The Global Recession and the Shift to Re-Shoring: Myth or Reality?

Posted: 28 Dec 2017 Last revised: 20 Feb 2018

See all articles by Agelos Delis

Agelos Delis

Aston University - Aston Business School; University of Nottingham - Nottingham Centre for Research on Globalisation and Economic Policy

Nigel Driffield

University of Warwick - Warwick Business School

Yama Temouri

Aston University

Date Written: December 21, 2017

Abstract

Despite the high degree of attention that re-shoring has recently attracted in the media, we lack detailed understanding of the drivers of such an important strategic change by a multinational enterprise (MNE). We offer the first large-scale analysis of the factors that influence a firm's decision to re-shore. Our analysis is based on 3683 MNEs from 14 developed countries investing in 66 host countries over the period 2006–2013. Our results suggest that increased re-shoring was triggered by the downturn in the West resulting from the recent global financial crisis. However, our results show that the effect of the global financial crisis on re-shoring is smaller when the distance between parent and subsidiaries becomes larger. In turn, as distance increases, the importance of relative costs declines in explaining re-shoring activity. Finally, MNEs who have engaged in re-shoring in the past are more likely to re-shore again.

Keywords: Multinational enterprises, Re-shoring, Foreign direct investment, Global recession

JEL Classification: F20, F23, F44

Suggested Citation

Delis, Agelos and Driffield, Nigel and Temouri, Yama, The Global Recession and the Shift to Re-Shoring: Myth or Reality? (December 21, 2017). Journal of Business Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3091855

Agelos Delis (Contact Author)

Aston University - Aston Business School ( email )

Aston Triangle
Birmingham, B47ET
United Kingdom

HOME PAGE: http://www1.aston.ac.uk/aston-business-school/staff/academic/esg/dr-agelos-delis/

University of Nottingham - Nottingham Centre for Research on Globalisation and Economic Policy ( email )

School of Economics
University Park
Nottingham, NG7 2RD
United Kingdom

Nigel Driffield

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Yama Temouri

Aston University ( email )

Aston Triangle
Birmingham, B4 7ET
United Kingdom

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