The Effects of Spatial Mobility on the Performance of Firms

Joris Knoben, L. A. G. (Leon) Oerlemans and R. P. J. H. (Roel) Rutten

Economic Geography, 2008, vol. 84, issue 2, 157-183

Abstract: A considerable body of research has analyzed the impact of a firm’s geographic position and levels of organizational and territorial embeddedness on its performance. Generally these studies have assumed that firms are immobile. Research that has focused on the effects of the relocation of firms has treated firms mainly as atomistic actors that can move freely in geographic space and has tended to neglect the influence of changes in a firm’s geographic position and level of organizational and territorial embeddedness. We integrated insights from both streams of literature to answer the research question, “What are the effects of relocation on a firm’s performance, and what is the influence of a firm’s geographic position and its level of organizational and territorial embeddedness on this relationship?” On the basis of our analysis of data from a survey of managers of Dutch automation services firms, we found that the degree of impact of a firm’s relocation on its performance depends on the characteristics of the relocation. For example, a move to an urbanized region hampers performance, whereas a move to a research and development-intensive region fosters a higher level of performance. Furthermore, firms with high levels of organizational embeddedness suffer in the short term from relocation, but benefit in the long run.

Date: 2008
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DOI: 10.1111/j.1944-8287.2008.tb00402.x

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