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The behavioral approach

Summing up, we may conclude that neo- classical relocation theory not only focuses on location factors that are well covered in location theory and could be denoted as location pull factors but also covers the factors triggering a relocation the push factors. The spatial margins to profitability discriminate between profitable and unprofitable locations and are therefore useful in determining where a firm should be locate pull. However as it is turns out in pull and packing they are usually span quite and a large area within which firms may operate profitably.

Changes in these boundaries are therefore not sufficient in explaining why firms want to move the push factors. In addition we have to look for internal processes within the firm of which firm growth as a result of economies of scale is the most a common one.

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 The simple neo- classical theory is transportation useful as a benchmark that defines the optimal behavior of the firm in economic terms under the assumptions of rationality and perfect information.

However it does not take in to account the internal dynamics of firms in a context with imperfect information and uncertainty where profit maximizing behavior is not the ultimate goal. This motivated Simon 1955, 1957 and Cyber and March 1963 to develop a behavioral theory of the firm which is based on more realistic notions of limited information and bounded rationality.

Here optimizing behavior is replaced by satisfier behavior. The behavioral  approach was also successfully introduced in location theory primarily by prod 1967, 1969. The behavioral approach became popular in all branches of human geography Cox and Go ledge 1981; Harvey, 1969. Apart from the general points of criticism towards neo- classical theory the application of these behavioral ideas in location theory was also motivated by the optimal location of industries Benoit, in 1995 or equivalently are spatial margins to profitability approach packers Halter, 1998.

If regional economic conditions show limited variation this leaves many profitable sites to choose from. Than  firm specific economic factors or non- economic factors may become of more importance for the explanation of firm relocation. The behavioral approach takes these factors explicitly in to account. The behavioral approach is especially geared towards firm relocation. We noted above that the key difference between location and relocation theory is that location theory is more concerned with location pull factors, whereas relocation also deals with push- factors the trigger to moving. This fits directly in to a simplified description of the decision process of the firm.