The Influence of Regional Development Incentives and Infrastructure on the Location of Small and Medium Sized Companies in Europe

Greater levels of economic integration within Europe will bring more intense competition, not least for small and medium sized enterprises (SMEs). This paper identifies the key factors in the SME location decision from a survey of almost 1400 companies. The most important factor was the availability of regional development assistance, followed by the quality and size of the labour supply, including wage levels, and the potential for future expansion. Infrastructure was found to be relatively unimportant as a locational determinant. These factors apply with considerable uniformity to different industrial sectors, but there are major differences between countries within the European Community (EC).