Challenges in the Era of Globalization - iaabd

Challenges in the Era of Globalization
Edited by Emmanuel Obuah
advanced country (learning opportunities). The reason that those location factors have no effect on the
MNCs decision is in reference to the nature of the studied sample. As mentioned above, this sample is a multisector
sample, consisting of different sectors and industries making some of those factors irrelevant to some
companies. For instance, from Table 2 above we can notice that financial and non-financial sectors represent
approximately 50% of the studied sample. Companies in those particular two sectors obviously will not
consider factors such as (a) low transportation/logistics costs (supply and distribution), (b) low costs of raw
materials, energy and water, and (c) high industrial concentration (industrial parks, technological networks
etc) to have any influence on MNCs decisions. ‘Less strict environmental laws’ relating to the fourth group is
considered least important location factors. Although, this factor is considered to be very important location
factor for MNCs to set up production facilities in developing countries because of the absence of
environmental laws and legislations in those countries, for ethical considerations respondents had not reported
it to be important. The next section presents the summary of the main findings of this study and
conclusion.
Table 3: Location Factors Analysis
Factors Rank Mean
Growing demand in the host market (potential growth) 1 4.72
Large size of host market 2 4.44
Local government regulations and policies towards foreign firms 3 4.37
Political stability in the host country 4 4.35
The legal environment 5 4.09
Availability and costs of local skilled workforce in the host country 6 3.85
Low-level competition in the host country’s market 7 3.69
Host country’s international trade agreements 8 3.58
No discrimination between local and foreign firms 9 3.22
Low corporate tax rates in the host country 10 3.16
Low costs of local workers in the host country 11 3.14
Investment incentives offered by the host country government 12 3.10
Standard of living and public services 13 3.08
Good infrastructures 14 3.06
Availability and low costs of land 15 2.87
Low transportation/logistics costs (supply and distribution) 16 2.87
Local governmental bureaucratic system and possible corruption in the host
country
17 2.73
Low costs of raw materials, energy and water 18 2.61
251