Size Matters: Multi-plant operation and the separation of corporate headquarters

Author Name OKUBO Toshihiro  (Keio University) /TOMIURA Eiichi  (Faculty Fellow, RIETI)
Creation Date/NO. May 2011 11-E-049
Research Project Study on Offshore Outsourcing by Japanese Firms
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This paper addresses two questions: i) under what circumstances corporate headquarters are separated from production plants, and ii) what types of plants are operated by multi-plant firms. We examine these issues using plant-level manufacturing census data. This paper has two main findings. Firstly, when a plant is large, productive, or intensive in labor or material use, then the plant tends to be managed by a corporate headquarters that is geographically separated from the plant, and the plant is also more likely to be a part of multi-plant operation. Secondly, there is a substantially greater marginal effect from a change in plant size on the probability of multi-plant operation when plants have around two hundred workers than at the mean.