Firm-specific and location-specific drivers of business location and relocation decisions

ABSTRACT

Decisions made by businesses on where to locate or relocate are typically given less consideration than residential location in integrated transport and land use modelling systems. This is surprising given the important role that businesses play in defining employment opportunities, and hence the travel patterns of workers and any travel associated with accessing firms. As part of a larger study on giving firm location choices an endogenous representation in an integrated model system, this paper reviews the existing literature on the drivers of location and relocation decisions in various geographical jurisdictions. The findings provide a starting position in the design of future firm-specific surveys, and especially the attributes that are candidates for stated choice experiments and for inclusion in firm location utility equations embedded in integrated strategic model systems.

KEYWORDS:

• Business location
• relocation
• literature review
• geographical settings
• keys drivers of location decisions
• decision maker

Acknowledgments

This paper contributes to the research programme of the Volvo Research and Education Foundation Bus Rapid Transit (BRT+) Centre of Excellence. We acknowledge the Foundation for funding support. This paper also contributes to the research programme of an ARC-DP grant (2017–19) DP170100420. We thank Chinh Ho, and Richard Ellison for the many discussions on this topic and comments on this paper. We also thank three referees for very useful advice.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 An earlier version was included in the ITLS working paper series (Balbontin & Hensher, 2018).

2 We used the words business, firm, organisation, company, and plant as equivalent unless stated otherwise.

3 A group of people from the company or an external consulting firm weights different characteristics of the locations and makes a rational decision.

4 We recognise that there may be a two stage approach to location and relocation where first a problem is identified and then a search of location options is undertaken. This may be different for the initial location decision compared to relocation decisions, but we do not believe the drivers for when choosing a location are different in both settings. According to the specialist location advisers, there are main drivers that are taken into account in initial location and relocation decisions – for example, office space and price. In the SC experiment we outlay, these main drivers are included.

Additional information

Funding

This work was supported by Australian Research Council: [Grant Number ARC-DP / DP170100420]; Volvo Research and Educational Foundations: [Grant Number Bus Rapid Transit].