IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Prior to reshoring: A duration analysis of foreign manufacturing ventures

Listed author(s):
  • Ancarani, Alessandro
  • Di Mauro, Carmela
  • Fratocchi, Luciano
  • Orzes, Guido
  • Sartor, Marco

This paper throws light on the determinants of the duration of manufacturing offshore experiences by US and European firms prior to reshoring. By applying survival analysis to a dataset of 249 offshoring experiences terminated with a relocation to the home country/region, we estimate the effects of different groups of survival determinants. Results highlight that contextual factors such as the industry, the home country, the host country, and the size of the firm significantly affect the duration of offshoring experiences. The likelihood of termination is in fact higher for the electronics and automotive industries, for small firms, for firms headquartered in Europe, and for offshoring to Asia. The analysis of the motivations for reshoring shows that quality issues experienced offshore emerge as the key factor giving rise to shorter offshore stays. Based on these empirical findings, a set of testable propositions is developed. In particular, we conjecture that the likelihood of termination of offshore manufacturing and the return to the home country may be accelerated by technology-based industries, small firm sizes, shrinking cost differentials and the psychic distance between home and host country, the organizational archetypes, and quality related motivations.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0925527315002807
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal International Journal of Production Economics.

Volume (Year): 169 (2015)
Issue (Month): C ()
Pages: 141-155

as
in new window

Handle: RePEc:eee:proeco:v:169:y:2015:i:c:p:141-155
DOI: 10.1016/j.ijpe.2015.07.031
Contact details of provider: Web page: http://www.elsevier.com/locate/ijpe

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Manning, Stephan, 2014. "Mitigate, tolerate or relocate? Offshoring challenges, strategic imperatives and resource constraints," Journal of World Business, Elsevier, vol. 49(4), pages 522-535.
  2. Yang, Zhilin & Wang, Xuehua & Su, Chenting, 2006. "A review of research methodologies in international business," International Business Review, Elsevier, vol. 15(6), pages 601-617, December.
  3. Mata, Jose & Portugal, Pedro & Guimaraes, Paulo, 1995. "The survival of new plants: Start-up conditions and post-entry evolution," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 459-481, December.
  4. Kedia, Ben L. & Mukherjee, Debmalya, 2009. "Understanding offshoring: A research framework based on disintegration, location and externalization advantages," Journal of World Business, Elsevier, vol. 44(3), pages 250-261, July.
  5. Stine Jessen Haakonsson & Peter D. Ørberg Jensen & Susan M. Mudambi, 2013. "A co-evolutionary perspective on the drivers of international sourcing of pharmaceutical R&D to India," Journal of Economic Geography, Oxford University Press, vol. 13(4), pages 677-700, July.
  6. Glaister, Keith W. & Buckley, Peter J., 1998. "Management-performance relationships in UK joint ventures," International Business Review, Elsevier, vol. 7(3), pages 235-257, June.
  7. David Bailey & Lisa De Propris, 2014. "Editor's choice Manufacturing reshoring and its limits: the UK automotive case," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 7(3), pages 379-395.
  8. Zhao, Hongxin & Zhu, Gangti, 1998. "Determinants of ownership preference of international joint ventures: new evidence from Chinese manufacturing industries," International Business Review, Elsevier, vol. 7(6), pages 569-589, November.
  9. 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.
  10. Chadee, Doren D. & Qiu, Feng & Rose, Elizabeth L., 2003. "FDI location at the subnational level: a study of EJVs in China," Journal of Business Research, Elsevier, vol. 56(10), pages 835-845, October.
  11. Michel A. Habib & Pierre Mella-Barral, 2007. "The Role of Knowhow Acquisition in the Formation and Duration of Joint Ventures," Review of Financial Studies, Society for Financial Studies, vol. 20(1), pages 189-233, January.
  12. Juan Alcácer & Wilbur Chung, 2007. "Location Strategies and Knowledge Spillovers," Management Science, INFORMS, vol. 53(5), pages 760-776, May.
  13. Schmenner, Roger W. & Huber, Joel C. & Cook, Randall L., 1987. "Geographic differences and the location of new manufacturing facilities," Journal of Urban Economics, Elsevier, vol. 21(1), pages 83-104, January.
  14. Ram Mudambi, 2008. "Location, control and innovation in knowledge-intensive industries," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 699-725, September.
  15. John Cantwell, 2009. "Location and the multinational enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(1), pages 35-41, January.
  16. Finbarr Livesey, 2012. "The Need for a New Understanding of Manufacturing and Industrial Policy in Leading Economies," Innovations: Technology, Governance, Globalization, MIT Press, vol. 7(3), pages 193-202, July.
  17. Peter J Buckley & Mark C Casson, 2009. "The internalisation theory of the multinational enterprise: A review of the progress of a research agenda after 30 years," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1563-1580, December.
  18. Holweg, Matthias & Reichhart, Andreas & Hong, Eui, 2011. "On risk and cost in global sourcing," International Journal of Production Economics, Elsevier, vol. 131(1), pages 333-341, May.
  19. Wren, Colin & Jones, Jonathan, 2009. "Re-investment and the survival of foreign-owned plants," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 214-223, March.
  20. Huang, Shihping Kevin, 2014. "The emergence of the outsourcing market and product technological performance," Technological Forecasting and Social Change, Elsevier, vol. 82(C), pages 132-139.
  21. John H Dunning, 2009. "Location and the multinational enterprise: A neglected factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(1), pages 5-19, January.
  22. 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.
  23. Rajneesh Narula & John Dunning, 2000. "Industrial Development, Globalization and Multinational Enterprises: New Realities for Developing Countries," Oxford Development Studies, Taylor & Francis Journals, vol. 28(2), pages 141-167.
  24. Jia, Fu & Lamming, Richard & Sartor, Marco & Orzes, Guido & Nassimbeni, Guido, 2014. "Global purchasing strategy and International Purchasing Offices: Evidence from case studies," International Journal of Production Economics, Elsevier, vol. 154(C), pages 284-298.
  25. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 190-207.
  26. Graf, Michael & Mudambi, Susan M., 2005. "The outsourcing of IT-enabled business processes: A conceptual model of the location decision," Journal of International Management, Elsevier, vol. 11(2), pages 253-268, June.
  27. Jean J Boddewyn, 1983. "Foreign and Domestic Divestment and Investment Decisions: Like or Unlike?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 14(3), pages 23-35, September.
  28. Pearce, John A., 2014. "Why domestic outsourcing is leading America's reemergence in global manufacturing," Business Horizons, Elsevier, vol. 57(1), pages 27-36.
  29. Marshall S Jiang & Preet S Aulakh & Yigang Pan, 2009. "Licensing duration in foreign markets: A real options perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(4), pages 559-577, May.
  30. John H Dunning, 1980. "Towards an Eclectic Theory of International Production: Some Empirical Tests," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(1), pages 9-31, March.
  31. Dunning, John H., 2000. "The eclectic paradigm as an envelope for economic and business theories of MNE activity," International Business Review, Elsevier, vol. 9(2), pages 163-190, April.
  32. Peter D. Ørberg Jensen & Torben Pedersen, 2011. "The Economic Geography of Offshoring: The Fit between Activities and Local Context," Journal of Management Studies, Wiley Blackwell, vol. 48(2), pages 352-372, March.
  33. Alan Rugman, 1980. "Internalization as a general theory of foreign direct investment: A re-appraisal of the literature," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 365-379, June.
  34. Audretsch, David B, 1998. "Agglomeration and the Location of Innovative Activity," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 18-29, Summer.
  35. McCloughan, Patrick & Stone, Ian, 1998. "Life duration of foreign multinational subsidiaries: Evidence from UK northern manufacturing industry 1970-93," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 719-747, November.
  36. Michael Porter, 1994. "The Role of Location in Competition," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(1), pages 35-40.
  37. Mark Casson & Nigel Wadeson, 2013. "The Economic Theory of International Supply Chains: A Systems View," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(2), pages 163-186, July.
  38. Mazzola, Erica & Perrone, Giovanni, 2013. "A strategic needs perspective on operations outsourcing and other inter-firm relationships," International Journal of Production Economics, Elsevier, vol. 144(1), pages 256-267.
  39. Nordman, Emilia Rovira & Tolstoy, Daniel, 2014. "Does relationship psychic distance matter for the learning processes of internationalizing SMEs?," International Business Review, Elsevier, vol. 23(1), pages 30-37.
  40. Ram Mudambi & Markus Venzin, 2010. "The Strategic Nexus of Offshoring and Outsourcing Decisions," Journal of Management Studies, Wiley Blackwell, vol. 47(s2), pages 1510-1533, December.
  41. Jiang, Marshall S. & Chu, Rongwei & Pan, Yigang, 2011. "Anticipated duration of international joint ventures: A transaction cost perspective," Journal of International Management, Elsevier, vol. 17(2), pages 175-183, June.
  42. Jagersma, P. K. & van Gorp, D. M., 2003. "International divestements--an empirical perspective," Business Horizons, Elsevier, vol. 46(6), pages 61-69.
  43. Bent Petersen & Torben Pedersen & Marjorie A Lyles, 2008. "Closing knowledge gaps in foreign markets," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(7), pages 1097-1113, October.
  44. John V. Gray & Brett Massimino, 2014. "The Effect of Language Differences and National Culture on Operational Process Compliance," Production and Operations Management, Production and Operations Management Society, vol. 23(6), pages 1042-1056, June.
  45. Henisz, Witold J, 2000. "The Institutional Environment for Multinational Investment," Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(2), pages 334-364, October.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:169:y:2015:i:c:p:141-155. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.