Interstate Relocation of Manufacturers and Business Climate

Abstract

In this study, we model how traditional factors associated with a supply‐side view of business climate, at times identified with neo‐liberalism, influence interstate relocation patterns of manufacturers using a panel (2000–2011) of the 48 contiguous American states. We find that very few manufacturing firms relocate across state lines in any given year and those that do relocate are relatively small businesses and are most likely to move to neighboring states. Traditional factors associated with business climate, such as taxation, appear to influence manufacturing interstate relocation. Further analysis shows that the tax policy changes necessary for an economically significant effect on relocation are likely infeasible.

Assessment of regions using an index for a location’s attractiveness for business development

“…The concept of attractiveness for business development is a research area that is among the most difficult to define, as it combines different interrelated aspects of favourable conditions for doing business, investment, living, working, learning and travelling. Therefore, we find overlapping concepts such as investment attractiveness (Godlewska-Majkowska, 2018;Strzelczyk, 2015), business environment (Kisel ' akov a et al, 2019), economic environment (Dub e et al, 2016), business climate (Conroy et al, 2017), economic performance (Chin, 2020), market environment (Budzy nska, 2016), country characteristics (Kotler et al, 2019) and geomarketing (Ramadani et al, 2018). Research that focuses on location-specific rather than country-specific factors and that addresses issues of business development rather than the attraction of investment, uses the concept of a location's attractiveness for business development (Dub e et al, 2016;Godlewska-Majkowska, 2018;Ramadani et al, 2018).…”

“…Numerous pieces of research stress the positive impact of an increase in attractiveness on the development of a location (Gokmenoglu et al, 2019; T anco sov a, 2019), on workplaces and productivity (Li & Tanna, 2019), on the number of companies (Gokmenoglu et al, 2019), on GDP (Gokmenoglu et al, 2019; T anco sov a, 2019) and on competitiveness (Kisel ' akov a et al, 2019). Following Conroy et al (2017), the number of studies at a regional level is noticeably smaller than the number at the country level. Furthermore, little is known about the impact of location attractiveness on the indicators for the establishment of a new business.…”

“…The factors that drive the location decision for a new start-up and those that influence the decision of a larger firm looking for a site for a new branch are likely to be very different (Conroy et al, 2017). The factors analysis that is usually done is based on the one of three theoretical frameworks, namely, the neo-classical, behavioural, or institutional framework (Kotler et al, 2019).…”

“…Within the institutional approach, external factors (e.g. formal and informal institutions, such as trust, networks, and local policies) are of the utmost importance to firm behaviour (Conroy et al, 2017).…”

“…Furthermore, little is known about the impact of location attractiveness on the indicators for the establishment of a new business. Most research analyses the effects on the relocation of companies (Conroy et al, 2017;Kotler et al, 2019) or on foreign direct investment (Dunning, 2003;Younsi & Bechtini, 2019). Some studies analyse the interaction between location attractiveness and new business development at a regional level.…”