EconPapers    
Economics at your fingertips  
 

Communication Costs and the Internal Organization of Multi-Plant Businesses: Evidence from the Impact of the French High-Speed Rail

P. Charnoz, Claire Lelarge and C. Trevien
Additional contact information
P. Charnoz: Insee, Crest et Université Paris-Sud
C. Trevien: Insee, Crest et Sciences-Po

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: We document the impact of travel time between affiliates and headquarters of geographically dispersed corporate groups on the management of such business organizations. Theory suggests that the easier circulation of managers might facilitate the transmission of information between production plants and headquarters, thus fostering growth and functional specialization (on production activities) at remote affiliates and decreasing operational costs at the group level. We test these predictions on the population of French corporate groups, using the expansion of the High Speed Rail network as an arguably exogenous shock on internal travel times. Results are most pronounced in the service industries, where information to be transmitted is arguably softer (Petersen and Rajan, 2002): we estimate that HSR induced the creation of one production job for the average affiliate in these industries (against 0.2 job in retail, trade or manufacturing industries), and the shift of around one managerial job from affiliate to HQ. These results are robust to alternative identification strategies addressing the problem of the endogenous placement of the HSR infrastructure (use of high-dimensional fixed effects controlling for local and affiliate-level shocks as in Giroud, 2013 and evidence from un-realized lines as in Donaldson, 2014). At the group level, descriptive regressions suggest that the impact on the operational profit margin is around 0.5 percentage points in most industries.

Keywords: Communication costs; headquarters; firm organization; public infrastructure; high-speed rail (search for similar items in EconPapers)
JEL-codes: L22 R30 R40 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.bnsp.insee.fr/ark:/12148/bc6p06zrc0z/f1.pdf Document de travail de la DESE numéro G2016-02 (application/pdf)

Related works:
Working Paper: Communication Costs and the Internal Organization of Multi-Plant Businesses: Evidence from the Impact of the French High-Speed Rail (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nse:doctra:g2016-02

Access Statistics for this paper

More papers in Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques Contact information at EDIRC.
Bibliographic data for series maintained by INSEE (doc.trav@insee.fr).

 
Page updated 2025-01-20
Handle: RePEc:nse:doctra:g2016-02