Dimensions of Industrial Location Factors : Review and Exploration

Industrial location is an increasingly important decision facing both national and international firms. Given that no operational measures of the critical factors affecting a firm's industrial location decision exist, this paper develops an instrument for the critical factors. The developed instrument, consisting of 14 dimensions, passed through a stringent empirical validation test, and is based on extensive literature search and psychometric principles. A total of 95 items were retained for the instrument. The main objective of the paper is to describe the methodology used in the development process. The paper provides a detailed presentation of how content and construct validity are assured. The process of identifying the fourteen critical factors utilized judgments by the authors and a group of industrial location professionals. A total of 2125 executives of industrial firms from all over the world participated in the study (23 countries). The general critical factors of industrial location are transportation, labor, raw materials, markets, industrial sites, utilities, government attitude, tax structure, climate, and community. In addition, for international location considerations, four general factors are identified: political situation of foreign countries, global competition and survival, government regulations, and economic factors.