Defining Sustainability Criteria for Emerging Market Multinationals

Literature and practice in interregional competition to attract new companies generally overlooks the question of whether these organizations operate sustainably and whether any efforts in attracting them are sustainable in terms of long-term existence. It is thus necessary to consider not only an organization’s long-term commitment towards a specific location but also general criteria for sustainable organizations, such as economical, ecological and social sustainability. Furthermore, (regional) headquarters have to be held responsible for their subsidiaries and partners along the value chain. While classic location incentives can attract new regional headquarters in the short term, we argue that classic sustainability criteria such as transparency and stakeholder-orientation suggest investments with long-term orientation. This, in connection with considerations of internal corporate processes, leads the authors to the conclusion that soft location factors are more important in attracting sustainably operating, sustainable corporations than hard location factors. Consequent recommendations regarding regional policies include: understanding the organization’s history and carefully choosing who to approach; betting on long-term relationships and staying attractive with always-new offers; increasing sunk costs by supporting investments, trust and image.