Agglomeration economies, accessibility and the spatial choice behavior of relocating firms

Abstract

A growing body of empirical urban economic studies suggests that agglomeration and accessibility externalities are important sources of the uneven distribution of economic activities across cities and regions. At the same time, little is known about the importance of agglomeration economies for the actual location behavior of rms. is is remarkable, since theories that underlie agglomeration economies are microeconomic in nature. In a case study of the Dutch province of South Holland, we analyze micro-level data to determine the extent to which relocation decisions are dependent on accessibility and agglomeration externalities when controlling for rm characteristics. ese externalities are measured with location attributes for both own-sector localization and urbanization economies and for proximity to transport infrastructures. e results con rm that rm relocation behavior is affected much more by rm-level attributes (size, age, and growth rate) than by agglomeration and accessibility attributes. Still, accessibility and agglomeration are signi cantly attached to rm relocations, though their effects vary over sectors. Own-sector and generalized external economies are more important for a rm's location choices than proximity to transport infrastructure.

The impact of economic crisis on firm relocation: Greek SME movement to Bulgaria and its effects on business performance

“…This could be explained by the fact that the micro firms, which are managed mainly by survivors, were most acutely affected by the crisis and austerity policies (Dimitropoulou et al 2014). Moreover, this finding could possibly be a consequence of the limited financial resources that the survivors have, as they mainly own micro enterprises (Aspelund and Butsko 2010;de Bok and van Oort 2011). Therefore, only 1.5% of the survivors' firms are subsidiaries, whereas 20% of the true entrepreneurs that relocated in the pre-crisis period and 37% of the true entrepreneurs who have moved since 2007 own subsidiaries.…”

“…First, the size of the enterprises is closely related to the type of their owners and thus the incentive for relocation, as firm size significantly affects relocation decisions (Brouwer et al 2004;de Bok and van Oort 2011). The true entrepreneurs, in both periods, demonstrate high levels of medium firms (33% in the pre-crisis period and 20% in the post-crisis context), compared to the survivors (just 5%).…”

“…Thus, the Ha hypothesis is accepted, and firm size is associated with the period of relocation at 1% level of significance. While the small size of an enterprise, and the subsequent limited resources, constrain its ability to internationalize (Aspelund and Butsko 2010;de Bok and van Oort 2011), the statistical analysis reveals a high tendency of small firms to relocate to a foreign country, due to the impact of the recession on their performance.…”

“…On these grounds, the features of the enterprises are crucial for the decision-making procedure related to relocation (van Dijk and Pellenbarg 2000;Arauzo-Carod et al 2010). Following the behavioral theoretical perspective, the sector, the size, and the location of an enterprise are variables strongly related to relocation decisions (Brouwer et al 2004;de Bok and van Oort 2011;van Dijk and Pellenbarg 2017).…”

“…The very small size and low level of financial resources of the Greek SMEs were important for the decision to relocate rather than to set up an affiliate. Considering that firm size and relocation decisions are closely interrelated (Aspelund and Butsko 2010;de Bok and van Oort 2011), it is worth noting that the small size and the subsequent low level of financial resources of the Greek SMEs were important for the decision to relocate rather than to set up an affiliate.…”