International relocation of production plants in MNEs: Is the enemy in our camp?

Abstract

AbstractThe literature has argued that low efficiency in comparison with other competitors in the same sector increases the probability of international relocation. In this paper, we argue that, in order to explain production relocation, it is important to consider not only the plant's efficiency in comparison with competing plants, which we shall call external rivalry, but also in comparison with other plants in the same group, to be called internal rivalry. An empirical analysis that focuses on automobile parts manufacturing plants belonging to MNEs in Spain, confirms that both types of rivalry should be considered and that internal rivalry plays a greater part than external rivalry in international relocation decisions.