Reshoring - Rational or Irrational Motives behind the Decision to Reshore

Abstract

Offshoring has historically been the norm for American originated multinational corporations (MNC), to utilize advantages specific for the offshore location, such as low wages. After several years of this trend a new phenomenon has emerged, which possibly can be a new and upcoming trend, called reshoring. Reshoring is the bringing back of an operation from the offshore nation to the country of origin, the ‘home country’. Why is this potential shift taking place? Since no theories are yet formulated purely for reshoring, this thesis will use different classical theories to analyze the reshoring phenomenon, in order to answer the research question “What are the motives behind reshoring?” The classical theories will be used on data found via case studies on reshoring MNCs and manufacturing competitiveness in two countries of focus, China and the United States. This thesis reveals and disregards both rational and irrational motives regarding the decision to reshore. It is concluded that there are motives that can be disregarded, motives that are non-generalizable as well as rational motives that are likely and generalizable for reshoring. However, there are also several irrational motives that are likely and generalizable, and when compared with the rational, the irrational motives seem to be more dominant. Due to non-generalizable motives for specific cases, reshoring could be rational, however this implies that reshoring, as a generalizable business strategy, would be irrational.