Plant location factors: a field research

Selecting the appropriate plant location is among the most important decisions a company will ever make. The present study examines the criteria affecting investors’ decisions concerning the location of their plants. Its main purpose is to incorporate the most significant measures used in the international literature and develop a new decision model (research model). The proposed research model was tested on a sample of Greek manufacturing companies. Empirical data were analysed using the “structural equation modelling” technique. The present study is explanatory (examines cause and effect relationships), deductive (tests research hypotheses), empirical (collects primary data), and quantitative (analyses quantitative data that were collected using a newly-developed structured questionnaire). The results indicate that cost issues (land, production process, raw materials and labour), market characteristics (size and prospects for future growth) and infrastructure are the main factors that affect investors’ decisions. Moreover, subsidies and tax incentives offered by the central government seem to affect, to a great extent, entrepreneurs’ decisions to invest in the specific region. The present study is conducted in an economy under crisis that has specific structural characteristics and finds great difficulty in attracting and retaining new investments. Its results may be generalised in other developed countries whose economy faces similar challenges. Moreover, the present study used qualitative data in order to enhance its proposed research model. Such an approach has very randomly used in the relevant literature. Finally, it updates the literature on plant location selection, since very few studies have been conducted during the last 5 years.