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Locational and managerial decisions as interdependent choices in the headquarter-manufacturing plant relationship: a theoretical approach |
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| Authors: | Carlos Eduardo Lobo e Silva Geoffrey J. D. Hewings |
| Affiliation: | 1. Department of Economics, Pontifícia Universidade Católica do Rio Grande do Sul, PUCRS, Av. Ipiranga, 6681, Prédio 50, sala 1001, Porto Alegre, RS, 90619-900, Brazil 2. Regional Economics Applications Laboratory (REAL), University of Illinois at Urbana-Champaign, 607 S. Mathews, Urbana, IL, 61801-3671, USA |
| Abstract: | The main purpose of the paper is to provide a link between the location decision and the internal organization of vertically integrated firms. The results of the model show that the decisions about location and managerial (de)centralization are interdependent: For certain parameters, firms should change both aspects simultaneously as a response to lower communication costs. The positive correlation between the decentralization of decision-making and geographic decentralization predicted by the model is supported by empirical research. |
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