Benchmarking Global Production Sourcing Decisions: Where and Why Firms Offshore and Reshore

38 Pages Posted: 8 Jan 2020

See all articles by Morris A. Cohen

Morris A. Cohen

University of Pennsylvania - The Wharton School

Shiliang Cui

Georgetown University - McDonough School of Business

Ricardo Ernst

Georgetown University - Robert Emmett McDonough School of Business

Arnd Huchzermeier

WHU - Otto Beisheim School of Management

Panos Kouvelis

Washington University

Hau L. Lee

Stanford Graduate School of Business

Hirofumi Matsuo

Kobe University

Marc Steuber

WHU - Otto Beisheim School of Management

Andy Tsay

Santa Clara University - Leavey School of Business

Date Written: May 25, 2016

Abstract

This paper reports on the results of a global field study conducted in 2014 and 2015 among leading manufacturers from a wide range of industries. It provides insights on managerial practices that concern production sourcing and on the factors that drive such decisions. Exploratory factor analysis and logistic regression models that use survey response data yield seven key findings. (1) Companies are currently restructuring their global production footprints. (2) The majority of firms engage in offshoring; reshoring does occur but seldom for corrective reasons. (3) North America may be at the cusp of a manufacturing renaissance, but not because of reshoring. (4) China remains the most attractive site for production sourcing, followed by the developing economies in Eastern Europe and Southern Asia. (5) Manufacturing continues to decline in the developed economies of Japan and Western Europe. (6) Labor cost no longer drives decisions about manufacturing location; rather, firms decide based on complex trade-offs among a variety of factors. (7) Firms localize production in developed economies and use developing economies as production hubs.

Keywords: manufacturing location decisions, offshoring, reshoring

JEL Classification: M11

Suggested Citation

Cohen, Morris A. and Cui, Shiliang and Ernst, Ricardo and Huchzermeier, Arnd and Kouvelis, Panos and Lee, Hau L. and Matsuo, Hirofumi and Steuber, Marc and Tsay, Andy, Benchmarking Global Production Sourcing Decisions: Where and Why Firms Offshore and Reshore (May 25, 2016). Georgetown McDonough School of Business Research Paper No. 3434284; Stanford University Graduate School of Business Research Paper No. 3434284. Available at SSRN: https://ssrn.com/abstract=3434284 or http://dx.doi.org/10.2139/ssrn.3434284

Morris A. Cohen

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104
United States

Shiliang Cui

Georgetown University - McDonough School of Business ( email )

Washington, DC 20057
United States

Ricardo Ernst

Georgetown University - Robert Emmett McDonough School of Business ( email )

37th and O Streets, NW
Washington, DC 20057
United States

Arnd Huchzermeier

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany
+49-261-6509380 (Phone)
+49-261-6509389 (Fax)

HOME PAGE: http://www.whu.edu/prod

Panos Kouvelis

Washington University ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Hau L. Lee

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Hirofumi Matsuo

Kobe University ( email )

2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501, 657-8501
Japan

Marc Steuber (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

HOME PAGE: http://www.whu.edu/prod

Andy Tsay

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Dept of Info Systems & Analytics (ISA)
Santa Clara, CA California 95053
United States

HOME PAGE: http://www.scu.edu/business/isa/faculty/tsay.cfm

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
41
Abstract Views
201
PlumX Metrics