IDENTIFYING AND TESTING THE DECISION MAKING FACTORS RELATED TO ‘KEY INDUSTRIES’ CHOICE OF LOCATION
by
CATHY HONG YANG
[Note: This is a thesis submitted for degree of Master of Philosophy (MPhil) at
ABSTRACT
Choosing a strategic location for business operations has always been of critical interest to industry and commerce. The old economy heavily relied on the neoclassical economic theory to provide a set of guiding principles, and focused on proximity to material resources, transport and markets. However, many argue that the new information economy must be viewed through the prism of a different paradigm. The new economy is highly dependent on technological infrastructure, organisational networks and intellectual capital. This thesis critically examines the implications of the new economy for location decision-making from a marketing perspective. It seeks to identify factors that influence the location decision-making process of key industries. The research attempts to address the following broad research problem: How do key industries choose a location for operating their business?
The research focus is directed to examining the interrelationships between the determinants of the decision making process which comprises:
• Regional specific location factors;
• Information processes;
• Key decision makers and their influence; and
• The organisational structures of firms
A theoretical framework is proposed which has been developed from the selected literature in the disciplines of economic geography, regional economics and organisational behaviour. It aims to provide a framework to empirically identify factors that influence the decision-making process to that assist in clarifying the determinants of the locational decision-making process.
It has not been the objective of this research to test the complete model. However, the following research issues are considered:
• What are the factors that have influenced location decisions of different key industries and firms?
• How do firms undertake information processing prior to making their decision?
• Who is involved in making the location decision for these firms and how do they influence the location decisions?
• What is the role of the organisational structure of firms in the location decision-making processes?
This thesis comprises a study of five ‘new economy’ industries: Information Technology; Electronic/Telecommunications; Biotechnology; Creative/ Multimedia and Aviation. A sequential mixed qualitative-quantitative methodology was chosen for conducting the study. This comprised the use of an expert panel focus group, one-on-one in-depth interviews and a mail survey.
Six research questions and six hypotheses were formulated to examine the following areas:
1) The relative important location factors with respect to their industry sector, headquarters’ location and business activity involvement.
2) The relative important information sources with respect to their industry sector, headquarters’’ location, and size.
3) The information evaluation process undertaken with respect to the firm’s size.
4) Number of criteria used for selecting a specific location with respect to different size of firms.
5) The personnel significantly involved in the decision-making process with respect to their industries sector, headquarters’ location and size.
6) The impact of the perception of key decision makers on the timeline set for the decision.
7) The impact of the perception of key decision makers on the information evaluation process.
8) The role of the organisational structures of firms in their location decision making processes.
The research concluded that the four determinants of the decision process are all interrelated. In particular, the organisational structure of firms was seen to play a predominant role in the location decision-making process.
The research outcomes have implications for further theory development, as well as for government policy making and related industry decision making. The findings of the interrelationships between the four determinants of the decision-making process imply that the location decision-making process of firms is a result of a combination of factors. The research outcomes will improve understanding of the location decision of key industries, and contribute to increased knowledge in the area of further theory development.
The research could assist regional and local governments by allowing them to target overseas and interstate investors. Understanding the factors that determine the firms best-fit would assist in improving the provision of salient decision making information and aid in targeting and reaching key decision makers.
Increasing the understanding of location decision-making processes of key industries, including noting the differences between firms, would assist the recipient local industries in developing appropriate strategies and enable them to provide suitable facilities and offer better services.
The results of the research also provide insights into individual companies in developing location decision-making criteria, processes and procedures.
CONTENTS
Chapter One: Introduction, Overview and Definition (click here, PDF file) |
1.1 Research Domain |
1.2 Research Objectives |
1.3 Justification for the Research |
1.4 Research Methodology |
1.5 Structure of the Study |
1.6 Definitions |
1.61 |
1.6.2 High-Technology Industries |
1.6.3 Smart Industries |
1.6.4 Key Industries |
1.7 Chapter Summary |
2.1 Introduction |
2.2 The Neoclassical Location Theory |
2.2.1 Least-Cost Theory |
2.2.2 Locational Interdependence Analysis |
2.2.3 General Equilibrium Analysis |
2.3 Behavioural Theory |
2.3.1 The Behavioural Matrix |
2.3.2 Behavioural Sequences – A Spatial Expression Framework |
2.3.3 Strategic Location Decision Analysis |
2.3.4 Locational Decision Process |
2.4 Government Impact on Industrial Location Decision Making |
2.5 New Economic Geography Theory |
2.5.1 Products-Profit Cycle Theory and Location Factors |
2.5.2 Localised Production Systems and Social Division of Labour |
2.5.3 Localisation and Urbanisation of Industrial Location |
2.6 Theoretical Model and Research Issues |
2.7 Research Questions and Hypotheses Development |
2.8 Chapter Summary |
3.1 Introduction |
3.2 Justification of Research Paradigms |
3.2.1 Positivism Paradigm |
3.2.2 Constructivism Paradigm |
3.2.3 Pragmatism Paradigm |
3.3 Research Strategies |
3.31 Expert Panel Focus Group |
3.3.2 In-depth Interviews |
3.3.2.1 Rationale of In-depth Interviews |
3.3.2.2 Sampling Strategy |
3.3.2.3 Administration for In-depth Interview |
3.3.3 Mail Survey |
3.3.3.1 Survey Sample Frame, Sample Size and Sampling Method |
3.3.3.2 Survey Administration and Data Collection |
3.3.3.3 Quantitative Data Analysis Method |
3.4 Validity and Reliability in Mixed Method Research |
3.4.1 Construct Validity |
3.4.2 Internal Validity |
3.4.3 External Validity |
3.4.4 Reliability |
3.5 Chapter Summary |
Chapter Four: Qualitative Data Analysis, and Questionnaire Design and Testing (click here, PDF file) |
4.1 Introduction |
4.2 Expert Panel Findings |
4.3 Qualitative data outcome in Determining Location Factors |
4.3.1 Proximity |
4.3.2 Business Operating Cost |
4.3.3 Infrastructures |
4.3.4 Employment |
4.3.5 Amenities |
4.3.6 Other Factors |
4.4 Qualitative Data Outcome in Determining Information Process |
4.4.1 Information Sources |
4.4.2 Information evaluation Procedure and Criteria Setting |
4.5 Qualitative Data Outcome in Determining Key Decision Maker |
4.5.1 Involvement of Personnel |
4.5.2 Characteristics of Key Personnel |
4.6 Qualitative Data Outcome relating Organisational Structure |
4.7 Research Questionnaire Design |
4.7.1 Preliminary Considerations |
4.7.2 Question Content and Wording |
4.7.3 Response Format |
4.7.4 Structure and Layout |
4.8 Questionnaire Pre-Testing |
4.9 Chapter Summary |
Chapter Five: Quantitative Data Analysis and Findings (click here, PDF file) |
5.1 Introduction |
5.2 Data Preparation |
5.2.1 Data entry and Treatment of Missing Data |
5.2.2 Outliers and Normality Examination |
5.2.3 General Characteristics of Responding Firms |
5.3 Data Analysis and Findings |
5.3.1 Important Location Factors on Firms’ Location Decisions |
5.3.2 The Impact of Organisational Structure on Information Process |
5.3.3 Relationship Between Organisational Structure and the Key Decision Maker |
5.3.4 The Role of Organisational Structure of Firms in Location Decision Making Process |
5.4 Chapter Summary |
Chapter Six: Discussion, Conclusion and Implications (click here, PDF file) |
6.1 Introduction |
6.2 Discussion of Research Finding |
6.2.1 Important Location Factors |
6.2.2 Information Process |
6.2.3 Key Personnel Characteristics and Their Influences |
6.2.4 The Role of the Firm’s Organisational Structure |
6.3 Conclusion of the Research Problems and Hypotheses |
6.3.1 Desirable Regional Location Factors |
6.3.2 Information Process |
6.3.3 Involvement of Personnel and Their Influences |
6.3.4 The Role of the Firm’s Organisational Structure |
6.4 Implications and Recommendations |
6.4.1 Implications for Theory Development |
6.4.2 Implications for Government Policy Makers |
6.4.3 Implications for Related Local Industries |
6.4.4 Recommendations |
6.5 Limitations and Further Research |
6.6 Chapter Summary |
1.0 The results of the in-depth interview |
2.0 Survey Questionnaire |
3.0 Table of Summary Statistics of Missing Data |
4.0 Distributional Characteristics, Testing for Normality, and Possible Remedies |
