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Transaction Partners and Firm Relocation Choice: Evidence from the Tohoku Earthquake

Arito Ono, Daisuke Miyakawa, Kaoru Hosono, Hirofumi Uchida, Taisuke Uchino and Iichiro Uesugi

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: A firm's choice of location is very important because it reveals the firm's dynamics. Using a unique firm-level data set, we examine whether and how the presence of incumbent transaction partners (i.e., suppliers, customers, and lender banks) affects this choice. To this end, we focus on those firms that were forced to relocate their headquarters because of the severe damage inflicted upon them by the Tohoku Earthquake. We find that, after the earthquake, firms tended to move to areas where their customers were located, but not to areas where their suppliers were located. We also find that firms tended to move to areas where the bank branches with which they had transacted were located. Furthermore, we find that the sizable impact of the presence of incumbent customers and banks on the probability of the firms' relocations diminished if the customers and the bank branches also suffered damage from the earthquake. On balance, these results suggest that the presence of healthy transaction partners is an important factor in the firms' choice of location.

Pages: 45 pages
Date: 2014-08
New Economics Papers: this item is included in nep-geo
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Citations: View citations in EconPapers (3)

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