A Model for Strategic Choice of Location

Abstract

We develop an approach for companies to make strategic choices of location based on the interdependency of location factors with different stages of the value creation process. We argue that the relevance of location factors varies with changing needs of R&D, procurement, production, sales & distribution and risk management. Our model, in which we consider companies as interdependent value creation processes rather than as entities, provides a framework to managers to help them make appropriate and strategic choices of location. We draw on economic research on location factors in general and particularly those that impact R&D, the literature on the significance of industry clusters, and the OLI paradigm. From a theoretical perspective, our approach overcomes the lack of communication about strategic location choice between the fields of international economics, economic geography and international business.