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Staying Home or Moving Away? Restructuring Efforts within Multinational Enterprises

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  • Filip Abraham
  • Tim Goesaert
  • Jozef Konings

Abstract

type="main" xml:id="twec12179-abs-0001"> This paper analyses the impact of geographic dispersion on employment changes within multinationals. Building on earlier work of Landier et al. (2009, Review of Financial Studies 22, 3: 1119), we investigate whether corporate decision-making within a multinational is affected by the distance between an affiliate and its headquarter. Our findings suggest a detrimental impact of distance on employees, by either an increased likelihood of observing a downsizing event, or by witnessing a larger decrease in the number of employees at distant locations during downsizing events. In addition, our results seem to relate the higher likelihood of observing a downsizing event to the role of social factors on decision making. The more visible a manager is in his community, the less likely he is to downsize proximate divisions.

Suggested Citation

  • Filip Abraham & Tim Goesaert & Jozef Konings, 2014. "Staying Home or Moving Away? Restructuring Efforts within Multinational Enterprises," The World Economy, Wiley Blackwell, vol. 37(6), pages 765-782, June.
    • Handle: RePEc:bla:worlde:v:37:y:2014:i:6:p:765-782
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    File URL: http://hdl.handle.net/10.1111/twec.2014.37.issue-6
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    Cited by:

    1. Bassanini, Andrea & Caroli, Eve & Ferreira, Bruno Chaves & Rebérioux, Antoine, 2020. "Don't Downsize This! Social Reactions to Mass Dismissals on Twitter," IZA Discussion Papers 13840, Institute of Labor Economics (IZA).
    2. Bassanini, Andrea & Caroli, Eve & Fontaine, François & Rebérioux, Antoine, 2021. "Escaping social pressure: Fixed-term contracts in multi-establishment firms," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 697-715.

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