Backshoring in Light of the Concepts of Divestment and De-internationalization: Similarities and Differences

Abstract

Objective: The purpose of this article is to evaluate the adequacy of the present theoretical knowledge relating to divestments and de-internationalization in the context of explaining the backshoring phenomenon – a relatively new, but gaining in importance specific behaviour of companies in the process of internationalization.

Research, Design & Methods: The paper discusses various aspects of contemporary processes of internationalization. The employed research design is qualitative – the study has been based on conclusions drawn from critical literature studies.

Findings: Although backshoring shares some common characteristics with the concepts of de-internationalization and international divestments, there are several noticeable differences: e.g. both de-internationalization and international divestments are rather related to wholly owned subsidiaries, while backshoring includes both activities outsourced to company’s foreign suppliers and to its subsidiaries.

Implications & Recommendations: It is necessary to develop new concepts that in a holistic way will define the decision-making process of enterprises which use
de-internationalization and backshoring of business processes as part of their long-term internationalization strategies. The article indicates some dependencies and issues that must be considered in formulating new theoretical proposals.

Contribution & Value Added: The originality of this study lies in the in-depth analysis of the similarities and differences between the processes of de-internationalization/international divestments and backshoring.

Keywords

backshoring, reshoring, international divestment, internationalization process, de-internationalization

References

1. Arlbjørn, J.S., & Mikkelsen, O.S. (2014). Backshoring manufacturing: Notes on an important but under-researched theme. Journal of Purchasing and Supply Management, 20(2), 60-62.
2. Bals, L., Daum, A., & Tate, W. (2015). From Offshoring to Rightshoring : Focus on the Backshoring Phenomenon. Academy of International Business Insights, 15(4), 3-8.
3. Benito, G. (2005). Divestment and international business strategy. Journal of Economic Geography, 5(2), 235-251.
4. Benito, G., & Welch, L. (1997). De-Internationalization. Management International Review, 37(2), 7-25.
5. Benito, G., Petersen, B., & Welch, L. (2009). Towards More Realistic Conceptualisations of Foreign Operation Modes. Journal of International Business Studies, 40(9), 1455-1470.
6. Boddewyn, J. (1979). Foreign divestment. Magnitude and factors. Journal of International Business Studies, 10(1), 21-27.
7. Burt, S., Dawson, J., & Sparks, L. (2003). Failure in International Retailing: research propositions. International Review of Retail Distribution and Consumer Research, 13(4), 355-373.
8. Calof, J., & Beamish, P. (1995). Adapting to Foreign Markets: Explaining Internationalization. International Business Review, 4(2), 115-131.
9. Chow, Y.K., & Hamilton, R.T. (1993). Corporate divestment: An overview. Journal of Managerial Psychology, 8(5), 9-13.
10. Cranfrield University (2015). An Analysis of the UK's Capability to Reshore Production. A White Paper by Cranfield University.
11. Duhaime, I.M., & Grant, J.H. (1984). Factor s influencing divestment decision-making: Evidence from a field study. Strategic Management Journal, 5(4), 301-318.
12. Fletcher, R. (2001). A holistic approach to internationalization. International Business Review. 10(1), 25-49.
13. Fratocchi, L., Di Mauro, C., Barbieri, P., Ancarani, A., Lapadre, L., & Zanoni, A. (2014). Manufacturing Reshoring: Threat or opportunity for East Central Europe and Baltic Countries. In A. Zhuplev. & K. Liuhto (Ed.), Geo-Regional Competitiveness in Central and Eastern Europe, the Baltic Countries, and Russia (pp. 83-118). Hershey, PA: IGI Global.
14. Fratocchi, L., Ancarani, A., Barbieri, P., Di Mauro, C., Nassimbeni, G., Sartor, M., Vignoli, M., & Zanoni, A. (2015). Manufacturing back-reshoring as a nonlinear internationalization process. In R. van Tulder, A. Verbeke & R. Drogendijk (Ed.), The Future of Global Organizing (Pro-gress in International Business Research (pp. 365-403). Emerald Group Publishing Limited.
15. Gray, J.V., Skowronski, K., Esenduran, G., & Rungtusanatham, J.M. (2013). The reshoring phenomenon: What supply chain academics ought to know and should do. Journal of Supply Chain Management, 49(2), 27-33.
16. Iozia, E.M., & Leirião, J.C. (2014). Opinion of the European Economic and Social Committee on the Reshoring of EU industries in the framework of reindustrialization. Retrieved on January 10, 2016 from European Economic and Social Committee: http://eur-lex.europa.eu
17. Kinkel, S. (2014). Future and impact of backshoring - Some conclusions from 15 years of research on German practices. Journal of Purchasing and Supply Management, 20(2), 63-65.
18. Kinkel, S. (2012). Trends in production relocation and backshoring activities. International Journal of Operations & Production Management, 32(6), 696-720.
19. Leibl, P., Nischler, C., Morefield, R., & Pfeiffer, R. (2009). An analysis of off-shoring manufacturing to reduce costs. Journal of Business and Behavioural Sciences, 21(1), 130-139.
20. Marti­nez-Mora, C., & Merino, F. (2014). Offshoring in the Spanish footwear industry: a return journey?. Journal of Purchasing & Supply Management, 20(4), 225-237.
21. Mata, J., & Portugal, P. (2000). Closure and Divestiture by Foreign Entrant: The Impact of Entry and Post-Entry Strategies. Strategic Management Journal, 21(5), 549-562.
22. Mellahi, K. (2003). The De-internationalization Process: A Case Study of Marks and Spencer. In C. Wheeler, F. McDonald & I. Greaves (Ed.), Internationalization: Firm Strategies and Man-agement (pp. 150-162). Palgrave Macmillan UK. doi: 10.1057/9780230514638
23. Mińska-Struzik, E., & Nowara, W. (2014). Dylematy badań nad internacjonalizacją przedsiębiorstwa. International Business and Global Economy, 33, 394-405.
24. Młody, M. (2015). Istota i motywy podejmowania przez przedsiębiorstwa strategii reshoringu. Prace Naukowe Wyższej Szkoły Bankowej w Gdańsku, 40, 209-223.
25. Moradlou, H., & Backhouse, C. (2015). Re-shoring UK Manufacturing Activities, Supply Chain Man-agement & Postponement Issues. Paper presented at the 18th Annual Cambridge International Manufacturing Symposium: Capturing value from global networks: implications for manufacturing, supply chains and industrial policy. Retrieved on January 10, 2016 from http://www.ifm.eng.cam.ac.uk
26. Pearce, J.A. (2014). Why domestic outsourcing is leading America's reemergence in global manu-facturing. Business Horizons, 57(1), 27-36.
27. Porter, M.E. (1976). Please note location of nearest exit: Exit barriers and planning. California Management Review, 19(2), 21-33.
28. Reiljan, E. (2004). Reasons for de-internationalization: an analysis of Estonian manufacturing companies. Workshop paper on 30th EIBA Annual Conference: Enlarged European Union: Chal-lenges to International Business and Management, Ljubljana.
29. Simoes, V.C. (2005). Divestment by foreign-based companies: Portuguese experiences. Paper presented at the conference: Relocation of production and jobs to CEE countries - who gains and who loses? Hamburg: Hamburg Institute of International Economics.
30. Tate, W.L., Ellram, L.M., Schoenherr, T., & Petersen, K.J. (2014). Global competitive conditions driving the manufacturing location decision. Business Horizons, 57(3), 381-390.
31. Turcan, R.V. (2011). De-internationalization: A conceptualization. Paper presented at AIB-UK & Ireland Chapter Conference: International Business: New challenges, new forms, new prac-tices, Edinburgh, United Kingdom.
32. UNCTAD (2013). World Investment Report 2013: Global Value-Chains: Investment and Trade for Development. New York and Geneva: UNCTAD.
33. UNCTAD (2014). World Investment Report 2014: Investing in the SDGs: An Action Plan. New York and Geneva: UNCTAD.
34. Van den Bossche, P., Gupta, P., Gutierrez, H., & Gupta, A. (2014). Solving the Reshoring Dilemma. Supply Chain Management Review, 18(1), 26-33.
35. Welch, C., & Welch, L. (2009). Re-internationalization. Exploration and conceptualisation. Interna-tional Business Review, 18(6), 567-577.
36. Welch, L., & Luostarinen, R. (1988). Internationalization: Evolution of a Concept. Journal of General Management, 14(2), 34-55.