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Business Trips Between Functional Regions

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Business Trips Between Functional Regions Peter Hugoson Interregional Business Travel and the Economics of Business Interaction Jönköping International Business School P.O.Box 1026 SE-551 11 Jönköping Telephone number: +46 36 15 77 00 E-mail: [email protected] www.jibs.se Interregional Business Travel and the Economics of Business Interaction JIBS Dissertation Series No. 009 © 2001 Peter Hugoson and Jönköping International Business School Ltd. ISSN 1403-0462 ISBN 91-89164-27-X Printed by Parajett AB Acknowledgements I was accepted as a doctoral student at Jönköping International Business School (JIBS) at the beginning of 1996. Now finally, is the time that my wife, Elisabeth, and my children, Charles and Vilma, as well as my dog, Pepsi, have waited for so long. No more broken promises of summer holidays or weekend family activities. The greatest gratitude has to be addressed to my family that has persistently supported and encouraged me. This also includes my father, Anders, and mother, Margareta, as well as my father-in-law, Tor Vesterlund, who showed such great hospitality during my seven-month visit in Toronto. Besides my thesis writing, I have had the privilege to teach at JIBS and to follow its development to the well-known international business school that it is today. During this time my supervisors, Börje Johansson and Charlie Karlsson, have stimulated me to take part in international as well as local assignments. I would like to thank them for doing this and for all their help in my research. Altogether, my years at JIBS have made me a much more experienced person in applying economic thoughts to problems of a businessman’s weekday. In this perspective JIBS is truly a business school clearly in line with real economic life. I am also in debt to Lars Westin at Umeå University who is my former teacher and with whom I had valuable discussions at the final thesis seminar. I also thank Eric Miller for his comments on my empirical work and hospitality during my seven-month visit at the University of Toronto. In my eagerness to learn spatial econometrics, I am also obliged to Luc Anselin and Raymond Florax for their assistance and helpful comments. I am also in debt to Bo Södersten, the chairman of our Friday seminars and my teaching colleague in international trade theory and policy. He has been a source of inspiration by scrutinising my papers and by letting me share his teaching experiences. I am also grateful to Per-Olof Bjuggren, Scott Hacker, Augustino Manduchi and Lars Petterson for their stimulating and encouraging discussions. My thanks also go to all those who participated in the Friday seminars and to the set of anonymous journal referees that have made useful comments to the different chapters of my thesis. I also want to thank Agneta Cumming who has helped me to correct the English of my manuscript. This paper is an output from the project ”Interregional Business Trips” at JIBS, with financial support from KFB, the Swedish Transport and Communication Research Board, Grant Dnr-1996 06 38. Jönköping September 2001 Peter Hugoson CONTENTS CHAPTER 1 Introduction and Summary of the Study................................................................. 1 1. Introduction .................................................................................................... 1 1.1. Aims and Motives of the Study ............................................................... 3 1.2. Economic Theory and Business Travel ................................................... 5 1.3. Outline of the Study and Summary of Main Findings............................. 8 References ........................................................................................................ 11 CHAPTER 2 The Generation of Interregional Trips as a Means to Exploit Business Opportunities........................................................................................................ 17 1. Introduction .................................................................................................. 18 1.1. From Individual Motives to Regional Patterns in Business Communication .................................................................................... 18 1.2. Interregional Business Travel and the Outline of the Paper .................. 19 2. The Economics of Business Communication ............................................... 21 2.1. Business Opportunities, Business Communication and Production ...... 21 2.2. The Matching Process and the Probability of Business Interaction....... 22 2.3. The Production and the Interaction Capacity of the Firm...................... 24 3. Interregional Face-to-Face Interaction and Transaction Costs ..................... 26 3.1. Observed Interregional Face-to-Face Interaction .................................. 27 3.2. Explaining Interregional Domestic Face-to-Face Interactions .............. 32 4. Conclusions .................................................................................................. 39 References ........................................................................................................ 41 Appendix 1. ...................................................................................................... 44 Data and Definitions..................................................................................... 44 CHAPTER 3 Willingness to Make International Business Trips: Face-to-Face Communication among Different Actors........................................ 47 1. Introduction .................................................................................................. 48 2.Transaction Costs and the Derived Demand for Business Trips ................... 50 2.1. Business Activities, The Organisation of the Firm and The Definition of Transaction Costs ............................................................................. 50 2.2. The Choice of Form of Interaction ........................................................ 52 1 2.3. The Expected Profit of Face-to-Face Interaction................................... 54 3. The Perceived Profit of an International Business Contact .......................... 57 3.1. Short- and Long-Distance Business Interaction .................................... 57 3.2. Discrete Choice Models and the Willingness to Make an International Business Trip................................................................... 60 3.2.1. Activity Characteristics of Trip-Makers ......................................... 62 3.2.2. Sector Characteristics of Trip-Makers............................................ 65 4. Conclusions and Suggestions for Future Research....................................... 66 References ........................................................................................................ 68 CHAPTER 4 Revealing the Economic Geography of Business Trip Attraction........................ 71 1. Introduction .................................................................................................. 72 2. Spatial Dependencies.................................................................................... 74 2.1. Data and Definitions.............................................................................. 75 2.2. Spatial Characteristics of Sweden and Spatial Dependency of Interregional Business .......................................................................... 78 3. Interregional Business Attraction ................................................................. 82 3.1. The Relationship between the Regional Working Population and the Business Attraction............................................................................... 82 3.2. Adding Accessibility and Spatial-Association Generic Dummy Variables to the Model.......................................................................... 85 3.3. Adding the Industrial Structure and a Spatially Lagged Size Variable to the Model.......................................................................................... 86 3.4. Structural Changes in the Business Attraction Pattern between 1990- 91 and 1996-97 ..................................................................................... 89 4. Conclusions .................................................................................................. 92 References ........................................................................................................ 94 Appendix 1 ....................................................................................................... 96 Appendix 2 ....................................................................................................... 99 CHAPTER 5 Business Trips between Functional Regions ...................................................... 101 1. Introduction ................................................................................................ 102 1.2. Outline of the Paper............................................................................. 103 2. Determination of Inter-Urban Business Trips ............................................ 103 2.1. Inter-Urban Business Interaction......................................................... 103 2.2. A Spatial Interaction Model of Inter-Urban Business Travel .............. 104 2.3 Trip Attraction versus Trip Generation ................................................ 105 3. Statistical Data and Estimations ................................................................. 107 3.1. The Jönköping Data Base .................................................................... 107 3.2. Distribution across
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