Intangible Locational Factors, relevant for Firms
Intangible factors are "soft" factors and not easily quantifiable. They become increasingly important to the extent that tangible factors become increasingly similar across many locations. Intangible factors which are often mentioned in the literature are
Local and regional economic climate
This is a very subjective factor, and it appears like a catch-all category, and yet it is a very strong factor, in particularly in strong regions. It is particularly relevant to attract external investors. If a region succeeds in projecting that the local business community is dynamic, that business contacts are easy to establish, and that government is dealing with the business community in a pragmatic, efficient way, this will establish a clear competitive locational advantage.
National economic climate
This is something which is important in attracting investment. It is an important precondition for local and regional efforts: If the national framework is perceived as unfavorable, there is only so much local and regional actors can do to compensate this. However, their latitude should not be underestimated. For instance, there can be a certain degree of flexibility in implementing regulations which come from central government, and local government can be more or less efficient in its implementation of regulations.
Image of site location
This is a category which addresses the sub-local level. It is about the image of certain parts of a city, i.e. the way in which it is perceived by businesses. This is only to a limited extent an objective factor. Decision makers in companies also fall for fashions. Another consideration concerns categories such as safety. A location which is commonly perceived as unsafe (e.g. subject to frequent armed assaults) can establish a serious disadvantage for companies located there, as business partners may refuse to come to such a premises.
Image of city / region
The image of a city or region. Here similar considerations to those mentioned before apply, and this issue is also related to that of the economic climate.
Climate and image of a place are closely related to the overall economic performance and to the behavior of government vis-à-vis business. The economic performance is the outcome of a multitude of factors, and government can only influence a part of them. However, government can do many things to create a business-friendly environment.
Contacts with firms of same branch
Companies seek business contacts with related companies, be it as suppliers or customers. Therefore, a location where already many companies of the same sector are located is at an advantage when it comes to attracting more firms of that sector.
Cooperation opportunities
Cooperation opportunities is an issue which is closely related to that mentioned before. Certain types of companies will value this aspect. For instance, innovative / technology-oriented firms will seek the proximity of related firms for joint development or production activities. Small, craft-based service firms may seek the proximity of complementary firms to be able to bid for larger contracts.
These factors can be summarized as networking opportunities.See also Promoting inter-firm co-operation
Science, technology and higher education institutions
Innovative milieu of the region
Active role of competent Chamber and Business Associations
More of Intangible Factors for Firms
Gender-aware Economic Promotion
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