Multi-plant operation and corporate headquarters separation: Evidence from Japanese plant-level panel data

Author: Toshihiro Okubo, Eiichi Tomiura
Date: 2016/6/27
No: DP2016-016
JEL Classification codes: L22, L23, R32
Language: English
[ Abstract ]

This paper shows (i) under what circumstances corporate headquarters (HQs) are separated from production plants and (ii) what type of plants are operated by multi-plant firms. By analyzing Japanese plant-level panel data from manufacturing census, we find that large-sized plants or plants intensively purchasing materials significantly tend to be separated from HQs and become a part of multi-plant operations. This pattern suggests an impact of managerial burden. We confirm the robustness of our main findings by dynamic switching patterns of plant status. Factors of economic geography, such as distance from core, also have noticeable impacts.