Characteristics of Relocated Firms: From the perspective of regional revitalization

The covid-19 pandemic triggered the widespread use of remote work. Many firms closed their headquarters in Tokyo and moved to neighboring or regional areas. Revitalization of regional economies has been one of the core policy issues of the Japanese government for the last 10 years. Relocation of firms to regional areas could help the regional economies’ development. This study analyses the characteristics of the relocated firms and their CEOs, and the possibility of the relocation of new firms and their effects on the revitalization of the regional economies through new business opportunities or new transactions. The analyses show that 1) only a small portion of firms relocate, as in the case of the other developed countries, and the ratio of firms that relocated between prefectures during the period of about 10 years was merely 0.74%; 2) most firms relocated to neighboring areas; 3) large firms or productive firms, or young (years since establishment) firms and firms run by young CEOs are more likely to relocate; 4) ICT-related firms are more likely to relocate and agglomerate in the central urban areas; 5) relocated firms are more likely to change their transaction partner firms; and 6) firms are likely to relocate closer to their customers’ locations. Moreover, the analyses find a positive correlation between the numbers of firms relocated into areas/industries and the growth rate of those areas/industries. On the other hand, there is a substantial number of large firms that relocated from Tokyo or Osaka areas to regional areas and most of those firms are in manufacturing industries.