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A key decision facing firms is the extent of control to exert over the different stages in their production processes. We develop and test a property rights model of firm boundary choices along the value chain. We construct firm-level measures of the upstreamness of integrated and nonintegrated inputs by combining information on firms’ production activities in more than 100 countries with input-output tables. Whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand it faces. Moreover, integration is shaped by the relative contractibility of stages along the value chain, as well as by the firm’s productivity.

Research summary: We examine the role of firm strategy in the global effort to combat pollution. We find that U.S. plants release less toxic emissions when their parent firm imports more from low‐wage countries (LWCs). Consistent with the Pollution Haven Hypothesis, goods imported by U.S. firms from LWCs are in more pollution‐intensive industries. U.S. plants shift production to less pollution‐intensive industries, produce less waste, and spend less on pollution abatement when their parent imports more from LWCs. The negative impact of LWC imports on emissions is stronger for U.S. plants located in counties with greater institutional pressure for environmental performance, but weaker for more‐capable U.S. plants and firms. These results highlight the role of local institutions and firm capability in explaining firms' offshoring and environmental strategies. Managerial summary: Using confidential trade, production, and pollution data of more than 8,000 firms and 18,000 plants from the U.S. Census Bureau for years 1992–2009, we find that U.S. plants release less toxic emissions when their parent firm imports more from low‐wage countries (LWCs). In addition, goods imported by U.S. firms from LWCs are in more pollution‐intensive industries. U.S. plants shift production to less pollution‐intensive industries, produce less waste, and spend less on pollution abatement when their parent imports more from LWCs. However, not all U.S. firms choose to “offshore pollution.” U.S. plants located in counties with greater institutional pressure for environmental performance offshore more, but more‐capable U.S. plants and firms offshore less. Copyright © 2017 John Wiley & Sons, Ltd.

We employ data that match the population of Danish workers to the universe of private-sector Danish firms, with product-level trade flows by origin-and destination-countries. We document new stylized facts about offshoring and instrument for offshoring and exporting. Within job spells, offshoring increases (decreases) the high-skilled (low-skilled) wage; exporting increases the wages of all skill-types; the net wage-effect of trade varies substantially within the same skill-type; conditional on skill, the wage-effect of offshoring varies across task characteristics. We estimate the overall effects of offshoring on workers' present and future income streams by constructing pre-offshoring-shock worker-cohorts and tracking them over time.

Purpose – The purpose of this paper is to present a framework for the analysis of reshoring. The framework is then applied to analyze motivations for reshoring, as they emerge from extant literature and from new evidence collected. Design/methodology/approach – The authors start by formulating a literature-grounded definition of reshoring and reviewing some key theoretical approaches for international manufacturing location. In light of these theories, the authors then propose an interpretative framework for the analysis of reshoring motivations. Finally, the authors provide new evidence on this phenomenon, by presenting the findings of an extensive data collection of reshoring cases built on secondary data. Findings – The authors show that a vast array of single drivers of reshoring can be extracted from extant literature; however, the interpretative framework eventually highlights four main typologies of reshoring motivations, thus allowing for a more sound comprehension of why the phenomenon happens. The empirical investigation proves also useful in comparing the relative importance of these motivations, as it reveals that value-driven and country-specific motivations prevail over efficiency-driven and firm-specific ones, respectively. Research limitations/implications – The study is based on the analyses of secondary data extracted from newspapers and magazine sources. Some motivations (and especially those that configure a “correction of a previous erroneous decision”) could have been underestimated. In addition, certain industries (e.g. clothing and footwear), certain countries (USA and China), and certain firms (large companies and MNCs) could have more visibility to the media. Another possible limitation is due to the fact that the classification work inherently implied some discretion and individual judgment. The authors however spent considerable efforts in cross-validating the assessments through extensive discussion within the research team. Originality/value – This is the first paper that summarizes the motivations of the rising reshoring phenomenon and interprets them based on an original theory-derived classification framework.

The literature has highlighted that the propensity of MNEs to co-locate offshore R&D labs with their production plants can vary substantially according to firm and industry characteristics. In this paper, we apply a novel two-stage estimation procedure that allows us to tease out this heterogenous behavior and investigate the factors that are associated with a higher propensity to colocate production and R&D activities abroad. Using data on 1483 greenfield international investments in R&D activities made by 855 firms in 587 cities worldwide, we uncover that the strength of the co-location effect is indeed highly heterogenous across firms. In particular, it is higher among firms with less international experience and geographical dispersion of international activities, as well as with a lower share of intangible assets. These results are consistent with the idea that co-location is a substitute for firms’ ability to coordinate complex and dispersed organizational structures, and that firms relying relatively less on codified knowledge can use co-location of offshore R&D and production to facilitate knowledge transfer across activities.

This study investigates estimation errors due to hidden costs—the costs of implementation that are neglected in strategic decision-making processes—in the context of services offshoring. Based on data from the Offshoring Research Network, we find that decision makers are more likely to make cost-estimation errors given increasing configuration and task complexity in captive offshoring and offshore outsourcing, respectively. Moreover, we show that experience and a strong orientation toward organizational design in the offshoring strategy reduce the cost-estimation errors that follow from complexity. Our findings contribute to research on the effectiveness of sourcing and global strategies by stressing the importance of organizational design and experience in dealing with increasing complexity.

Purpose The purpose of this paper is to clarify the rather blurry concept of reshoring and its main drivers and barriers. At the same time, the paper seeks to provide a much-needed overview of the scientific theories used in previous research on reshoring. Design/methodology/approach The paper gathers information from previous published research. Data were collected through a systematic literature review on “reshoring” using primarily qualitative research techniques. Through a structured keyword search and subsequent elimination of papers, 22 peer-reviewed journal papers made it into the final review. Findings There is currently no consensus on the definition or “theory of reshoring”. Drivers and barriers could be grouped into five different sets of dynamics: global competitive dynamics, home country, host country, supply chain and firm-specific. Research limitations/implications Researchers need to consider the future development of the field and work toward an accepted terminology. Models about reshoring decisions need to include several decision criteria, which goes beyond financial metrics. Practical implications Practitioners need to carefully consider the decision to reshore as to not make rushed decisions. The final decision needs to consider factors such as quality, risk and brand reputation. Originality/value The paper is, to authors’ knowledge, the first overview of earlier research in a research journal. It provides a much-needed overview of an emerging field that can hold great importance for both future research and production. The constructed framework structures the dynamics (drivers and barriers) associated with reshoring.

Research summary: In this article, we address the role of R&D offshoring strategies in the sales growth of small-and medium-sized enterprises (SMEs). We propose that different governance modes of R&D offshoring—insourcing versus outsourcing—may lead to growth, but that they differ in their effects. In turn, we argue that innovation mediates the relation between international R&D sourcing strategies and sales growth. Based on a large database of SME manufacturing enterprises in Spain, we find that offshore outsourcing positively affects sales growth both directly and indirectly, while offshore insourcing only affects sales growth indirectly via innovation results. The analysis reveals different contributions of each governance mode to sales growth and the mediating role of innovation in the relation between R&D offshoring and firm growth. Managerial summary: We analyze how different governance modes of international R&D sourcing—offshore insourcing and outsourcing—may contribute to growth in SMEs. Modes of offshore R&D outsourcing positively affect the growth of sales in two ways. One effect is direct, produced by improved efficiency, flexibility, enhanced resources, and access to new markets. And the other effect is indirect as offshore R&D outsourcing favors the achievement of innovations, and this in turn, positively affects firm growth. For their part, captive modes only exert an indirect effect. Offshore R&D insourcing contributes to the achievement of innovations, and thus, ultimately to firm growth in so far as these innovations enable SMEs to increase sales. Therefore, innovation results perform a mediating role in the relation between R&D offshoring and sales growth.