Strategic Business Location Decisions: Importance of Economic Factors and Place Image

Our research provides a novel perspective by examining the effect of both economic factors and non-economic factors such as place image on business location decisions. This paper expands the extant theory and practice by identifying and considering in addition to the economic factors, place image factors, i.e., sense of place, identity (retention factors) and brand image, visual image, and reputation (attraction factors). The most significant issue in quantitative studies such as facility location problems is the inability to identify qualitative factors previously considered nebulous correctly. The authors, with the help of a case study of Amazon’s Headquarters 2 location decision, contend that in addition to economic factors, image factors are important for strategic location decisions. Specifically, our analysis shows that Amazon’s decision to move a part of HQ2 to Arlington, Virginia can be explained through place image factors. We posit that place image should be given due consideration for strategic location decisions.