Spatial Organization of Firms
A firm’s production activities are often supported by non-production activities. Among
these activities are administrative units including headquarters, which process
information both within and between firms. Often firms physically separate such
administrative units from their production activities and create stand alone Central
Administrative Offices (CAO). However, having its activities in multiple locations
potentially imposes significant internal firm face-to-face communication costs. What
types of firms are more likely to separate out such functions? If firms do separate
administration and production, where do they place CAOs and why? How often do firms
open and close, or relocate CAOs? This paper documents such firms’ decisions on their
spatial organization by using micro-level data from the U.S. Census Bureau.