Spatial organization of firms: The decision to split production and administration

Kristin Aarland, James C. Davis, J. Vernon Henderson, Yukako Ono

Research output: Contribution to journalArticlepeer-review

37 Citations (Scopus)


A firm's production activities are often supported by nonproduction activities, such as administrative units including headquarters, which process information both within and between firms. Firms may physically separate such administrative units from their production activities and create stand-alone central administrative offices (CAOs). However, activities in multiple locations may cause internal communication costs. What types of firms are more likely to separate such functions? If firms separate administration and production, where do they locate CAOs? This paper examines firms' spatial organization using microlevel data from the US Census Bureau.

Original languageEnglish
Pages (from-to)480-494
Number of pages15
JournalRAND Journal of Economics
Issue number2
Publication statusPublished - 2007 Jun
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics


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