The role of geographical and temporary proximity in MNEs’ location and intra-firm co-location choices

Katiuscia Lavoratori, Sergio Mariotti and Lucia Piscitello

Regional Studies, 2020, vol. 54, issue 10, 1442-1456

Abstract: This paper investigates the role of geographical and temporary proximity in the location and co-location decisions of manufacturing activities by foreign multinational enterprises (MNEs). Empirical analysis shows that foreign MNEs co-locate their new manufacturing plants with their plants already operating in the same manufacturing activity, while geographical proximity exerts a much weaker role when the latter operates in services activities. This is especially true in the case of knowledge-intensive business services, where the travelling and meeting of professionals allows temporary proximity. Moreover, a spatial econometric extension of the analysis confirms a geographical decay effect for intra-firm co-location with activities located in contiguous provinces.

Date: 2020
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DOI: 10.1080/00343404.2020.1732901

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