Agglomeration effects and firm performance

Jennen, M. and Verwijmeren, P. (2010) Agglomeration effects and firm performance. Urban Studies, 47(12), pp. 2683-2703. (doi: 10.1177/0042098010363495)

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This study empirically tests the trade-off between the costs and benefits of agglomeration for a large sample of firms. In line with the existing literature, it is found that population and employment density benefit productivity, but increase labour and real estate costs. To test the trade-off of benefits and drawbacks of agglomeration, the analysis focuses on the relation between agglomeration and profitability. For a sample of single-establishment Dutch firms, it is found that on average the costs of settling in an area with a dense spatial distribution of employment outweigh the benefits, an effect that holds for both urbanisation and localisation measures. In general, doubling the employment density will decrease the average return on assets by more than one percentage point.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Verwijmeren, Professor Patrick
Authors: Jennen, M., and Verwijmeren, P.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Urban Studies
ISSN (Online):1360-063X
Published Online:19 July 2010

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