and the existence of a local tax abatement program do not influence the generation or location of new firms within the region Instead, there is evidence that wage rates, the size of the pool of potential entrepreneurs, localiza tion economies, distance from a labor force, and urbanization economies in a county influence where new firm births will occur

Will Social Action Have Any Impact?

Ecological and social action explanations have been used to account for the location of new firms in small communities. Using data collected for a sample of 162 small communities in Illinois, the authors attempt to determine which of these explanations differentiates the communities acquiring new firms from those not acquiring them. The contrasting explanations and findings are discussed in terms of their implications for the role of the community specialist in industrial development efforts.The location of new firms in small towns is not associated solely with relatively fixed, ecological factors. All the social action measures used were found to be significantly related to location. That suggests that community specialists’ efforts, if they are directed toward organizing the community, coordinating activities, and mobilizing interest groups, will likely have an impact on development.