Location factors in corporate location decisions. Is the relevance of soft factors really increasing?

Abstract

For a long time, it was assumed that hard location factors (e.g. workforce, land) were the primary influence on the location decisions of firms. In the course of the tertiarization of the economy and linked increases in the qualification of employees as well as changes in values and timemodels, soft location factors (e.g. image, cultural offerings) are expected to gain in importance. Therefore, this paper examines whether the importance of soft location factors has really increased in comparison to traditional, hard location factors. For this purpose, company surveys conducted by the Chamber of Commerce and Industry Mittlerer Niederrhein (Germany) in 2002 and 2017 are analysed. More than 1,000 firms took part in both surveys and evaluated more than 50 location factors in terms of their importance. The results of the study show that the importance of soft location factors related to quality of life (e.g. safety, image) and the city centre (e.g. parking) increased significantly over this time period. In comparison, the importance of the hard location factors stagnated or even decreased (without including the factor information and communication infrastructure). These results provide indications for the local authorities concerning which site conditions are important for retaining firms or attracting new companies in the future.

Keywords

• Soft location factors
• Hard location factors
• Regional location conditions
• Firm location
• Location decision