Sprint through a busy terminal to catch a connecting flight and you feel the friction firsthand. That same friction, MIT researchers now report, quietly determines where multinational corporations choose to expand. Cities requiring even one layover attract 20 percent fewer foreign subsidiaries than those with direct international service. Add a second connection and the gap widens to 34 percent.
The findings emerge from an analysis of 7.5 million firms and 400,000 flight routes spanning 800 cities across 142 countries between 1993 and 2023. Published in Nature Cities, the study shows that air connectivity remains a stubborn predictor of business location decisions, a pattern that held firm through the rise of video conferencing, shifting trade policies, and even the pandemic.
Physical travel acts as coordination infrastructure. Multinational operations depend on relationships between parent offices and foreign branches, ties often built and maintained through face-to-face meetings. Direct flights make those meetings cheaper, faster, and more frequent. The data suggests that this accessibility translates directly into investment decisions. A 10 percent increase in a city’s connectivity to other well-linked hubs corresponds with roughly a 4 percent bump in new subsidiaries over the following decade.
Trust and Tacit Knowledge Still Require Handshakes
Why does physical presence matter when screens can connect offices instantly? The researchers point to “know-how” and “know-who,” forms of complex information that resist digitization. Building trust, transferring expertise, and navigating cultural differences all benefit from in-person contact. This is especially true in knowledge-intensive sectors where relationships carry weight.
“What we found is how much it matters for a city to be embedded within the global air transportation network, and we also highlight the importance of this for knowledge-intensive business sectors,” Ambra Amico, an MIT researcher and co-author, explains.
The study tracked not just how many destinations a city could reach, but how strategically it connected to the broader network. Cities linked to other major hubs gained a compounding advantage. It’s not only about who you can reach, but who your connections can reach. This “eigenvector centrality” proved a stronger predictor of subsidiary growth than raw flight volume alone.
The team used the 1995 establishment of the World Trade Organization as a natural experiment, confirming that connectivity drives growth rather than simply reflecting it. Even after controlling for city size and local wealth, the pattern persisted. Airports function less like infrastructure and more like economic gateways.
Finance Needs Flights More Than Factories Do
Not all industries respond equally. Finance, professional services, and technology showed high sensitivity to flight networks. These sectors depend on moving people and ideas rather than goods. Manufacturing firms, by contrast, rely more on shipping routes and road access. A textile factory cares about getting products to market; a venture capital firm cares about getting partners into conference rooms.
The consistency across 30 years suggests that technological advances haven’t replaced the need for physical proximity. Companies still coordinate, negotiate, and troubleshoot in person. The airport lounge remains a prelude to deals that screens can’t quite seal.
For cities competing for global investment, the message is clear. Flight networks aren’t just amenities. They’re economic levers. A direct route can mean the difference between becoming a business hub or getting bypassed entirely. As the global economy tilts further toward services and knowledge work, being easy to reach only becomes more valuable.
Nature Cities: 10.1038/s44284-025-00361-4
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