Abstract:

This paper investigates the tendency of high technology firms in Israel to choose metropolitan locations. A series of hypotheses are presented that link this spatial behavior with the firms' life cycle characteristics, its' network context and technological characteristics. These hypotheses are then structured in a causal framework and the choice of metropolitan location is modeled as a discrete choice problem. Firm behavior is taken as utility-maximizing rather than profit-maximizing. Empirical results, based on a survey of over 160 Israel high technology firms are presented.These suggest that the choice of metropolitan location is often used to substitute for disadvantages that the firm experiences. For example, metropolitan location for new firms can mitigate the negative effects associated with a precarious market position; for firms with weak network structures, metropolitan location can substitute for this drawback. The public policy implications of these findings with respect to prospects for network-based regional development in Israel, are also discussed.

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