For example hospital or branch would typically be included in studies involving several hospitals or several bank branches. Failure to include these variables would result in their known effects being ascribed to other variables. Laws of Statistics for multiple multiple variables. We are free to use any combinations of explanatory variables we choose. Judgement may be used in forming important variables.
Some variables have to be included regardless of their apparent significance.
Principal components should be used when you have exhausted your knowledge about the variables.