Choosing the Perfect Spot - An exploratory study of the underlying factors behind companies' location decisions

Abstract: Over time, different trends have been spotted in how companies decide to locate their businesses. From the gradual rise of more offshoring of operations, to the recent increase in popularity of returning business domestically again. The topic has also received much recognition academically, with focus often placed on the factors that lead to locational competitive advantages - attributes that differentiate the performance of one location compared to another. But how do companies reason when approached with the location decision question? What is considered important in their own eyes? This thesis aimed to find the factors affecting a company’s location decision, explained by themselves. Furthermore, it sought to investigate if there was a connection between the many different parts of theory and the impactful factors expressed by the participating companies. The reasons derived from the areas of theory, to which the location decision was compared, were resource-based factors, macro-environmental factors, agglomeration and competition factors, and stakeholder factors. Through eight case studies on companies’ location decisions, it was discovered that a combination of this theory plays a crucial role in the matter. In addition, the participants had other contextual factors that held strong meaning and complemented the other reasons. It was also noticed how the company characteristics influenced which location decision factors that were deemed important in each case. Lastly, some of the factors were found to be closely connected to each other and therefore especially valuable for the location decision in question.