| dc.description.abstract | A number of empirical papers have concluded that there is a significant correlation between a
firm’s business environment - encompassing factors such as education, labour, demographics
and health – and its financial performance. It has been argued that an improvement of the
business environment in a region also improves its economic strength by increasing local
firms’ performance.
This master thesis tests if such a relationship is evident also in Norway. I use two large datasets
on firm performance and municipality rankings to create models that control for several layers
of fixed effects. Firstly, I investigate the relationship between business environment and
individual firm performance. Secondly, I look at the municipality level aggregated
performance of firms. Lastly, I analyse the connection between a firm’s moving behaviour and
the change in its business environment. To gain further insights on the topic, the paper
additionally splits the tested firms into industry and size groups.
In general, I do not find a significant relationship between local business environment and
firm performance, which is in disagreement with most of the relevant literature. However, for
small firms and firms within two industry groups, evidence of a relationship is observable.
Additionally, investigation of the role played by the fixed effects reviles that the region fixedeffect,
including factors such as the business environment but also other factors, plays a major
role for the performance of small and medium sized firms. Moreover, I found that the business
environment significantly affects a firm’s moving decision. In fact, this relationship holds true
for most firms in the dataset. | nb_NO |
