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Beyond clusters: How regional geographic signature affects firm value and risk
Author(s) -
Bell Geoffrey G.,
Deng Saiying
Publication year - 2013
Publication title -
canadian journal of administrative sciences / revue canadienne des sciences de l'administration
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 48
eISSN - 1936-4490
pISSN - 0825-0383
DOI - 10.1002/cjas.1251
Subject(s) - diversification (marketing strategy) , endogeneity , economic geography , diversity (politics) , systematic risk , value (mathematics) , location , economies of agglomeration , geographical distance , business , sample (material) , economics , geography , econometrics , marketing , finance , economic growth , political science , computer science , population , demography , geodesy , machine learning , sociology , law , chemistry , chromatography
Existing studies examining how geography affects firm outcomes primarily consider how clusters affect performance. We examine how regional geographic signature—industry clusters, regional economic diversity, region size, and regional innovativeness—affects firm value and systematic and unsystematic risk using a sample of publicly traded American bank holding companies. After controlling for endogeneity of clusters, we find that locating in large and innovative regions enhances firm value, while locating in clusters and diversifying into many regions reduces value. Clusters reduce systematic risk and increase unsystematic risk, while economic diversity and innovativeness increase systematic risk. Thus, geographic locales exert multifaceted influences on value and risk, and we need to consider more than industry clusters and geographic diversification when considering geographic influence. Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd .