Location Preferences of Family Firms: Strategic Decision Making

Why do firms locate where they do? This question has puzzled researchers in economic geography, strategic planning, regional economics, and organizational behavior for over fifty years. Economists generally invoke least-cost concepts to explain location, reasoning that firms seek facilities with the lowest operating costs. Organizational theorists, by comparison, invoke structural contingency theory, reasoning that firm location depends on the interaction of the firm's characteristics and the context. Few, if any, of these studies give much weight to the effect of family ownership in strategic site location decisions. Consider the implications of this omission. If anything should affect location preferences, family status should. Families as well as businesses have their own belief systems, and the interaction of the two systems should affect the choice of the business location (Miller and Rice, 1967). Proximity to family residence or ancestral home, security of the family network, and availability of familiar recreational and cultural activities may be valued highly by the family, possibly overriding more economic concerns of the firm such as proximity to markets, wage rates, and business taxes in influencing the location decision. For example, Henry Ford's decision to move Ford world headquarters to Dearborn, Michigan, site of the Ford family farm,