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Staying Home or Moving Away? Restructuring Efforts within Multinational Enterprises
Author(s) -
Abraham Filip,
Goesaert Tim,
Konings Jozef
Publication year - 2014
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12179
Subject(s) - multinational corporation , restructuring , work (physics) , event (particle physics) , demographic economics , geographical distance , business , dispersion (optics) , economic geography , economics , finance , sociology , demography , engineering , mechanical engineering , population , physics , optics , quantum mechanics
This paper analyses the impact of geographic dispersion on employment changes within multinationals. Building on earlier work of Landier et al. (2009, Review of Financial Studies 22, 3: 1119), we investigate whether corporate decision‐making within a multinational is affected by the distance between an affiliate and its headquarter. Our findings suggest a detrimental impact of distance on employees, by either an increased likelihood of observing a downsizing event, or by witnessing a larger decrease in the number of employees at distant locations during downsizing events. In addition, our results seem to relate the higher likelihood of observing a downsizing event to the role of social factors on decision making. The more visible a manager is in his community, the less likely he is to downsize proximate divisions.