Regions, Industrial Dominance, and Business Success: An Inquiry into the Geography of Economic Adjustment, Flexibility and Competitiveness
Edward Feser University of Illinois at Urbana-Champaign
This study will investigate the relationship between concentrated regional corporate structure-the dominance of a given regional industry by one or a few large firms-and regional business adaptability and performance. The research will test the idea that firms in regions in specific industries dominated by few very large businesses tend to be less productive than firms in the same industries in regions characterized by less corporate dominance and greater organizational diversity. The theory is that corporate dominance in a specific location limits local firms' ability to deploy and adjust workforce, capital, and other inputs to maximum advantage. In effect, corporate organizational structure is a mechanism which can lock regions into a particular set of industrial competencies. As markets evolve and technology changes, those competencies-once key economic assets-may become liabilities. Detrimental "lock-in" effects are minimized or avoided to the degree that adjustment via improvements in efficiency, adoption of new technology, new business growth and entrepreneurial activity are maximized. The project research design involves the use of micro-level data from the U.S. Census' Longitudinal Research Database (LRD) to construct an index of regional corporate dominance and to estimate establishment-level production functions for selected U.S. manufacturing industries. The research also includes case studies of selected industries and regions.
While the study will make important contributions to the intellectual understanding of economic change and its manifestation at the regional scale, it also has practical significance. Knowledge of why certain cities and regions are able to adapt more quickly than others to national and global economic forces is critical for good urban planning as well as national policy formation. Urban planners need such information to develop improved methods for predicting economic change and its impacts on urban services and infrastructure while federal officials need a better understanding of the likely implications of policies that affect the competitiveness of specific sectors and regions. This study is particularly timely in the face of the slow job growth following the 2001 recession. Many U.S. regions are facing major workforce dislocation as labor-intensive industries migrate to Latin America, Asia and other low-cost locations. The most affected U.S. regions, particularly the smaller ones, are often "one company towns" that must remake themselves in a world of heightened global competition. Policy makers require a better understanding of the factors that limit or enhance regions' capacity to adjust and adapt to national and global economic shifts.
