Getting There Fast: Globalization, Intercontinental Flights and Location of Headquarters

Abstract

This paper examines the determinants of the location of large firms' headquarters across a rich sample of European urban areas, focusing on the availability of non-stop intercontinental flights. We also account for the influence of other aspects: the proximity to large markets and specialized providers, congestion and tax costs, the availability of skilled labor and the role of the urban area in the home country. Controlling for these factors, we find that the availability of direct non-stop flights has a large influence on headquarters' location. This confirms the importance of transport infrastructures and tacit information exchanges between cities for firm location. Getting there fast: Globalization, intercontinental flights and location of headquartersAbstract: This paper examines the determinants of the location of large firms' headquarters across a rich sample of European urban areas, focusing on the availability of non-stop intercontinental flights. We also account for the influence of other aspects: the proximity to large markets and specialized providers, congestion and tax costs, the availability of skilled labor and the role of the urban area in the home country. Controlling for these factors, we find that the availability of direct non-stop flights has a large influence on headquarters' location. This confirms the importance of transport infrastructures and tacit information exchanges between cities for firm location.

Air service and urban growth: Evidence from a quasi-natural policy experiment

“…Finally, air traffic could raise regional productivity via agglomeration effects and the associated positive externalities (see, among others, Stuart and Strange, 2004). The location decision of exporters and multinational firm headquarters is influenced by the quality of air services (Lovely et al, 2005;Bel and Fageda, 2008). At the same time, both types of firms are shown to exert positive spillovers on local businesses, further affecting productivity (Blomstrom and Kokko, 1998;Arnold et al, 2011).…”

The fortunes of air transport gateways

“…However, at the inter-continental analysis Madrid and Los Angeles stood out. Bel and Fageda (2008) found a close correlation between total traffic and intercontinental traffic at European airports, but that Milan, Munich and Zurich had higher than expected inter-continental traffic.…”

Building a “Headquarters Economy”: The geography of headquarters within Beijing and its implications for urban restructuring

“…Most empirical and theoretical studies on location of HQ in developed economies have paid much attention on the role of market forces such as benefits and costs of a specific locational choice of HQ (Bel & Fageda, 2008;Davis & Henderson, 2008;Henderson & Ono, 2008;Lovely et al, 2005), while the importance of the state factors in determining HQ location have been largely overlooked. Institutional contexts have been considered critical in the distribution of HQ of large firms within China's urban system (Pan & Xia, 2014).…”

“…Most of them have focused on the distribution of HQ among different cities (Bel & Fageda, 2008;Klier, 2006;Meyer & Green, 2003;Pan & Xia, 2014;Rice, 2010;Rice & Lyons, 2010;Tonts & Taylor, 2011, 2010. Theoretical and empirical research suggests that HQ are highly agglomerated in metropolitan areas in western countries (Davis & Henderson, 2008;Henderson & Ono, 2008;Lovely, Rosenthal, & Sharma, 2005;Strauss-Kahn & Vives, 2009).…”