The purpose of this research is to review and analyze in a systematic manner the current research published in peer-reviewed international scientific journals on the backshoring of manufacturing We identify 20 articles published from 2009 to early 2016 We classify and discuss the literature according to publication year, research methodology, industry type, and firm size Using content analysis, we identify 25 factors that are relevant for backshoring decision-making and categorize them into seven clusters that influence the decision to move manufacturing back These clusters are: cost, quality, time and flexibility, access to skills and knowledge, risks, market, and other factors Further, we provide a research agenda for further research on the phenomenon of moving manufacturing back

Manufacturing backshoring : a systematic literature review

https://www.nber.org/system/files/working_papers/w27264/w27264.pdf

COVID-19 doesn’t need lockdowns to destroy jobs: The effect of local outbreaks in Korea

Purpose




The purpose of this paper is to present recent empirical results concerning offshoring and backshoring of manufacturing from and to Sweden, to increase the understanding of manufacturing relocation in an international context. In particular, extent, geographies, type of production, drivers, and benefits of moving manufacturing in both directions are investigated.




Design/methodology/approach




The study is based on survey data from 373 manufacturing plants. The same set of questions is used for both offshoring and backshoring between 2010 and 2015, which allows similarities and differences in decision-making and results between the two relocation directions to be identified.




Findings




There are many significant differences between offshoring and backshoring projects. Labour cost is the dominating factor in offshoring, as driver and benefit, while backshoring is related to many drivers and benefits, such as quality, lead-time, flexibility, access to skills and knowledge, access to technology, and proximity to RD labour-intensive production is offshored and complex production is backshored.




Research limitations/implications




Plants that have both offshored and backshored think and act differently than plants that have only offshored or backshored, which is why it is important to distinguish between these plant types in the context of manufacturing relocations.




Practical implications




The experience of Swedish manufacturing plants reported here can be used as a point of reference for internal manufacturing operations.




Originality/value




The survey design allows a unique comparison between offshoring and backshoring activity. Since Swedish firms in general have been quite active in rearranging their manufacturing footprint and have experience from movements in both directions, it is an appropriate geographical area to study in this context.

Manufacturing relocation through offshoring and backshoring: The case of Sweden

Purpose




The purpose of this paper is to investigate the extent, drivers, and conditions underlying backshoring in the Finnish manufacturing industry, comparing the results to the wider ongoing relocation of production in the international context.




Design/methodology/approach




The survey of 229 Finnish manufacturing firms reveals the background, drivers, and patterns of offshoring and backshoring.




Findings




Companies that had transferred their production back to Finland were more commonly in industries with relatively higher technology intensity and they were typically larger than the no-movement companies, and with a higher number of plants. They also reported more commonly having a corporate-wide strategy for guiding production location decisions.




Research limitations/implications




Backshoring activity in the small and open economy of Finland seems to be higher compared to earlier studies in larger countries. The findings suggest that there is a transformation in the manufacturing industries with some gradual replacement of labor-intensive and lower technology-intensive industries toward higher technology-intensive industries.




Practical implications




Moving production across national borders is one option in the strategies of firms to stay competitive. Companies must carefully consider the relevance of various decision-making drivers when determining strategies for their production networks.




Social implications




Manufacturing industries have traditionally been important for employment in the relatively small and open economies of the Nordic countries. From the social perspective, it is important to understand the ongoing transformation and its implications.




Originality/value




There are few empirical studies available of the ongoing backshoring movement, utilizing data from company decision makers instead of macroeconomic factors.

Backshoring of production in the context of a small and open Nordic economy

In 1996, the World Bank committed itself to becoming a 'global knowledge bank,' using knowledge to improve the development effectiveness of its work. In fiscal 2008, the Bank reiterated its focus on knowledge and learning, naming it as one of its six strategic directions. This evaluation focuses on two of the analytical and advisory activities through which the Bank provides knowledge to its client countries: economic and sector work (ESW) and nonlending technical assistance (TA). This evaluation found that the majority of ESW and TA met their objectives at least to an average extent during fiscal 2000-06, although there were substantial differences across countries and tasks. ESW and TA of higher technical quality were clearly more effective in meeting their objectives. Close collaboration with clients during the process mattered for effectiveness, whether clients actually produced part of the task or not. Sustained follow-up after the completion of the tasks was important for effectiveness. Whether clients requested the tasks did not matter for effectiveness, although all tasks needed to be tailored to client needs and interests to be effective. ESW and TA were less effective in countries where government capacity was lower. Clients in middle-income countries prefer nonlending to lending services, and clients in all countries prefer TA over ESW.

Using knowledge to improve development effectiveness : an evaluation of World Bank economic and sector work and technical assistance, 2000-2006

How does the entry of large discount stores increase retail employment? Evidence from Korea ✩

In contrast to the existing offshoring literature that typically views foreign outsourcing and integration as alternative strategies, the simultaneous use of these two offshoring strategies by multinational firms becomes common practice in many countries. In this paper, we employ bivariate choice models to investigate firm-level decision-making on foreign outsourcing and insourcing strategies. Analyzing Korean firm-level data, we find a possible complementarity between the two strategies and that a firm’s choice of multiple sourcing strategies is related to its expected gains from increased bargaining power, reduced price risk in purchasing inputs, and costs saved in the production process. Furthermore, our empirical results reveal distinctive roles of various firm-specific characteristics in determining the two foreign sourcing strategies adopted by Korean manufacturing firms.

Choosing multiple offshoring strategies: Determinants and complementarity

Using the Census on Establishments data in Korea, the present study revisits the role of firm age and size to explain aggregate employment dynamics. We confirm the finding of Haltiwanger et al. that no systematic inverse relationship exists between net job growth and firm size once firm age is controlled for. We find that small businesses are driving forces of aggregate employment growth but that such high growth is mostly driven by the entry of very small firms, which is offset by job destructions of a similar magnitude. Moreover, entrepreneurial activity occurs among very small firms, whereas large start-ups are rarely observed.

Job Creation and Destruction: New Evidence on the Role of Small Versus Young Firms in Korea

Using the Census on Establishments collected by Statistics Korea, we analyze how the patterns of job creation and destruction differ across counties (si-gun-gu) We measure aggregate employment changes due to establishment startups, expansions, contractions, and shutdowns for each county and quantif

/pdf/job-creation-destruction-and-regional-employment-growth-4rccdsjm2e.pdf

Job Creation, Destruction, and Regional Employment Growth: Evidence from Korean Establishment-level Data

The internet is profoundly transforming every aspect of production and business processes. Firms now employ various applications of the internet for the purpose of marketing, supply-chain management, human resources management, and etc. Consequently, the use of internet can provide firms with an opportunity to enhance productivity and develop new goods and services. Even though the positive benefits of the internet on business activities seem to be obvious, there have been few empirical studies which carefully quantify the effects of the internet on firm performance. It is essential to explore firm-level data in order to understand the exact economic impact of internet use. This study investigates the effects of internet use on labor productivity, sales, and employment growths at the firm-level in Korea using data from the Survey of Business Activities for the period of 2006-2008. The survey is annually conducted by the Statistics Korea and covers all firms in both the manufacturing and service sectors, with more than 50 employees. The estimation sample includes 7,873 manufacturing firms and 4,346 service firms. The results of the study indicate that a firm using the internet in its production and business processes has about 1.5%p higher annual labor productivity growth rate and 0.6%p higher sales growth rate than a firm not using the internet. The results also suggest that the annual growth rate of employment for a firm using the internet is about 1.4%p higher than that for a firm not using the internet. The analysis on a subsample of manufacturing and service sector firms shows that the positive effects of internet use on the growth rates of labor productivity and sales are much more significant for manufacturing firms than for service sector firms. The effect of internet use on employment, on the other hand, is similar for manufacturing and services sector firms.

Janghee Cho

Papers

How does the entry of large discount stores increase retail employment? Evidence from Korea ✩

Choosing multiple offshoring strategies: Determinants and complementarity

Job Creation and Destruction: New Evidence on the Role of Small Versus Young Firms in Korea

Job Creation, Destruction, and Regional Employment Growth: Evidence from Korean Establishment-level Data

The Effects of Internet Use on Productivity and Growth at the Firm Level