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Abstract Cities play a crucial role in our societies and shape corporate actions in several ways. Their economic relevance poses an important policy question: Does the city in which the headquarters of a given company is located matter for its performance? If so, which urban dimensions matter more? We focus on the headquarters’ location because it acts as the firm’s central node of strategic, financial, and operational decisions, and a gateway to valuable resources. To date, no prior research has focused on this specific policy question, and no dominant paradigm exists to address it. Thus, we adopt a multilevel exploratory approach to inquire whether, and if so, how, the characteristics of a firm’s home city—corresponding to where a firm locates its headquarters—relate to firm performance. To do so, we use a unique 2014–2016 panel of 27,933 firm-year observations of 9952 public firms based in 127 cities—located in the U.S., Europe, and Asia. Our findings show that the home city matters to firm performance and distinct dimensions of the home city play a different role across geographical areas and industries. Thus, our work highlights the growing importance of urban ecosystems in shaping firm outcomes and provides new insights for policymakers and international business scholars.
Memarian et al. (Wed,) studied this question.