Housing the Mobile Entrepeneur. The location behavior of firms in urban residential neighbourhoods

Abstract

Changing economic production processes have opened up new locational demands for firms and have led to an increasingly diverse firm population displaying fragmented location patterns. This research focuses on those spatial configurations that fit the current economic fragmentation and changing location decisions. It does so by studying the factors that influence the location behaviour of firms in urban residential neighbourhoods in the Netherlands. The thesis connects the neighbourhood economy with the increasingly flexible and mobile ways entrepreneurs go about their business. The thesis is the first to thoroughly address the role of real estate characteristics in the (re)location choices of these neighbourhood firms. First, the research demonstrates that the type of economic zoning in the local land-use plan can be linked to the location pattern of local firms. Our analyses showed that a more lenient regulatory framework was related to a higher amount of and potential for local economic activities. Second, the research demonstrates that the structure of the neighbourhood housing stock can be linked to the location pattern of local firms. We showed that real estate factors such as property ownership, size and age play an important role in explaining the relocation likelihood of firms. These real estate factors are not generally accounted for in research on the revealed relocation decisions of firms, but deserve a place of their own alongside the more often controlled for factors such as firm sector and size. Overall, the results show that real estate and neighbourhood characteristics are related to the general (re)location behaviour of firms. However, such general tendencies are only a minor part of the story. Along with the fact that there is heterogeneity among urban residential neighbourhoods, these areas also house a very heterogeneous firm population displaying different locational behaviours. When studying the location behaviour of firms in urban residential neighbourhood, this research indicates that it is necessary to differentiate between firms housed in residential properties (Home Based Bussinesses (HBBs)) opposed to Firms located in Commercial Properties (FCPs). First, with an average yearly relocation probability of 7.1%, HBBs are more mobile than FCPs, of which 3.7% relocated on an annual basis. Second, when differentiating between HBBs and FCPs, we noted that these two groups of firms occasionally valued location factors in opposing ways. Not differentiating between firms in commercial and residential properties would nullify these interaction effects. Third, while firms in commercial properties largely confined to the more classical economic location factors, HBB relocations are motivated by different types of factors. For home based-based businesses, the incorporation of work-lifestyle characteristics, rather than the explanatory variables more commonly used in locational analysis, seems to provide an explanation. Ultimately, we advocate that these increasingly fragmented locational behaviours of firms deserve greater attention in locational analyses and firm location theory. With regard local economic policies aimed at creating a desirable local business climate the results suggest that place-based policies can be considered an effective tool in attracting firms that want to relocate to commercial properties. Real estate-based policies and flexibility in land-use zoning can be attractive policy initiatives for facilitating both the commercial and residential property based firms. Overall, these policy initiatives should reiterate the current economic profile of the neighbourhood and fit the local economic context.