IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v205y2018icp37-46.html
   My bibliography  Save this article

Comparing offshoring and backshoring: The role of manufacturing site location factors and their impact on post-relocation performance

Author

Listed:
  • Johansson, Malin
  • Olhager, Jan

Abstract

The global nature of businesses has increased the geographical dispersion of operations and has made the location decision an important strategic perspective for manufacturing firms. The consensus view is that three major plant location factors must be kept in mind: (1) access to low-cost manufacturing, (2) proximity to market, and (3) access to development competences. Two options for changing the global manufacturing footprint are offshoring and backshoring. This research has analysed the role and relevance of these manufacturing site location factors as drivers for offshoring and backshoring decisions and has investigated these factors' relationship with operational performance. The study used survey data drawn from Swedish manufacturing plants, including 133 offshoring projects and 99 backshoring projects. The survey instrument used the same set of questions for both relocation directions (for drivers as well as performance benefits), which allowed us to analyse each direction separately as well as to make comparisons between offshoring and backshoring. We applied a theory-testing approach in the study, in that we tested how the three major location factors related to offshoring and backshoring based on confirmatory factor analysis and regression analyses. The results have verified that these three major location factors are relevant for both manufacturing offshoring and backshoring; the results also indicated significant differences in how these factors influence relocation decisions for offshoring and backshoring as well as how they affect performance.

Suggested Citation

  • Johansson, Malin & Olhager, Jan, 2018. "Comparing offshoring and backshoring: The role of manufacturing site location factors and their impact on post-relocation performance," International Journal of Production Economics, Elsevier, vol. 205(C), pages 37-46.
    • Handle: RePEc:eee:proeco:v:205:y:2018:i:c:p:37-46
    DOI: 10.1016/j.ijpe.2018.08.027
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527318303475
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2018.08.027?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ancarani, Alessandro & Di Mauro, Carmela & Fratocchi, Luciano & Orzes, Guido & Sartor, Marco, 2015. "Prior to reshoring: A duration analysis of foreign manufacturing ventures," International Journal of Production Economics, Elsevier, vol. 169(C), pages 141-155.
    2. Albertoni, Filippo & Elia, Stefano & Massini, Silvia & Piscitello, Lucia, 2017. "The reshoring of business services: Reaction to failure or persistent strategy?," Journal of World Business, Elsevier, vol. 52(3), pages 417-430.
    3. da Silveira, Giovani J.C., 2014. "An empirical analysis of manufacturing competitive factors and offshoring," International Journal of Production Economics, Elsevier, vol. 150(C), pages 163-173.
    4. Gylling, Michael & Heikkilä, Jussi & Jussila, Kari & Saarinen, Markku, 2015. "Making decisions on offshore outsourcing and backshoring: A case study in the bicycle industry," International Journal of Production Economics, Elsevier, vol. 162(C), pages 92-100.
    5. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    6. Partovi, Fariborz Y., 2006. "An analytic model for locating facilities strategically," Omega, Elsevier, vol. 34(1), pages 41-55, January.
    7. Bert Meijboom & Hans Voordijk, 2003. "International operations and location decisions: a firm level approach," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 94(4), pages 463-476, September.
    8. Hallgren, Mattias & Olhager, Jan, 2009. "Flexibility configurations: Empirical analysis of volume and product mix flexibility," Omega, Elsevier, vol. 37(4), pages 746-756, August.
    9. Luis Mendes & José Machado, 2015. "Employees’ skills, manufacturing flexibility and performance: a structural equation modelling applied to the automotive industry," International Journal of Production Research, Taylor & Francis Journals, vol. 53(13), pages 4087-4101, July.
    10. Amy V. Benstead & Mark Stevenson & Linda C. Hendry, 2017. "Why and how do firms reshore? A contingency-based conceptual framework," Operations Management Research, Springer, vol. 10(3), pages 85-103, December.
    11. repec:bla:jomstd:v:47:y:2010:i:s2:p:1510-1533 is not listed on IDEAS
    12. Pamela K. Robinson & Linda Hsieh, 2016. "Reshoring: a strategic renewal of luxury clothing supply chains," Operations Management Research, Springer, vol. 9(3), pages 89-101, December.
    13. Gautam Ray & Jay B. Barney & Waleed A. Muhanna, 2004. "Capabilities, business processes, and competitive advantage: choosing the dependent variable in empirical tests of the resource‐based view," Strategic Management Journal, Wiley Blackwell, vol. 25(1), pages 23-37, January.
    14. Roza, Marja & Van den Bosch, Frans A.J. & Volberda, Henk W., 2011. "Offshoring strategy: Motives, functions, locations, and governance modes of small, medium-sized and large firms," International Business Review, Elsevier, vol. 20(3), pages 314-323, June.
    15. Jagjit Singh Srai & Camille Ané, 2016. "Institutional and strategic operations perspectives on manufacturing reshoring," International Journal of Production Research, Taylor & Francis Journals, vol. 54(23), pages 7193-7211, December.
    16. Esmeralda Linares-Navarro & Torben Pedersen & José Pla-Barber, 2014. "Fine slicing of the value chain and offshoring of essential activities: empirical evidence from European multinationals," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(1), pages 111-134, February.
    17. Jan Stentoft & Jan Olhager & Jussi Heikkilä & Lisa Thoms, 2016. "Manufacturing backshoring: a systematic literature review," Operations Management Research, Springer, vol. 9(3), pages 53-61, December.
    18. Stentoft, Jan & Mikkelsen, Ole Stegmann & Jensen, Jesper Kronborg & Rajkumar, Christopher, 2018. "Performance outcomes of offshoring, backshoring and staying at home manufacturing," International Journal of Production Economics, Elsevier, vol. 199(C), pages 199-208.
    19. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    20. Pearce, John A., 2014. "Why domestic outsourcing is leading America's reemergence in global manufacturing," Business Horizons, Elsevier, vol. 57(1), pages 27-36.
    21. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    22. Hartman, Paul L. & Ogden, Jeffrey A. & Wirthlin, Joseph R. & Hazen, Benjamin T., 2017. "Nearshoring, reshoring, and insourcing: Moving beyond the total cost of ownership conversation," Business Horizons, Elsevier, vol. 60(3), pages 363-373.
    23. Ram Mudambi & Markus Venzin, 2010. "The Strategic Nexus of Offshoring and Outsourcing Decisions," Journal of Management Studies, Wiley Blackwell, vol. 47(8), pages 1510-1533, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Keil, Sascha, 2024. "Competing for manufacturing value added: How strong is competitive cost pressure on sectoral level?," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 197-212.
    2. Fabian Kreutzer & Wolfram Berger, 2022. "Does offshoring boost productivity? A comparison of SMEs and large firms for Germany," Economics and Business Letters, Oviedo University Press, vol. 11(2), pages 46-52.
    3. Di Mauro, Carmela & Ancarani, Alessandro, 2022. "A taxonomy of back-shoring initiatives in the US," International Business Review, Elsevier, vol. 31(5).
    4. Pourya Pourhejazy & Alison Ashby, 2021. "Reshoring Decisions for Adjusting Supply Chains in a Changing World: A Case Study from the Apparel Industry," IJERPH, MDPI, vol. 18(9), pages 1-13, May.
    5. Lian-Sheng Tang & Xiang Tan & Peng Guo & Ting-Ting Huang & Tie-Li Liu, 2022. "Comparative Analysis of Locational Factors and Their External Influence on Free-Trade Port Zones in China," Sustainability, MDPI, vol. 14(4), pages 1-19, February.
    6. Kinkel, Steffen & Capestro, Mauro & Di Maria, Eleonora & Bettiol, Marco, 2023. "Artificial intelligence and relocation of production activities: An empirical cross-national study," International Journal of Production Economics, Elsevier, vol. 261(C).
    7. Begoña Fuster & Carmen Martínez-Mora & Adelaida Lillo-Bañuls, 2023. "Does Reshoring Generate Employment? A Study on Services Reshoring and Its Intra- and Inter-Sectoral Components," SAGE Open, , vol. 13(3), pages 21582440231, September.
    8. Woldt, Jason & Godfrey, Michael, 2022. "Is there a home field advantage? The impact of shareholder wealth from U.S. manufacturing location decisions: A comparative analysis," International Journal of Production Economics, Elsevier, vol. 248(C).
    9. Pinheiro, Alexandra & Sochirca, Elena & Afonso, Oscar & Neves, Pedro Cunha, 2023. "Automation and off(re)shoring: A meta-regression analysis," International Journal of Production Economics, Elsevier, vol. 264(C).
    10. Fuster, Begoña & Lillo-Bañuls, Adelaida & Martínez-Mora, Carmen, 2020. "Reshoring of services and employment," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 233-246.
    11. Godfrey Mugurusi & Luitzen de Boer, 2019. "Are You Receiving Me? A Viable System Model (VSM) Analysis of Purchasing Coordination in a Firm Engaged in Offshoring of Manufacturing Activities," Systemic Practice and Action Research, Springer, vol. 32(3), pages 239-272, June.
    12. Haibo Wang & Lutfu S. Sua & Jun Huang & Jaime Ortiz & Bahram Alidaee, 2024. "Will Southeast Asia be the next global manufacturing hub? A multiway cointegration, causality, and dynamic connectedness analyses on factors influencing offshore decisions," Papers 2406.07525, arXiv.org.
    13. Morganti, Daniele & De Giovanni, Pietro, 2022. "Offshoring motivations driven by sustainability factors," Research in Transportation Economics, Elsevier, vol. 95(C).
    14. Razika Malek & Qing Yang, 2023. "Analyzing Interrelationships and Prioritizing Performance Indicators in Global Product Development: Application in the Chinese Renewable Energy Sector," Sustainability, MDPI, vol. 15(14), pages 1-26, July.
    15. Li, Xinwei & Tse, Ying Kei & Zhang, Minhao & Phi, Hoang Dinh, 2023. "Impact of relocation strategy on brand trustworthiness and word-of-mouth: Experimental vignette research on the US fashion industry," International Journal of Production Economics, Elsevier, vol. 257(C).
    16. Henkel, Malin & Boffelli, Albachiara & Olhager, Jan & Kalchschmidt, Matteo, 2022. "A case survey of offshoring–backshoring cases: The influence of contingency factors," International Journal of Production Economics, Elsevier, vol. 253(C).
    17. De Beule, Filip & Van Assche, Ari & Nevens, Joren, 2022. "Additive Manufacturing and Production Internationalization: An Internalization Perspective," Journal of International Management, Elsevier, vol. 28(4).
    18. Razika Malek & Qing Yang & Sahraoui Dhelim, 2024. "Toward Sustainable Global Product Development Performance: Exploring the Criticality of Organizational Factors and the Moderating Influence of Global Innovation Culture," Sustainability, MDPI, vol. 16(10), pages 1-25, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McIvor, Ronan & Bals, Lydia, 2021. "A multi-theory framework for understanding the reshoring decision," International Business Review, Elsevier, vol. 30(6).
    2. Di Mauro, Carmela & Ancarani, Alessandro, 2022. "A taxonomy of back-shoring initiatives in the US," International Business Review, Elsevier, vol. 31(5).
    3. Silvia Cosimato & Roberto Vona, 2021. "Digital Innovation for the Sustainability of Reshoring Strategies: A Literature Review," Sustainability, MDPI, vol. 13(14), pages 1-16, July.
    4. Henkel, Malin & Boffelli, Albachiara & Olhager, Jan & Kalchschmidt, Matteo, 2022. "A case survey of offshoring–backshoring cases: The influence of contingency factors," International Journal of Production Economics, Elsevier, vol. 253(C).
    5. Stentoft, Jan & Mikkelsen, Ole Stegmann & Jensen, Jesper Kronborg & Rajkumar, Christopher, 2018. "Performance outcomes of offshoring, backshoring and staying at home manufacturing," International Journal of Production Economics, Elsevier, vol. 199(C), pages 199-208.
    6. Fernando Merino & Cristina Di Stefano & Luciano Fratocchi, 2021. "Back-shoring vs near-shoring: a comparative exploratory study in the footwear industry," Operations Management Research, Springer, vol. 14(1), pages 17-37, June.
    7. Luíza Neves Marques Fonseca & Angela Rocha, 2023. "Setbacks, interruptions and turnarounds in the internationalization process: a bibliometric and literature review of de-internationalization," Management Review Quarterly, Springer, vol. 73(3), pages 1351-1384, September.
    8. Albachiara Boffelli & Malin Johansson, 2020. "What do we want to know about reshoring? Towards a comprehensive framework based on a meta-synthesis," Operations Management Research, Springer, vol. 13(1), pages 53-69, June.
    9. Dachs, Bernhard & Kinkel, Steffen & Jäger, Angela, 2019. "Bringing it all back home? Backshoring of manufacturing activities and the adoption of Industry 4.0 technologies," Journal of World Business, Elsevier, vol. 54(6), pages 1-1.
    10. Amy V. Benstead & Mark Stevenson & Linda C. Hendry, 2017. "Why and how do firms reshore? A contingency-based conceptual framework," Operations Management Research, Springer, vol. 10(3), pages 85-103, December.
    11. Weifeng Zhai & Shiling Sun & Guangxing Zhang, 2016. "Reshoring of American manufacturing companies from China," Operations Management Research, Springer, vol. 9(3), pages 62-74, December.
    12. Piatanesi, Benedetta & Arauzo Carod, Josep Maria, 2019. "An Analysis about reverse offshoring," Working Papers 2072/376030, Universitat Rovira i Virgili, Department of Economics.
    13. Albachiara Boffelli & Luciano Fratocchi & Matteo Kalchschmidt & Susana Cristina Lima da Costa e Silva, 2021. "Doing the right thing or doing things right: what is better for a successful manufacturing reshoring?," Operations Management Research, Springer, vol. 14(1), pages 1-16, June.
    14. Ancarani, Alessandro & Di Mauro, Carmela & Fratocchi, Luciano & Orzes, Guido & Sartor, Marco, 2015. "Prior to reshoring: A duration analysis of foreign manufacturing ventures," International Journal of Production Economics, Elsevier, vol. 169(C), pages 141-155.
    15. Młody Michał & Stępień Beata, 2020. "Principles of reshoring development in luxury goods sector," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 56(2), pages 140-158, June.
    16. Bart Kamp & Juan José Gibaja, 2021. "Adoption of digital technologies and backshoring decisions: is there a link?," Operations Management Research, Springer, vol. 14(3), pages 380-402, December.
    17. Kim, Yun Geon & Chung, Byung Do, 2022. "Closed-loop supply chain network design considering reshoring drivers," Omega, Elsevier, vol. 109(C).
    18. Woldt, Jason & Godfrey, Michael, 2022. "Is there a home field advantage? The impact of shareholder wealth from U.S. manufacturing location decisions: A comparative analysis," International Journal of Production Economics, Elsevier, vol. 248(C).
    19. Li, Xinwei & Tse, Ying Kei & Zhang, Minhao & Phi, Hoang Dinh, 2023. "Impact of relocation strategy on brand trustworthiness and word-of-mouth: Experimental vignette research on the US fashion industry," International Journal of Production Economics, Elsevier, vol. 257(C).
    20. Schmeisser, Bjoern, 2013. "A Systematic Review of Literature on Offshoring of Value Chain Activities," Journal of International Management, Elsevier, vol. 19(4), pages 390-406.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:205:y:2018:i:c:p:37-46. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.