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Spatial organization of firms: the decision to split production and administration
Author(s) -
Aarland Kristin,
Davis James C.,
Henderson J. Ver,
Ono Yukako
Publication year - 2007
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/j.1756-2171.2007.tb00079.x
Subject(s) - production (economics) , business , administration (probate law) , census , process (computing) , industrial organization , economics , microeconomics , computer science , population , demography , sociology , political science , law , operating system
A firm's production activities are often supported by nonproduction activities, such as administrative units including headquarters, which process information both within and between firms. Firms may physically separate such administrative units from their production activities and create stand‐alone central administrative offices (CAOs). However, activities in multiple locations may cause internal communication costs. What types of firms are more likely to separate such functions? If firms separate administration and production, where do they locate CAOs? This paper examines firms' spatial organization using microlevel data from the US Census Bureau.