Factors affecting location decisions in international operations - A Delphi study

Abstract

Only a limited amount of research has been reported on factors influencing international location decisions for contemporary manufacturing operations. In this paper a comprehensive set of factors that may influence international location decisions is identified from an analysis of the existing literature. Results are presented from a Delphi study that used a worldwide panel of experts to investigate factors affecting international location decisions. Findings are reported on the motivations of firms in seeking to manufacture across national borders and the key steps that should be followed in making international location decisions. The top five major factors identified that may strongly influence international location decisions generally were: costs, infrastructure, labour characteristics, government and political factors and economic factors. Ten key sub-factors identified were: quality of labour force, existence of modes of transportation, quality and reliability of modes of transportation, availability of labour force, quality and reliability of utilities, wage rates, motivation of workers, telecommunication systems, record of government stability and industrial relations laws. Additional sub-factors of increasing importance include: protection of patents, availability of management resources and specific skills and system and integration costs. The factors identified have implications for management practice, for policy-making by governments and other agencies and for academic research in international operations.