Post-offshoring manufacturing strategies: decision-making and implementation

Abstract

PurposeThe advantages of offshoring are increasingly under scrutiny, and coronavirus disease 2019 (COVID-19) has advanced the debate, calling for a redefinition of firms' production location strategies. While attention has primarily focused on the relocation of second-degree strategies, such as back-shoring, near-shoring and further offshoring, there are also other alternatives, including home country-based domestic product and process innovations, and the development of new business activities. The objective of the authors' paper is to identify which factors influence decision-makers when they select and implement such post-offshoring strategic alternatives.Design/methodology/approachThe authors consider 11 Italian manufacturing companies that implemented these strategies and analyze triggers, drivers, enabling factors and barriers of the decision phase, as well as content, governance mode and timing of the implementation phase.FindingsBased on the collected findings, the authors suggest a set of propositions for further research. First of all, firms can simultaneously manage multiple strategies by adopting an ambidextrous approach through which to mitigate supply chain risks. They may integrate their domestic and international production activities, but the home country remains central for innovations and production of high-end products and Industry 4.0 technologies increases the probability of investing in their home country. At the same time, lack of competence induces selective near- and back-shoring, while full back-shoring is mainly a consequence of managerial mistakes. Competence availability acts as a barrier to relocation in the home country, inducing the implementation of either an insourcing strategy or a combination of insourcing and outsourcing.Originality/valueThe authors' work identifies post-offshoring as a dynamic process and provides insights into the post-pandemic scenario. The conceptual framework may represent a useful tool for company managers in re-evaluating their initial offshoring strategies.

Offshoring, hierarchical control and transnational and dynamic environments

“…Ye et al, 2022) or manufacturing offshoring (e.g. Bettiol et al, 2023), whereas only a few studies have focused on innovation offshoring (Hong et al, 2022, p. 970). In addition, most governance choice studies have emphasized the importance of external environments and paid attention to how institutional environments affect MNEs' governance choices in offshoring (e.g.…”

“…, 2022) or manufacturing offshoring (e.g. Bettiol et al. , 2023), whereas only a few studies have focused on innovation offshoring (Hong et al.…”

Conceptual review of global outsourcing-offshoring in the last 20 years: Notes on systematic literature review

“…Another aspect that has an impact on the level of outsourcing-offshoring decisions is political conditions. Political risks impact outsourcing activities (Bettiol et al, 2023). Politics influences offshoring decisions and evaluates their impact on outsourcing entry mode decisions, whether to outsource Information Technology (ITO), Business Process Outsourcing (BPO) or Knowledge Process Outsourcing (KPO).…”