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Cost-driven motives to relocate manufacturing abroad among small- and medium-sized manufacturers: The influence of Industry 4.0

Jan Stentoft (Entreprenurship and Relationship Management, University of Southern Denmark – Kolding Campus, Kolding, Denmark)
Kent Adsbøll Wickstrøm (Entreprenurship and Relationship Management, University of Southern Denmark – Kolding Campus, Kolding, Denmark)
Anders Haug (Entreprenurship and Relationship Management, University of Southern Denmark – Kolding Campus, Kolding, Denmark)
Kristian Philipsen (Entreprenurship and Relationship Management, University of Southern Denmark – Kolding Campus, Kolding, Denmark)

Journal of Manufacturing Technology Management

ISSN: 1741-038X

Article publication date: 25 February 2020

Issue publication date: 24 March 2021

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415

Abstract

Purpose

The purpose of this paper is to advance the understanding of how Industry 4.0 related technologies affect the relocation of manufacturing abroad by small and medium-sized enterprises.

Design/methodology/approach

This paper contains an empirical analysis of how Industry 4.0 related technologies affect the cost-driven relocation of manufacturing abroad based on 191 comprehensive and full responses to a questionnaire survey distributed in 2018 among small- and medium-sized Danish manufacturers.

Findings

This paper builds upon data, which reveals that companies' pursuit of cost-focused competitive strategies is positively correlated with relocating manufacturing abroad. However, the data also shows that the more Industry 4.0-ready decision-makers are, the less cost-focused strategy drives manufacturing abroad. Furthermore, perceived barriers to Industry 4.0 related technologies promote the cost-driven relocation of manufacturing abroad whereas perceived drivers decrease this phenomenon.

Research limitations/implications

This paper is based on the answers given by a single respondent from each company and only on Danish respondents.

Practical implications

The results indicate a need to invest resources to obtain a better knowledge of Industry 4.0 related technologies when used in processes involved in decisions about where to locate manufacturing.

Originality/value

This paper contains new, empirically founded information about how Industry 4.0 related technologies affect the cost-driven relocation of manufacturing abroad from the perspective of small- and medium-sized manufacturers.

Keywords

Acknowledgements

The authors would like to thank IT-Vest – Networking Universities in Denmark for funding the research activities disseminated in this paper. The funding is provided to further develop the master course in IT and business development in small and medium-sized enterprises offered at the part time education of Master in IT.

Citation

Stentoft, J., Wickstrøm, K.A., Haug, A. and Philipsen, K. (2021), "Cost-driven motives to relocate manufacturing abroad among small- and medium-sized manufacturers: The influence of Industry 4.0", Journal of Manufacturing Technology Management, Vol. 32 No. 3, pp. 646-666. https://doi.org/10.1108/JMTM-07-2019-0283

Publisher

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Emerald Publishing Limited

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