For several decades, firms in developed countries have strategically offshored manufacturing and production activities to emerging economies mostly to exploit cost advantages,
while locating value-adding, knowledge-intensive activities in advanced countries to benefit from knowledge pool (Contractor et al., 2010; Doh et al., 2009).
After decades of offshoring of both production and services (the latter still a growing phenomenon), some companies have started to relocate their offshore activities either back to home countries
or to other offshore locations. In this paper, we adopt the term “reshoring” to indicate the voluntary (i.e. not forced by host country governments) partial or total relocation of business initiatives previously offshored,
whether to another location or back home. Namely, we refer to the relocation of business processes and activities of companies operating in manufacturing and service industries. The relevance of the phenomenon
has been acknowledged by the economic press (The Economist, 2013a), consultancy companies (Sirkin et al, 2013), and transnational institutions (UNCTAD, 2013). The U.S. Administration is challenging traditional free-trade cornerstones
to bring back home some production activities (Tate, 2014), and, recently, the European Union is considering (or designing) policies to support the re-industrialization (EPRS, 2014).
Although the debate has mostly regarded manufacturing activities, some companies are beginning to take back home service jobs, for instance General Electric and General Motors have decided to reshore IT services
(The Economist, 2013b).
Despite the rising interest in mass media and public opinion towards reshoring, there is almost no research on the phenomenon of the reshoring of business services, and relatively limited scholarly research on the reshoring of manufacturing operations
(e.g., Arlbjørn and Mikkelsen, 2014; Ellram, 2013; Ellram et al. 2013; Fratocchi et al., 2014; Gylling et al, 2015; Kinkel and Maloca, 2009; Martinez-Mora and Merino, 2014; Tate et al., 2014).
This may be due to the lack of systematic data available on this phenomenon, and its relatively little scale. However, this phenomenon is likely to become more pronounced.
Market adjustments are weakening imbalances between advanced and emerging economies in terms of the main drivers underlying the offshoring of business services, i.e.
the quest of cost savings and the recruiting of qualified personnel (Lewin et al., 2009; Manning et al., 2008). On the one hand, over time, labour costs are raising in emerging economies
and declining in advanced countries where unemployment rates indicate over supply in the labour market (Arlbjorn and Mikkelsen, 2014; Van Den Bossche et al., 2014).
These trends suggest that reshoring is much more than a managerial fad and it represents a raising opportunity, as well as a threat, for managers and policy makers in advanced and emerging economies.
In order to discuss the potential implications associated to this phenomenon, a deeper understanding and empirical analyses are required.
The literature explains reshoring of manufacturing as a consequence of performance shortcomings (Fratocchi et al., 2014; Kinkel and Maloka, 2009; Kinkel, 2012).
We argue that reshoring of business services may be due not only to not reaching the objectives underlying offshoring decisions, i.e., a somewhat unsatisfactory performance,
but also to the desire to continue pursuing the original offshoring strategy when external conditions change, even if the performance of offshoring operations is satisfactory.
Offshoring decisions have been discussed within the framework based on disintegration, localization and externalization advantages (Kedia and Mukherjee; 2009).
Our empirical analysis relies upon original data from the Offshoring Research Network (e.g. Lewin and Peeters, 2006), and confirm that these factors can explain also reshoring decisions, in addition to performance shortcomings.
