The hardships of long distance relationships: time zone proximity and the location of MNC's knowledge-intensive activities

• 成果类型: Article
• 署名作者: Bahar, Dany
• 署名单位: Brookings Institution
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2020.103311
• 发表日期: 2020
• 关键词: Time zones; Multinational corporations; KNOWLEDGE; distance; FDI

摘要

Using a unique global dataset on multinational corporations (MNCs) with precise location of headquarters and affiliates, I present evidence of a trade-off between distance to the headquarters and knowledge intensity of the affiliates' economic activity. This trade-off is strongly diminished the higher the overlap inworking hours between the headquarters and the affiliate. In order to rule out biases arising fromconfounding factors, I implement a regression discontinuity framework to show that the economic activity of a subsidiary located just across the time zone line which increases the overlap in working hours with its headquarters is, on average, roughly 1% higher on the knowledge intensity scale. The results are present only for foreign horizontal subsidiaries. Overall, the findings suggest that barriers to real-time communicationwithinMNCs play an important role in the location decisions of their subsidiaries. (C) 2020 Elsevier B.V. All rights reserved.