Dear Colleagues,
Our next virtual seminar in the Entrepreneurship and Innovation Policy Research series is Wednesday, November 19 from 11:00-12:00 ET. Jing Deng (Arizona State University) - will present "Should I Stay or Should I Go: Why High-Tech Firms Leave Agglomerations" (with Maryann Feldman and Janet Bercovitz). Abstract is below. Click the link HERE to register for the November 19 seminar.
We hope you join us!
- Tim Folta (UCONN), Maryann Feldman (ASU), and Supradeep Dutta (Rutgers U)
Abstract: Agglomeration economies confer well-documented advantages to high-tech firms, raising important questions about why some firms relocate to less concentrated regions. Using longitudinal microdata from the U.S. Census Bureau, we investigate the drivers of firm exit from agglomerations, focusing on three hypothesized push factors: knowledge leakage, competition for skilled labor, and interstate tax differentials. Our analysis reveals that labor market pressures and tax burdens are the most salient drivers of relocation, while effects vary systematically by firm age. Established firms tend to relocate to contain operational costs, whereas younger firms are more likely to exit agglomerations due to challenges in attracting and retaining skilled talent. These findings highlight heightened competition for talent as an overlooked push factor and challenge the conventional assumption that agglomeration effects are uniformly beneficial, demonstrating that their impact is contingent on firm characteristics and organizational maturity. We conceptualize relocation as a strategic response to life-cycle dynamics and labor market constraints, contributing to research on firm strategy, innovation, entrepreneurship, and economic geography by highlighting the spatial interdependencies that shape regional development and firm growth trajectories.
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