The internal spatial organization of firms: Evidence from Denmark

We study the location and occupational composition of establishments within firms between 1981 and 2016. Using Danish administrative employer-employee matched data, we document four novel results regarding the internal spatial organization of firms. First, the average number of establishments per firm increased by 21%. Second, the average distance of establishments and workers from their headquarters about doubled. Third, firms achieved this fragmentation by concentrating managers at headquarters locations and decentralizing jobs in production and business services occupations. Fourth, the ratio of managers to production and clerical workers within firms increased by 80%, driven particularly by headquarters and establishments located in the largest cities These facts imply that firms are not simply becoming more spatially dispersed; instead, they are fragmenting into functions.