COLLEEN CARROLL
How do companies choose where to locate their business?
Project
How do companies choose where to locate parts of their global operations? Access to materials and transportation infrastructure were two expensive issues that traditionally shaped the decision of where to open a new factory, distribution center, or office. More recently, technological decreased the importance of these factors: new materials, new and highly skilled labor sources, free trade agreements, and decreasing transportation costs meant that the barriers to opening in new locations were less important. So in light of these changes, has the decision of where to build a new office or factory also changed? Since these factors no longer an issue, what other issues influence this decision? Do local or national regulations play a deciding factor when choosing where to locate a new office/factory?
These questions perplexed a Brussels-based group of trade lawyers. After collaborating on a purely academic project, we teamed up again, coupling legal research with qualitative research methods to see if we could uncover new answers to these questions.
Plan
Accommodating tight schedules, we planned to work in short bursts over a span of 6 months. This approach allowed us to alternate work periods based on availability. Most importantly, we emphasized continual refinement of our research strategy. Decisions for next steps hinged on results from the preceding research phase. This meant we routinely sought methods to match our data, not data to match our methods.
Our project team was most familiar legal research. This type of research relies on reviewing legal decisions and legal scholarship. An issue is then interpreted in light of these decisions. Our research, however, was exploratory. We needed a research strategy that straddled economic, political, and legal scholarship. We also needed a responsive, flexible research strategy. This would help us uncover factors shaping the decision to locate parts of a business in certain countries.
Process
Research
An iterative process guided our project's progress. We allowed ourselves space to refine and process research results after each big push- this supported our exploratory mission.
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Our point of departure was a review of standing literature. Sifting through economic, legal, and political texts, we created a list of factors typically attributed to location decisions.
Results from our first-cut research indicated that factors vary based on sector. This in mind, we decided to focus on one industry as a proxy. Narrowing our focus improved the project’s feasibility. It broadened the types of research tools we were able to use.
To move forward, we selected the pharmaceutical industry. From a geographic point of view, it is heavily represented in Belgium, the Netherlands, western Germany, and northern France. Selecting an industry in close proximity offered two key advantages:
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We could overcome language barriers. A common language allowed a wider pool of companies and executives for us to bring into our study.
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We could use snowball sampling to extend our list of interviewees and survey respondents.
We contacted 35 pharmaceutical executives for interviews. 20 executives agreed to meet. Our semi-structured interviews questions asked about the location of new offices, factories, and distribution centers. The goal was to filter domains uncovered in primary research into a list of factors impacting decision-making.
We assembled a cross-functional team from the law firm and from our think-tank. This included economists, research analysts, trade lawyers, accountants and generalists. We posed a basic problem statement: “What issues influence the decision of where to locate a new arm of a business?”
Using an online software called Memosort, we populated virtual sticky notes with answers from our interviews. Participants sorted sticky notes and created labels for the categories. This created general categories of influencing factors.
We created a survey to determine the hierarchy of critical factors influencing the choice for location. The survey also prompted decision-makers to think deeply about factors unmentioned during interviews. We translated the categories identified in our affinity diagram into an online survey.
The online format offered pharmaceutical employees the chance to respond regardless of location, which expanded our sample size. Snowball sampling during interviews generated a list of respondents. We also presented our project and recruited participants at two industry-wide conferences.
The Typeform survey platform proved a speedy and efficient way to analyze results. Coded responses helped us isolate key “moments” in the decision-making process. Identifying "moments" meant we could model the decision tree for selecting location.
Our survey results helped us understand the importance of specific factors in the choice for a new business location. Mapping these factors into a decision-tree helped us visualize the decision-making process from pharmaceutical executives' point of view.
We documented our methods and results as we progressed through each iteration phase. At the end of the project, we finalized our report, and each collaborator took turns improving the text. We presented our findings at two international conferences.
The World Customs Organization and the World Trade Organization offered outlets for our research. We presented the fruits of our labor at two international conferences hosted by the organizations.