Location Criteria and Perceptions of Regional Business Climate: A Study of Mexican and U.S. Small Electronics Firms

The impact of cultural differences on the location concerns of smaller high-technology operations in both Mexico and the US is investigated. The results show that, regardless of country, executives are concerned about the availability and productivity of skilled labor. However, while US firms place an emphasis on ambience and lifestyle factors, their Mexican counterparts emphasize infrastructure criteria. In addition, the results suggest that there are important cultural differences in both the perception of cross-border business climate and the key factors that contribute to successful strategies. While there are substantial labor cost savings to be gained from Mexican high-tech manufacturing, these savings must be counterbalanced against relatively high legal and cultural difference start-up costs, intrinsically lower productivity levels, and higher employee turnover rates.