The internal spatial organization of firms: Evidence from Denmark

Abstract

While multi-establishment firms are an important part of the economy, little is known about their spatial organization. In this article, we study how the location and the occupational composition of establishments within firms has changed during the last 36 years. Using Danish administrative employer-employee data, we present a series of stylized facts regarding the spatial internal organization of firms. We show that the average number of establishments at the firm level increased by 36% during this period. Moreover, the average distance of the establishments and workers to their headquarters has increased by more than 200%. These changes are mainly driven by increases in the average distance of production workers and business service workers, and a higher use of the latter. Finally, we show that the ratio of managers to production and clerical workers within firms has increased, in particular in establishments located in the largest urban municipalities. After presenting the facts, we briefly discuss some of the mechanisms that could be behind these changes.

Can the internet reshape the national city size distribution? Cross‐country evidence

“…The advances in internet technology increase the value of knowledge and time (Mack, 2010). Because large cities have more knowledge exchanges and tacit knowledge is hard to exchange through the internet, knowledge‐intensive enterprises prefer to gather in large cities (Acosta & Lyngemark, 2021), where they can also access information sources faster and organize production immediately. For individuals, the increased online communication ability provided by the internet will also stimulate more face‐to‐face communication, and the role of large cities as interaction centres will be strengthened (Gaspar & Glaeser, 1998).…”

“…Workers exchange more in larger cities than in smaller cities (Davis & Jonathan, 2019), and due to the incomplete and imperfect dissemination of knowledge via the internet, tacit knowledge is hard to obtain in small cities through the internet (Gokan et al, 2019). Therefore, enterprises, especially knowledge-intensive enterprises, tend to locate in large cities (Acosta & Lyngemark, 2021), which is demonstrated by location patterns, such as the agglomeration of creative industry enterprises in big cities in Britain and information industry companies in Silicon Valley (Paschke, 2019). Second, the maturity of internet technology has instigated the rising demand for just-in-time production (Sohn et al, 2002).…”