Firm Mobility and Organizational Networks

Joris Knoben illustrates that the number of firm relocations has grown steadily and considerably over the last decade and, at the same time, relationships between organizations have become more important to firm performance. It is often argued that these relationships require geographical stability, and so the author explores how these two seemingly contradictory observations can be reconciled. Insights from economic geography and organization science are utilized to develop a multidisciplinary firm-level perspective on the causes and consequences of firm relocation. Subsequently, this framework is tested empirically. The results show that incorporating the level of embeddedness as well as the spatial mobility of firms into a single framework leads to significantly better explanations of both the spatial behavior of firms as well as of the outcomes of this behavior. All-in-all, the findings indicate that there is a tradeoff between spatial mobility and inter-organizational stability. This multidisciplinary perspective on the relations between organizational networks, spatial firm mobility, and firm performance will be of great interest to a range of scholars, including organization scientists, regional scientists and economic geographers and, managers of relocating companies as well as consultants in this field.