Service Firm Location Decisions: Some Midwestern Evidence

Using survey returns from 926 service operations of all types from five states of the American Midwest, provides insight on what drives their location choices. The location decision is considered a two‐stage process: a general area decision followed by a particular site decision. No matter how the “general area” is defined (more locally‐oriented versus more regionally‐oriented), the most important influences are good infrastructure, proximity to customers, and the ability to attract qualified labour. The rank orders of influences are much the same for both locally‐ and regionally‐oriented firms. Identifies three different partitions of the sample in order to capture any local versus regional distinctions, but finds no substantial distinctions to be evident in the location decision making of the different types of firms. When considering a “particular site”, the most important influences are parking, an attractive building, an attractive cost or rent, and the ability to meet specialized space needs. Differences across industries,for both the general area and particular site decisions, are generally as expected. Hospitals, utilities and construction were largely immune to location influences, while more wholesale‐and retail‐oriented services were much more sensitive to such influences.