Headquarters and innovation: does location matter?
Volume: 14 Topics in Corporate Finance
Price: € 20.00
A key public issue for many governments is how to attract (and retain) economic activities. While industrial policy, aimed at picking winners and/or subsidizing existing businesses, is out of fashion (the dreadful experiences in the seventies with protecting “old industries” like shipping and mining are still vivid…), countries and regions are nevertheless actively trying to create their own “Silicon Valley”. In similar spirit, governments seem interested at being attractive as location for headquarters. Economic activity, knowledge intensive professional services in particular, seem to cluster where headquarters are. All this might be true yet little is known about the effectiveness and ability of governments to stimulate economic activity.
Against this backdrop the Amsterdam Center for Corporate Finance (ACCF) has decided to devote this issue of its discussion series ”Topics in Corporate Finance” to this important topic. This booklet tries to take a small step in that direction. Professor Vives –one of the world’s leading authorities on competitiveness and industrial policy (in collaboration with Professor Vanessa Strauss Kahn) – provides an insightful analysis on the choice of location for headquarters. This is analyzed extensively using data on location choices of firms in the Unites States. In a separate chapter Professor Vives also addresses where economic activity is clustered in the EU, suggestive for what the regional competitive advantages might be. The main observation in this brief chapter is that regions have specialized, yet have very different track records in attracting innovative activities.