Risky business: An examination of firm location decisions and their implications for inner cities

This dissertation examines the issue of firm location---i.e., how employers decide where to locate a business---and its implications for the availability of jobs in the inner city. While sociologists have noted the effects of insufficient employment on urban individuals and communities, and highlighted the macroeconomic forces thought to cause these demand deficiencies, they have had little to say about how and why individual firms decide to locate where they do. This is a crucial piece of the puzzle, for it is the individual firm that will ultimately provide a job for an inner city resident. If firms won't move to certain locations, the options for residents may be limited. The extant literature identifies many discrete factors associated with location outcomes, but does not provide much purchase on why these factors matter, or what the location decision process looks like. This dissertation makes use of new survey data and in-depth interviews to explore three questions: (1) Which factors seem to matter most in the location decision? (2) Why do these factors matter? (3) What can we learn about the implications of (1) and (2) for urban areas? The study confirms the importance of labor availability, transportation, and rents, but deemphasizes the significance of other factors frequently cited in econometric approaches to location theory. A key finding concerns the desire of real estate professionals to minimize the short-term risks in the development process. Specifically, decision makers seek to avoid locations where the upfront permitting and regulatory processes are uncertain, even when those locations are economically attractive in the long run. As a consequence, the complexities of the development process in many urban municipalities can make firms reluctant to take their chances there. Some implications of these findings for sociological theory and public policy are discussed.