Businesses Thrive When Owned Establishments Cluster Geographically
Internal agglomeration, which is when businesses owned by the same company cluster together geographically, can boost productivity. A study on U.S. hotels and restaurants found that doubling the intensity of internal agglomeration led to a 2% increase in productivity for existing establishments. This productivity boost is likely due to knowledge sharing between nearby owned establishments. The findings suggest that internal agglomeration can have positive effects on performance in various industries with multiple locations.