A new article published in Global Strategy Journal argues that business leaders should put more effort into understanding location strategy, a framework used to understand how an organization’s geographic decisions fit into the broader business strategy. According to the study’s authors, this knowledge can give companies an edge over their competition, as location decisions can affect everything from branding to human resources to research and development.
“This is a big topic, like understanding your markets, understanding your competition, understanding your talent or human capital and how to manage your employees, how to choose and manage locations and grow them,” study author says. Richard Florida, a professor at the University of Toronto. “The location decision is one of the most important decisions a company can make — and it’s hard to undo.”
Florida and co-author Patrick Adler, an assistant professor at the University of Hong Kong, define location strategy by drawing on key concepts from management theory, business strategy, and economic geography. They refined their approach to the subject through their The City and Business course in the MBA program at the Rotman School at the University of Toronto, after discovering that management training typically does not involve geographical considerations. They argue that the strategy is particularly relevant when studying sprawling modern organizations, the movement of talent, and the high degree of competition in regional economic policies.
To underline the importance of the topic, the paper is divided into sections that include recent contributions from economic geography and business strategy in general, fundamental definitions of modern location strategy, and a series of reflections that may guide future research on business locations. The paper also touches on the realities of work in a post-pandemic world.
“This concept is now even more important with remote work,” says Florida. “You’ve got all those tech companies saying they’re going to cancel their leases, but how do you organize your people? How do you create a corporate culture? How do you bring them together and off-site? Think more about it: What does it mean to root out to go and leave a place?”
The aim of the article, according to Florida, was to merge business strategy with the traditional approach to economic geography in location decisions. The authors found that location strategy was often an afterthought in many organizations. They point to some key factors for its relevance, including the growing shift towards a knowledge-based economy; increasing competition in dynamic efficiency; the rise of location-specific tournaments for businesses, such as Amazon’s HQ2 and Tesla’s Giga factory; and the increased use of large taxpayer incentives to endorse business location decisions. They propose incorporating location strategy into both MBA courses and management courses in a broader sense.
“For something this important — where you’re going to find it — it needs a lot more attention,” Florida says.
How do female CEOs influence companies’ environmental policies?
Richard Florida et al, Location Strategy: Understanding Location in Economic Geography and Business Strategy, Global Strategy Journal (2022). DOI: 10.1002/gsj.1456
Provided by Strategic Management Society
Quote: New article highlights the importance of location strategy in business (2022, October 20) retrieved October 20, 2022 from https://phys.org/news/2022-10-paper-highlights-importance-strategy-business.html
This document is copyrighted. Other than fair dealing for personal study or research, nothing may be reproduced without written permission. The content is provided for informational purposes only.