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Fahri Karakaya: University of Massachusetts Dartmouth, North Dartmouth, Massachusetts, USA
Cem Canel: University of North Carolina at Wilmington, Wilmington, North Carolina, USA
Introduction
During the last two decades manufacturing and service companies in the USA have changed their locations for a variety of reasons. Companies in some of the states seem to have left for more attractive locations in other states. The extensive amount of investment in new locations indicate the significance of location decisions. Increasing foreign investment in the USA clearly shows that location can be a contributing factor to the competitiveness of any organization. Most of the literature on facilities location concentrates on the theoretical aspects and not many studies exist on the empirical aspects of location decisions.
Czamanski (1981) refers to a growing dissatisfaction with the classical location theory. He asserts that operations researchers reduce complex location decisions to an algorithm form and solve these problems with existing algorithms. He expresses his concern that most location decisions should involve more than the "cost factors". Schemenner (1979) supports this view and states that costs can be estimated through any quantitative analysis and should definitely consider the intangible and qualitative factors. He cites that the intangibles could be risks associated with the costs or demand estimates, business climate of locations, education of the labor force, attitudes of the workforce toward productivity, change, unionization, cultural attributes of the location, local and state government attitudes, commuting distances for workers and managers, and impact of other businesses in the area.
In a survey of manufacturing companies which decided to build or expand plants in the south-eastern USA, Hekman (1982) found that the following factors were the five most important:
1 state and local industrial climate;
2 labor productivity;
3 transport;
4 land availability and room for expansion; and
5 cost of land and construction.
In addition to these factors, other researchers point out the importance of social and cultural environment (Hack, 1984); unionism, building and energy costs, tax rates, and population density (Schemenner et al., 1987); and proximity to markets (Schemenner, 1982) as being the determining factors in location decisions. A comprehensive list of factors considered in location decisions and the studies are listed in Table I.
In recent years, many nations, regions and municipalities have attempted...