Understanding What Informs the Choice of Agro-Processing Firm Siting: Evidence from a Developing Country

Abstract

This article investigates the complexity of factors that influence the location choice for agro-processing firms from a developing country and SME perspective. It further examines the underpinning role of government policies regarding the siting, operation and effectiveness of agro-processing firms. Using a quantitative methods research design, 124 randomly sampled agro-processing firms were surveyed. The collected data was analysed using exploratory factor analysis and logistic regression analysis. It emerged that business support, economic and socio-cultural factors had a direct impact on decisions regarding the siting of agro-processing firms. Also, the availability of raw materials and cheap labour equally contributes to such decisions. Government policies turned out to be ineffective in influencing decisions on the siting of agro-processing firms. In terms of policy, there is a need to refocus efforts to incentivise agro-entrepreneurs, open up access to sustainable funding options and build the innovative capacity of agro-processing firms. This is critical to attracting agro-processing investments to remote areas such as Northern Ghana to revamp the local economy. This article highlights the impact of policy on the location of agro businesses in developing countries and also demonstrates the nexus between the location of a business and its performance.