Although businesses often choose locations near their competitors, successful companies with more advanced technology capabilities locate their offices near major academic institutions that can partner in research, according to the Management Insights feature in the May issue of Management Science, the flagship journal of the Institute for Operations Research and the Management Sciences (INFORMS®).
Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.
"Location Strategies and Knowledge Spillovers" is by Juan Alcacer of the Stern School of Business at NYU and Wilbur Chung of the Smith School of Business, University of Maryland.
A benefit of geographic proximity is greater ease in learning what neighboring firms are doing through shared points of contact. Use of common suppliers, hiring and firing of workers, and chance meetings between companies' employees aids communication of ideas across firms. Besides gleaning knowledge from competitors, firms might also be interested in potential knowledge spillovers from academic institutions and government labs.
In their paper, Professors Alcacer and Chung examined a sample of 620 firms that established new facilities in the United States from 1985 to 1994 to see which firms are more likely to locate near other competitors, academic institutions, and government labs.
Their results suggest that firms are attracted to academic and competitor activity. This attraction varies based upon the firms' technical capabilities. While less capable firms congregate around locations rich with competitor activity, more capable ones avoid such locations and instead go for regions rich with academic activity.
The implication is that managers should cultivate their firms' own technical capabilities in order to get the most from academically rich regions.
The current issue of Management Insights is available at http://mansci.
The Insights in the current issue are:
- The Strategic Perils of Delayed Differentiation by Krishnan S. Anand, Karan Girotra
- Pricing and Lead Time Decisions in Decentralized Supply Chains by Liming Liu, Mahmut Parlar, Stuart X. Zhu
- Intertemporal Pricing with Strategic Customer Behavior by Xuanming Su
- Strategic Spot Trading in Supply Chains by Haim Mendelson, Tunay I. Tunca
- On the Benefits of Collaborative Forecasting Partnerships Between Retailers and Manufacturers by Yossi Aviv
- Online Auction and List Price Revenue Management by René Caldentey, Gustavo Vulcano
- Temporary and Permanent Buyout Prices in Online Auctions by Jérémie Gallien, Shobhit Gupta
- Managerial Motivation Dynamics and Incentives by Ayse Kocabýyýkoglu, Ioana Popescu
- Dynamic Agency with Renegotiation and Managerial Tenure Florin Sabac
INFORMS journals are strongly cited in Journal Citation Reports, an industry source. In the JCR subject category "operations research and management science," Management Science ranked in the top 10 along with two other INFORMS journals.
The special MBA issue published by Business Week includes Management Science and two other INFORMS journals in its list of 20 top academic journals that are used to evaluate business school programs. Financial Times includes Management Science and four other INFORMS journals in its list of academic journals used to evaluate MBA programs.
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.