Firm Organization with Multiple Establishments

Abstract We show theoretically and empirically that the managerial organization of multiestablishment firms is interdependent across establishments. To derive our result, we study effect geographic frictions on firm organization. In model, assume a CEO’s time resource in limited supply, shared headquarters Geographic increase costs accessing CEO. Hiring middle managers at one establishment substitutes for CEO time, which reallocated all Consequently, between affect establishments firm. Our model consistent with novel facts about document using administrative data from Germany. exploit opening high-speed railway routes to not only directly affected by faster travel times but also other adjust their findings imply local conditions propagate space through