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Article
Publication date: 29 July 2021

Jesús F. Lampón and Elena Rivo-López

The paper aims to explore the influence of the industry technology intensity on the drivers of manufacturing backshoring.

Abstract

Purpose

The paper aims to explore the influence of the industry technology intensity on the drivers of manufacturing backshoring.

Design/methodology/approach

An analysis of backshoring factors in recent cases of backshoring in the European manufacturing industry based on original qualitative and quantitative information collected from different databases. This analysis was performed using different econometric models applied to samples of firms classified by technology intensity of industries.

Findings

Drivers of backshoring are conditioned by the technology intensity of the industries. The models that analyse firms classified by technology intensity of the industries have a good explanatory capacity with few key factors. In industries with low-technology intensity, backshoring is a cost-oriented strategy and the drivers are linked to internal process optimisation and external factors related to labour and logistics costs in the host location. In industries with high-technology intensity, backshoring is mainly an innovation-oriented strategy and the key drivers are those related to the internal innovation capacity for improvement of the technological level of manufacturing processes. The research also identifies the more suitable theoretical approaches for explaining backshoring drivers in each type of industry according to its technology intensity.

Originality/value

This research analyses the backshoring drivers by means of models applied to firms classified by the technology intensity of industries. It also reinforces the dynamic perspective of time to analyse backshoring as a reassessment of location decisions made after prior offshoring.

Details

Journal of Manufacturing Technology Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-038X

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Book part
Publication date: 4 August 2017

Paweł Capik

Backshoring keeps gaining popularity with consultancies, politicians and businesses alike, yet academic research lags behind this seemingly increasing practice. Through a…

Abstract

Backshoring keeps gaining popularity with consultancies, politicians and businesses alike, yet academic research lags behind this seemingly increasing practice. Through a narrative, critical overview of literature the paper demonstrates incipient nature of backshoring research and identifies international business and economic geography as most relevant disciplines in furthering the understanding of the phenomenon and its managerial, policy and developmental significance.

The number of firms which backshored some or all of their activities from locations abroad appears to be growing, however due to unavailability of reliable data it is difficult to accurately assess how common backshoring is. There is a problem even with estimating the scale of the phenomenon which stems from the fact that the concept remains to be ill-defined. Consequently, current research is dominated by contradicting observations disallowing meaningful conclusion. However it is such shortcomings which arguably offer an unmissable opportunity for theory testing and development, and contribution to managerial practice and policy design.

Details

Breaking up the Global Value Chain
Type: Book
ISBN: 978-1-78743-071-6

Keywords

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Book part
Publication date: 21 October 2019

Lise Lillebrygfjeld Halse, Bella Belerivana Nujen and Hans Solli-Sæther

Based on in-depth case studies from a high-cost environment, we identify context-specific aspects as important motivating factors for decision-makers re-evaluating the…

Abstract

Based on in-depth case studies from a high-cost environment, we identify context-specific aspects as important motivating factors for decision-makers re-evaluating the previous offshoring decisions. This chapter sheds light on the complexity of backshoring motives by adding a meso level, illustrating how case companies’ sourcing decisions evolve alongside the institutional context at a regional level. Further, the chapter provides a deeper understanding of the motives that underlay backshoring decisions and argues that these motivating factors differ from a broader set of drivers that can be found within the existing frameworks of backshoring.

Details

International Business in a VUCA World: The Changing Role of States and Firms
Type: Book
ISBN: 978-1-83867-256-0

Keywords

Content available
Article
Publication date: 14 December 2017

Malin Johansson and Jan Olhager

The purpose of this paper is to present recent empirical results concerning offshoring and backshoring of manufacturing from and to Sweden, to increase the understanding…

Abstract

Purpose

The purpose of this paper is to present recent empirical results concerning offshoring and backshoring of manufacturing from and to Sweden, to increase the understanding of manufacturing relocation in an international context. In particular, extent, geographies, type of production, drivers, and benefits of moving manufacturing in both directions are investigated.

Design/methodology/approach

The study is based on survey data from 373 manufacturing plants. The same set of questions is used for both offshoring and backshoring between 2010 and 2015, which allows similarities and differences in decision-making and results between the two relocation directions to be identified.

Findings

There are many significant differences between offshoring and backshoring projects. Labour cost is the dominating factor in offshoring, as driver and benefit, while backshoring is related to many drivers and benefits, such as quality, lead-time, flexibility, access to skills and knowledge, access to technology, and proximity to R&D. This is also reflected in the type of production that is relocated; labour-intensive production is offshored and complex production is backshored.

Research limitations/implications

Plants that have both offshored and backshored think and act differently than plants that have only offshored or backshored, which is why it is important to distinguish between these plant types in the context of manufacturing relocations.

Practical implications

The experience of Swedish manufacturing plants reported here can be used as a point of reference for internal manufacturing operations.

Originality/value

The survey design allows a unique comparison between offshoring and backshoring activity. Since Swedish firms in general have been quite active in rearranging their manufacturing footprint and have experience from movements in both directions, it is an appropriate geographical area to study in this context.

Details

Journal of Manufacturing Technology Management, vol. 29 no. 4
Type: Research Article
ISSN: 1741-038X

Keywords

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Article
Publication date: 23 November 2018

Bella Belerivana Nujen, Deodat Edward Mwesiumo, Hans Solli-Sæther, Andrea Blindheim Slyngstad and Lise Lillebrygfjeld Halse

The purpose of this study is to delineate key aspects of backshoring readiness and discuss how such aspects contribute to a smooth shift-back from global sourcing…

Abstract

Purpose

The purpose of this study is to delineate key aspects of backshoring readiness and discuss how such aspects contribute to a smooth shift-back from global sourcing operations. It aims to answer the following questions: which factors constitute backshoring readiness and how these factors affect the backshoring transition.

Design/methodology/approach

Based on theory departure from the organizational readiness field and the emerging field on backshoring, a conceptual model is developed. A multiple qualitative case study is then conducted to exemplify the backshoring readiness factors delineated in the study.

Findings

The study indicates that due to previous outsourcing, limitations concerning the availability of firms’ capabilities are affected by ownership structures and that backshoring appears to be time-sensitive. The study delineates three key aspects of backshoring readiness and proposes a comprehensive understanding of readiness as an important construct to enhance successful backshoring.

Research limitations/implications

The findings are limited by the nature of this conceptual study, the restriction to a high-cost context and the small number of cases. Therefore, conclusions and proposed recommendations need to be further investigated in preferably larger samples of case studies.

Practical implications

By introducing contextual variables that go beyond traditional cost considerations, this work should be of special interest for both practitioners and academics, because the absorptive capacity for the exploitation of cutting-edge knowledge is globally scarce and hence rather expensive in Western countries compared with traditionally low-cost countries. Another practical contribution of this study is the conceptual backshoring readiness framework itself, as it can guide firms acquainting themselves with the resource availability in their home environment.

Originality/value

The research defines key resources needed to facilitate backshoring readiness in a conceptual framework developed from literature, which is then exemplified by a case study. This framework conceptualizes backshoring readiness as aspects of requirements to knowledge, technology and supplier infrastructures. Furthermore, the readiness framework developed provides firms and their managers with six recommendations that can enable a rigorous evaluation of a firm’s readiness to embark on backshoring and reflect on the aspect of fitness of its current strategies.

Details

Journal of Global Operations and Strategic Sourcing, vol. 12 no. 1
Type: Research Article
ISSN: 2398-5364

Keywords

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Article
Publication date: 4 January 2018

Jussi Heikkilä, Miia Martinsuo and Sanna Nenonen

The purpose of this paper is to investigate the extent, drivers, and conditions underlying backshoring in the Finnish manufacturing industry, comparing the results to the…

Abstract

Purpose

The purpose of this paper is to investigate the extent, drivers, and conditions underlying backshoring in the Finnish manufacturing industry, comparing the results to the wider ongoing relocation of production in the international context.

Design/methodology/approach

The survey of 229 Finnish manufacturing firms reveals the background, drivers, and patterns of offshoring and backshoring.

Findings

Companies that had transferred their production back to Finland were more commonly in industries with relatively higher technology intensity and they were typically larger than the no-movement companies, and with a higher number of plants. They also reported more commonly having a corporate-wide strategy for guiding production location decisions.

Research limitations/implications

Backshoring activity in the small and open economy of Finland seems to be higher compared to earlier studies in larger countries. The findings suggest that there is a transformation in the manufacturing industries with some gradual replacement of labor-intensive and lower technology-intensive industries toward higher technology-intensive industries.

Practical implications

Moving production across national borders is one option in the strategies of firms to stay competitive. Companies must carefully consider the relevance of various decision-making drivers when determining strategies for their production networks.

Social implications

Manufacturing industries have traditionally been important for employment in the relatively small and open economies of the Nordic countries. From the social perspective, it is important to understand the ongoing transformation and its implications.

Originality/value

There are few empirical studies available of the ongoing backshoring movement, utilizing data from company decision makers instead of macroeconomic factors.

Details

Journal of Manufacturing Technology Management, vol. 29 no. 4
Type: Research Article
ISSN: 1741-038X

Keywords

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Article
Publication date: 18 May 2012

Steffen Kinkel

The purpose of this paper is to present an empirical investigation of recent trends and changes in companies' production relocation and backshoring behaviour against the…

Abstract

Purpose

The purpose of this paper is to present an empirical investigation of recent trends and changes in companies' production relocation and backshoring behaviour against the background of the global economic crisis.

Design/methodology/approach

The empirical research is based on a large data set of 1,484 German manufacturing companies as part of the European Manufacturing Survey (EMS). The paper employs a structured set of probit analyses to identify the differences of production relocation and backshoring determinants before and within the crisis.

Findings

Against common belief the paper finds that not only the relocation of production to emerging countries, but also the backshoring of once offshored manufacturing capacities to the home base is a relevant phenomenon. Since the emergence of the global economic crisis, relocation activities declined significantly, whereas the level of backshoring activities has remained stable. Far‐shore destinations in Asia gain in attractiveness over near‐shore locations in Eastern Europe. Particularly export‐intensive companies tended recently towards (re‐)concentrating of their production capacities, trying to exploit the benefits of higher capacity utilisation and a superior relation of variable costs to fix costs at their existing locations.

Research limitations/implications

Although covering a significant range of industrial sectors in Germany, more empirical evidence is needed from other branches and countries. Looking forward it is proposed to systemically integrate scenarios on the future development of the most influential environmental factors in future research frameworks for global production decisions and value chains.

Practical implications

The findings strongly recommend a revision of established decision‐making schemes for production relocations based on pure cost efficiency considerations. Decision‐making should integrate qualitative environmental factors and dynamic considerations using scenario‐based tools. Companies need to understand and prepare for dynamic developments at different locations which can strategically necessitate backshoring after a certain time.

Originality/value

The research considerably widens the empirical knowledge on recent trends in relocation activities and their inherent risks, which in a dynamic perspective are sometimes forcing backshoring activities.

Details

International Journal of Operations & Production Management, vol. 32 no. 6
Type: Research Article
ISSN: 0144-3577

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Article
Publication date: 18 November 2013

Stephen Canham and Robert T. Hamilton

This paper aims to focus on production offshoring and “backshoring” in a representative sample of 151 New Zealand manufacturers. It identifies how and why firms offshore;…

Abstract

Purpose

This paper aims to focus on production offshoring and “backshoring” in a representative sample of 151 New Zealand manufacturers. It identifies how and why firms offshore; why many increase their offshoring while others “backshore”; and why most firms continue to compete internationally without offshoring.

Design/methodology/approach

Data collection used a two-wave postal questionnaire survey of 676 firms, with a usable response rate of 22.3 per cent and no indication of non-response bias.

Findings

Most exporters manufactured only from their New Zealand base, but 44 per cent had outsourced some production offshore in the period 2001 to 2011. Among the 67 offshored firms, 11 had then “backshored” to New Zealand. The main reasons for offshoring were lower labour costs and capacity constraints in New Zealand. “Backshoring” occurs when lower labour costs become offset by impaired capabilities in flexibility/delivery; quality; and the value of the Made in New Zealand brand especially among consumer goods producers. Stay at home firms reported fears of lowered quality; country loyalty; and their Made in New Zealand country of origin brand.

Practical implications

Offshoring begins tentatively but many firms then increase their offshoring to reap the benefit of lower labour costs. These reasons for “backshoring” mirror those given for keeping production in New Zealand and must be given careful consideration by firms considering offshoring.

Originality/value

There are few studies of offshoring by smaller manufacturers and none that have elucidated this as a process, one that is still avoided by many and can end in costly “backshoring” for others.

Details

Strategic Outsourcing: An International Journal, vol. 6 no. 3
Type: Research Article
ISSN: 1753-8297

Keywords

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Book part
Publication date: 4 August 2017

Marco Bettiol, Chiara Burlina, Maria Chiarvesio and Eleonora Di Maria

Defined as local manufacturing systems, industrial districts have been recognized as particularly important for the location of firms’ manufacturing activities intertwined…

Abstract

Defined as local manufacturing systems, industrial districts have been recognized as particularly important for the location of firms’ manufacturing activities intertwined with innovation processes. The debate on the internationalization of production has stressed the low value related to manufacturing within value chain activities (smile framework), emphasizing the need to focus on high value-added activities (R&D or marketing). Following multinational enterprises’ internationalization strategies, also district firms have progressively offshored their production phases in the past years. However, recent studies focused on backshoring have revamped the attention on the domestic control of production for firms’ competitiveness. This chapter explores district firms’ location choices for manufacturing activities between local and global. Based on an empirical analysis of about 260 Italian district firms specialized in mechanics, furniture, and fashion and supported by a case study investigation, our results show that despite district internationalization processes, a non-negligible amount of firms still carry out – in-house or through outsourcing – production activities at district level. Larger firms couple district production and long-term upstream outsourced internationalization activities. The district system confirms its role of pooling specialized competences and product know-how, being decisive for firms’ innovation and responsiveness to national and international markets. Backshoring, instead, is a very limited phenomenon and linked to upgrading strategies.

Details

Breaking up the Global Value Chain
Type: Book
ISBN: 978-1-78743-071-6

Keywords

Content available

Abstract

Details

Journal of Manufacturing Technology Management, vol. 29 no. 4
Type: Research Article
ISSN: 1741-038X

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