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The Size Distribution Of Firms: Geographical Perspectives

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The Size Distribution Of Firms: Geographical Perspectives. ELIZABETH PYLE & MADS MORTENSEN. Overview. The Size Distribution of firms – the existence of small and large firms in modern economies The geographic scope of large firms – employment geographies - PowerPoint PPT Presentation

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Page 1: The Size Distribution Of Firms: Geographical Perspectives
Page 2: The Size Distribution Of Firms: Geographical Perspectives

The Size Distribution of firms – the existence of small and large firms in modern economies

The geographic scope of large firms – employment geographies

The ‘spatial division of labour (SDL) – employment distributions

Conclusion/Discussion

Page 3: The Size Distribution Of Firms: Geographical Perspectives

the existence of corporate giants, and impressive variations in the size distribution of firms have been important characteristics of industrial economies throughout this century.

Population pyramid/Gibrats Law – number & size of firms represented by a positively skewed distribution

Page 4: The Size Distribution Of Firms: Geographical Perspectives

Occurs when the average cost of production declines with increasing size of activity

Diseconomies of Scale – increase in size may become inefficient

Causes of diseconomies –technological limits, supervision and communication, labor alienation etc

Highly Variable opportunities to take advantage of economies of scale

Page 5: The Size Distribution Of Firms: Geographical Perspectives

Planning system firms &Market system firm

Contrast to economies of scale model

It cannot be assumed that the largest firms are the most efficient firms

The issue of subcontracting

Page 6: The Size Distribution Of Firms: Geographical Perspectives

Substantial Variations

National & cultural factors as well as economies of scale

National Variations in firm size distributions have deep historical roots

Small firm sector is playing at greater role

Page 7: The Size Distribution Of Firms: Geographical Perspectives

The size distribution of firms is mirrored by variations in the geographic scope of firms

Hakansonsmodel – firms first establish a strong local or regional base, then grow nationally and finally internationally

Page 8: The Size Distribution Of Firms: Geographical Perspectives

Since 70’s, employment geographies of large corporations have been volatile

The biggest changes, in terms of job shedding, have occurred within corporations in mature industries such as iron and steel, shipping and and building

Cadburys Schwepps, Standard Electric & Phillips

Page 9: The Size Distribution Of Firms: Geographical Perspectives

As manufacturing firms grow there is typically pressure to internationalize operations by exporting and eventually by investing in foreign based facilities

Considerable variations exist

The integration of MNC’s (Mcnee 1958)

Page 10: The Size Distribution Of Firms: Geographical Perspectives

Firms pov– investments + merger & acquisitions = long term motivations

Faster and less risk strategy

Increase of economic and geographicconcentration of power

Macmillan Bloedel Case

Page 11: The Size Distribution Of Firms: Geographical Perspectives

1. Sectoral division of labor occurs when regions specialize in particular industries and all the related skills

2. intra sectoral division of labouroccurs within individual industries firms choose to specialize tasks and occupations by location.

New international Division of labor (NIDL)

Page 12: The Size Distribution Of Firms: Geographical Perspectives

SDL & NIDL both anticipate the agglomeration of control functions at the top of the urban hierarchy

The geographic distribution of the head offices and R&D; UK, Japan, Canada &US

R&D Strategies

Page 13: The Size Distribution Of Firms: Geographical Perspectives

1. ‘cores’ where decisions are made about the allocation of investment, jobs and technology in periphery

2. ‘cores’- highest paid and most stable jobs

Spin offs and local wealth generated by core functions

Contrasting ‘core periphery’ – less stable

Page 14: The Size Distribution Of Firms: Geographical Perspectives

Enormously varied The SDL & NIDL have both captured

important tendencies and grossly over simplified reality

Locational hierarchies of the largest firms and core periphery contrasts have proven more dynamic than anticipated

A Need to investigate the structure and strategies of firm's in diff segments.