The Interregional Migration Of Rural Enterprises

Firm relocation has become an important topic in the areas of economics, geography andmanagement. Existing studies mainly investigate the decision rule of firm relocation. Therural enterprises in China, however, have their own speciality, e.g., obeying local norms,dispersed initial distribution and local agglomeration, and their relocation behavior cannot beexplained by existing studies, which focus on traditional firms. Hence a study of ruralenterprises’ relocation behavior in China is interesting and also important.Drawing on existing firm relocation theory, firm network theory and analyticalframework of firm resource allocation, this study uses micro survey data of rural enterprisesin Zhejiang Province to analyze the relocation motivation, relocation-determining factors,location choice, and enterprise performance. At first, based on a review of firm relocationmotivation studies, I analyze rural enterprises’ relocation motivation and their distributiondifferences. Secondly, by reviewing new-classical model and firm-location-environmentmodel, I build a model to study the willingness to relocate of rural enterprises, i.e., ERBVmodel, and examine the effects of enterprise internal resource, external resource, organizationand geography on the willingness to relocate. Next, with a review of location choice of firmsthat plan to relocate, I study the feature of rural enterprises’ location choice and finish twocase studies of rural enterprises in Shengzhou, Zhejiang. Finally, from the perspective ofnetwork theory, this study builds a performance mechanism model to test the effects ofcommitment of rural enterprises and network on the rural enterprises’ relocation performance.The main results of this study are as follows:(1) The12categories of relocation motivation show different impacts on rural enterprises’relocation behavior. Generally, expanding the scale of production is the most importantmotivation for rural enterprises to relocate, followed by the motivation of developing newbusiness, reducing operation cost, and obtaining policy subsidies. All the other motivationsonly take a relatively small proportion. Different enterprises have different relocationmotivation. For instance, to expand the production scale, firms prefer to relocate the factoriesinstead of the whole enterprise, and to recruit high-end professional workers, enterprises prefer to relocate the headquarters.(2) The willingness to relocate of rural enterprises is affected by enterprises’ own resourceand their ability to access new resource. The study finds that rural enterprises have strongmotivation to relocate when the factor supply becomes intense, the demand increases and theintensity of communication of technology and business support becomes higher. Moreover,rural enterprises have weak motivation to relocate if the industry is capital intensive, socialnetwork is large and factor suppliers are highly localized.(3) Rural enterprises have their own preference in location choice, which is also affectedby relocation motivation. From the perspective of geography, their relocation priority isranked as follows, home county, home province and other provinces. As the location choices,rural enterprises prefer the suburb area to the urban area. Few would choose rural areas astheir relocation choice. Differently motivated enterprises have difference location choice. Forexamples, enterprises, motivated by entering the local market, prefer to relocate in otherprovinces; enterprises, which are motivated by expanding the scale of production, developingnew business, reducing operation cost and obtaining policy subsidies, prefer to relocate inhome county. The enterprises motivated by entering local market and recruiting high-endprofessional workers prefer to relocate in urban areas, while all others prefer suburb areas.(4) The commitment to the resettled areas and network rebuilding have important roles indetermining the performance of rural enterprises relocation. The centrality of the socialnetwork, the number of upstream and downstream affiliations and the network ability ofauxiliary institutions have significant effects on rural enterprises’ performance. The resourceand benefits enterprises commit to resettled areas also have significant effects on enterprises’performance. In addition, the commitment is partially realized by the centrality of the socialnetwork and the network ability of auxiliary institutions.The innovation of this study is mainly reflected in the following aspects:(1) By focusingon rural enterprises’ behavior and deepening the analysis of the effects of initial distributionon relocation behavior, this study expands the literature of firm relocation.(2) Byincorporating resource base theory into the analysis of the factors that influence relocation,stressing resource as the most fundamental factor in enterprises relocation behavior andbuilding ERBV model to study the willingness to relocate, this study provides importantimplication for how to facilitate the relocation.(3) From the perspective of resourcecommitment and network rebuilding, this paper builds a relocation performance model. Thismodel differs from traditional studies that only focus on performance differences of relocation, and thus deepens the research of relocation performance and its impact factors.