Sustained Firm Growth and Regional Income Convergence

Abstract

Despite evidence that the bulk of all job creation is attributed to a small subset of establishments, their performance has not been included in spatially explicit models of regional income convergence. Because convergence is an inherently geographic process and standard ordinary least squares (OLS) tests frequently violate basic statistical assumptions, a nonspatial model of income convergence is compared to a spatially explicit model incorporating both traditional location factors and the influence of sustained growth firms in the United States over the period from 1990 to 2010. Our primary findings indicate that the pace of convergence is both spatially contingent and likely slower than OLS estimates suggest. Further, sustained growth firms add significant explanatory power to the conditional model, lending credence to the proposition that establishment-level performance impacts the convergence process.

Family business and regional development—A theoretical model of regional familiness

“…As such, geographical aspects, such as space, territory, and the place where phenomena occur, are important (Stimson, 2014a). Although regional studies, such as the regional economic growth research stream, have generally focused on location attributes and environmental conditions and have not focused on the role of the firm, firms are one of the main actors responsible for growth and economic development (Campbell, James, & Kunkle, 2013). Firms and institutions are responsible for decision making, namely, the allocation and utilization of production factors.…”

“…Specifically, the endogenous vision shifts the focus away from considering the rational aspect of firms (rational maximizing actor) to the behavioral aspects of firms, entrepreneurs, and policymakers (Campbell et al, 2013). Within this framework of regional development, family firms become an important phenomenon to study not only because the family firm is an important type of organization that exists in different sizes, sectors, and economies (i.e., as important locally embedded actors) but also because the relationship between family and business systems alters organizations' decision making (i.e., how they allocate resources and the timing thereof) (Basco & Pé rez Rodriguez, 2009;Le BretonMiller & Miller, 2014), thereby having potential consequences for regional economic dynamics.…”

Family business and regional science: “Bridging the gap”

“…Therefore, the following question emerges: Does the regional family firm embeddedness impact regional factors and regional processes? Addressing this research question could fill one of the main gaps within regional science, which neglects the role of the firm because regional science has mainly focused on location attributes and regional conditions (Campbell et al, 2013). The degree and the sign (i.e., the positive or negative effect) of the regional family firm embeddedness effect on regional factors and processes could give a first approximation of family firms' role in regional economic development.…”

“…Second, the endogenous perspective in regional science has amplified the importance of geographical space. Much of the research in regional science has, until recently, focused on local attributes and regional conditions (Campbell, James, & Kunkle, 2013) that marginalize the role of firms. Specifically, the comprehension of how the heterogeneity of firms affects regional outcomes has been neglected.…”

Convergence analysis for hierarchical longitudinal data

“…Rizov and Zhang (2014) investigate regional productivity disparities in China from firm-level data, Basile et al (2014) exploit firm-level data to explore the regional business cycles differentials. Campbell et al (2016) discuss the role of firm heterogeneity for aggregate convergence. They construct regional indicators of firm performance and identify an important role of best performers for regional convergence within an aggregate analysis.…”