Final answer:
A company must comply with the regulations of the country in which it is operating, but it may also adhere to stricter regulations from another country. The imposition of higher safety standards on imports can serve as informal trade barriers. Environmental regulation costs are usually a minor consideration in the broader scope of factors influencing corporate location decisions.
Step-by-step explanation:
In regards to which country's regulations a company should adhere to, it often depends on both legal obligations and business strategy. Generally, a company must comply with the regulations of the country in which it operates, but it may choose to adhere to stricter standards from another jurisdiction as a best practice. The debate on imposing higher safety standards on imported goods than those existing in the foreign country where they were produced is complex. Countries may legally implement such measures, but this often raises trade concerns and may act as an informal barrier. However, in the global marketplace, companies tend to look at a multitude of factors when deciding on locating operations, including labor and capital costs, proximity to suppliers and customers, infrastructure quality, taxation, and government efficiency. Despite the seeming race-to-the-bottom fear, environmental regulations do not constitute the primary factor for location decisions, as these costs are typically a small fraction of total costs.