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Benchmarking Global Production Sourcing Decisions: Where and Why Firms Offshore and Reshore

Author

Listed:
  • Cohen, Morris A.
  • Cui, Shiliang
  • Ernst, Ricardo
  • Lee, Hau L.

    (Stanford U)

  • Huchzermeier, Arnd
  • Kouvelis, Panos
  • Matsuo, Hirofumi
  • Steuber, Marc

Abstract

This paper reports on the results of a global field study conducted in 2014 and 2015 among leading manufacturers from a wide range of industries. It provides insights on managerial practices that concern production sourcing and on the factors that drive such decisions. Exploratory factor analysis and logistic regression models that use survey response data yield seven key findings. (1) Companies are currently restructuring their global production footprints. (2) The majority of firms engage in offshoring; reshoring does occur but seldom for corrective reasons. (3) North America may be at the cusp of a manufacturing renaissance, but not because of reshoring. (4) China remains the most attractive site for production sourcing, followed by the developing economies in Eastern Europe and Southern Asia. (5) Manufacturing continues to decline in the developed economies of Japan and Western Europe. (6) Labor cost no longer drives decisions about manufacturing location; rather, firms decide based on complex trade-offs among a variety of factors. (7) Firms localize production in developed economies and use developing economies as production hubs.

Suggested Citation

  • Cohen, Morris A. & Cui, Shiliang & Ernst, Ricardo & Lee, Hau L. & Huchzermeier, Arnd & Kouvelis, Panos & Matsuo, Hirofumi & Steuber, Marc, 2020. "Benchmarking Global Production Sourcing Decisions: Where and Why Firms Offshore and Reshore," Research Papers 3855, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3855
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    Cited by:

    1. Viswanathan Nagarajan & Prateek Sharma, 2021. "Firm internationalization and long‐term impact of the Covid‐19 pandemic," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1477-1491, September.
    2. Seung Hwan Jung, 2020. "Offshore versus Onshore Sourcing: Quick Response, Random Yield, and Competition," Production and Operations Management, Production and Operations Management Society, vol. 29(3), pages 750-766, March.
    3. 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.
    4. Baozhuang Niu & Kanglin Chen & Lei Chen & Chao Ding & Xiaohang Yue, 2021. "Strategic Waiting for Disruption Forecasts in Cross‐Border E‐Commerce Operations," Production and Operations Management, Production and Operations Management Society, vol. 30(9), pages 2840-2857, September.
    5. Andrea Elteto, 2019. "Effects of Industry 4.0 on reshoring investments - Hungarian experiences," IWE Working Papers 251, Institute for World Economics - Centre for Economic and Regional Studies.
    6. Morris A. Cohen & Panos Kouvelis, 2021. "Revisit of AAA Excellence of Global Value Chains: Robustness, Resilience, and Realignment," Production and Operations Management, Production and Operations Management Society, vol. 30(3), pages 633-643, March.

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