New business location: how local characteristics influence individual location decision?

Cissé, Ismaëlh; Dubé, Jean; Brunelle, Cédric

doi:10.1007/s00168-019-00968-1

Original Paper
Published: 01 January 2020

New business location: how local characteristics influence individual location decision?

The Annals of Regional Science volume 64, pages 185–214 (2020)Cite this article

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Abstract

The aim of this paper is to identify the impact of local characteristics, such as the relative concentration of economic activities, on new business location decisions based on their sectors of economic activity. Spatial establishment-level, micro-data, pooled over time (2008–2014) was used for a typical Canadian nonmetropolitan area—the Lower St. Lawrence region—in the province of Quebec. The study was conducted on a radius of 1250 m to describe the local economic environment. Results of our employed multinomial logit model reveal that local characteristics influence the location decision of new individual establishments for most of the economic sectors. An econometric model is developed to simulate the probability that a new establishment (in a given economic sector) will be located at a given geographic location based on this location’s characteristics. Results confirm that the location decisions for new primary sector businesses are related to the presence of benefits arising from the existence of natural resources as well as those benefits associated with having large spaces (such as in the case of rural cities). New manufacturing sector businesses are mainly looking for a co-location (specialisation) pattern, with a slight preference to locate in small-sized cities. Finally, the location decisions of service sectors firms are strongly dependent on intermediate demand and on the distance to major markets.

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Notes

For each sector, the corresponding economic activities are those whose three-digit NAICS code is part of the economic sector.

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Université Laval, 2325 rue des Bibliothèques, Pavillon Félix-Antoine-Savard, Québec, QC, G1V 0A6, Canada
Ismaëlh Cissé & Jean Dubé
Université INRS - Centre Urbanisation Culture Société, 385 rue Sherbrooke Est, Montréal, QC, H2X 1E3, Canada
Cédric Brunelle

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Ismaëlh Cissé
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Jean Dubé
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Cédric Brunelle
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Appendices

Appendix 1

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Table 4 Descriptive statistics of spatial characteristics’ variables, 2008–2014

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Appendix 2

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Table 5 Three-digit NAICS code classification for related variety

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Cissé, I., Dubé, J. & Brunelle, C. New business location: how local characteristics influence individual location decision?. Ann Reg Sci 64, 185–214 (2020). https://doi.org/10.1007/s00168-019-00968-1

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Received: 21 November 2018
Accepted: 10 December 2019
Published: 01 January 2020
Issue Date: February 2020
DOI: https://doi.org/10.1007/s00168-019-00968-1

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O18