Abstract
PurposeThis paper aims to offer a long-term systematic picture of the evolution of manufacturing offshoring (in terms of intensity, geography and drivers) highlighting the changes in the surrounding context and the resulting transitions points (“points in time”) that have shaped its development path.Design/methodology/approachThree statistical tools were adopted on a dataset of 644 cases. First, the authors resorted to multiple structural change tests to identify the transition points. Second, the authors explored offshoring geography by conducting a network analysis. Finally, the authors adopted gravity models to shed light on offshoring drivers.FindingsResults highlight three offshoring phases: expansion (2002–2006), reconsideration (2007–2009) and rationalization (2010 onwards). During the first phase, characterized by economic growth, firms were mainly interested in economic savings; offshoring to low-cost countries was the prevailing location strategy. Subsequently, during the economic crisis, the number of cases declined and the main drivers became market-based factors together with the research for cost savings. Finally, in the third phase, when the economy was still stagnating and new manufacturing technologies appeared, the number of offshoring cases has further decreased, and technological- and market-based factors have become the main location drivers.Originality/valueThe study is the first to adopt a systematic, empirical and quantitative approach to analyze the evolution of the manufacturing offshoring considering both the phenomenon itself and the triggering changes in the surrounding context. In doing this, the authors also tested the importance of considering the point in time in offshoring strategies.
Highlights
In the last few decades, manufacturing offshoring – the transfer of production facilities or supply basins to foreign locations (Ferdows, 1997) – has internationalization emerged as a major industry trend and, at the same time, as a popular research topic in Operations
4.2 Geography To understand whether and how offshoring geography changed over the years, we drew three different graphs, one for each period previously identified (Figure 2); nodes represent the countries involved, while arrows represent the jobs relocated from one country to another
We are the first to adopt a systematic, empirical and quantitative approach to analyze the evolution of the manufacturing offshoring considering both the phenomenon itself and the triggering contextual changes
Summary
ManufacturingIn the last few decades, manufacturing offshoring – the transfer of production facilities (captive offshoring) or supply basins (offshore outsourcing) to foreign locations (Ferdows, 1997) – has internationalization emerged as a major industry trend and, at the same time, as a popular research topic in OperationsManagement (OM) and International Business (IB). In the last few decades, manufacturing offshoring – the transfer of production facilities (captive offshoring) or supply basins (offshore outsourcing) to foreign locations (Ferdows, 1997) – has internationalization emerged as a major industry trend and, at the same time, as a popular research topic in Operations. Firms realized the advantages and the unexpected costs and risks of offshoring (Patrucco et al, 2016). For this reason, companies reconsidered their choices with the growth of phenomena such as reshoring and right-shoring (Johansson and Olhager, 2018). 2.1 Literature background A wide set of OM and IB studies have been devoted to international location choices (offshoring and manufacturing internationalization). According to Dunning categorization, offshoring drivers can be described as:
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