Is Human Capital the Key Factor in Explaining Business Location Differences? Knowledge Intensive Business Services in Portugal

The purpose of this paper is to verify if the human capital is the key factor in explaining business location differences on Portuguese knowledge intensive business services (KIBS) sector. A logistic regression model is applied, adopting rural versus urban and human resources as the key dimensions. We combine business locations with graduate employee rates to assess whether these aspects are determinant in the KIBS sector or if they vary from firm to firm. Our results demonstrate that rural professional and technological KIBS employ more graduate human resources than urban KIBS. As regards their urban professional and technological KIBS counterparts, we may statistically state that the employment of higher education qualified professionals is not related to KIBS type. Furthermore, we conclude that the employment of graduate human resources, the age and the academic background of business owners do have a statistically significant impact on the logit probability of a KIBS company locating in a rural environment.