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The influence of factors on the foreign location choice

Nijs, E. de (2012) The influence of factors on the foreign location choice.

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Abstract:This research analyses the influence of factors on the foreign location choice of Dutch companies in Flanders and Wallonia. In particular the influence of cultural factors. The motive for this research is the large deviation in the location choice of Dutch companies in Belgium: in 2006 6500 Dutch companies had an affiliate in Belgium. Of these 6500 companies, 6435 companies were located in Flanders and 65 companies were located in Wallonia. This research has a high relevance for Dutch companies that want to start a new affiliate in Flanders or Wallonia because this research can help them make the right foreign location choice. This research is also relevant for the government of Flanders and Wallonia because it can help the government create a more business-friendly location climate. The main purpose of this study is to research what the relative influence of cultural factors is on the location choice of Dutch affiliates in Flanders and Wallonia. Both qualitative and quantitative methods were used. For the qualitative research five companies of five different industries were interviewed to research which factors have influence on the location choice of Dutch companies in Flanders and Wallonia. The qualitative research also served as a pre-test for the quantitative research. For the quantitative research, 244 companies were contacted to participate in this research by filling in an online survey. 66 out of the 244 companies have filled in the survey. According to the companies, cultural factors have a small influence on the foreign location choice of Dutch companies in Flanders and Wallonia but this influence is not significant. Therefore this result is due to chance. This result is in line with other researches. Of the five cultural factors, only the factor the amount of business community that speak Dutch in the region has an average but not significant influence on the foreign location choice of Dutch companies in Flanders and Wallonia. The cultural distance between Flanders and the Netherlands is smaller than the cultural distance between Wallonia and the Netherlands but this relation is not significant. Therefore this result is due to chance. This result is in line with other researches. Of all fifteen factors, only the factor unemployment rates has significant influence on the location choice of Dutch companies in Flanders and Wallonia. According to the Dutch companies in Flanders and Wallonia this factor has a small influence on their location choice but the influences of the other 14 factors are not significant: the influence of these factors are more likely due to chance. According to the 244 companies, the factors that will attract companies to Flanders are the following factors: the average annual sales of the same type of product that they are selling in NL, the agglomeration effect, the wealth, the amount of persons with education, the amount of business terminals, the individualism, the amount of adaptation costs, the uncertainty avoidance, the geographic distance and the amount of business community that speak Dutch. The factors that will attract companies to Wallonia are the following factors: the amount of financial incentives, the masculinity and the unemployment rates. Both regions rate the growth rate and the power distance of their own region higher. Despite of the fact that all companies had the same chance to be part of this research the results are not generalizable because the sample used in this study is too small to make the outcomes representative for the complete group of Dutch companies in Flanders and Wallonia. The conclusion of this research is that culture has a small but not significant influence on the foreign location choice of Dutch companies in Flanders and Wallonia, the cultural distance between Flanders and the Netherlands is smaller than the cultural distance between Wallonia and the Netherlands but this relation is not significant and that only the factor unemployment rates has a significant influence on the foreign location choice of Dutch companies in Flanders and Wallonia. This conclusion is in line with the results of other researches.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/62489
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