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Why and where do headquarters move?

Author

Listed:
  • Strauss-Kahn, Vanessa

    (INSEAD)

  • Vives, Xavier

    (IESE Business School)

Abstract

This paper analyzes decisions regarding the location of headquarters in the U.S. for the period 1996-2001. Using a unique firm-level database of about 30,000 U.S. headquarters, we study the firm and location-specific characteristics of headquarters that relocated over that period. Headquarters are increasingly concentrated in medium-sized service-oriented metropolitan areas, and the rate of relocation is significant (5% a year). Larger (in terms of sales) and younger headquarters tend to relocate more often, as do larger (in terms of the number of headquarters) and foreign firms, and firms that are the outcome of a merger. Headquarters relocate to metropolitan areas with good airport facilities with a dramatic impact, low corporate taxes, low average wages, high level of business services, same industry specialization, and agglomeration of headquarters in the same sector of activity, with all agglomeration variables having an important and significant impact.

Suggested Citation

  • Strauss-Kahn, Vanessa & Vives, Xavier, 2006. "Why and where do headquarters move?," IESE Research Papers D/650, IESE Business School.
    • Handle: RePEc:ebg:iesewp:d-0650
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    More about this item

    Keywords

    Agglomeration externalities; business services; communication costs; congestion; corporate history; mergers; nested logit;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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