Backshoring of production in the context of a small and open Nordic economy

Abstract

Purpose The purpose of this paper is to investigate the extent, drivers, and conditions underlying backshoring in the Finnish manufacturing industry, comparing the results to the wider ongoing relocation of production in the international context. Design/methodology/approach The survey of 229 Finnish manufacturing firms reveals the background, drivers, and patterns of offshoring and backshoring. Findings Companies that had transferred their production back to Finland were more commonly in industries with relatively higher technology intensity and they were typically larger than the no-movement companies, and with a higher number of plants. They also reported more commonly having a corporate-wide strategy for guiding production location decisions. Research limitations/implications Backshoring activity in the small and open economy of Finland seems to be higher compared to earlier studies in larger countries. The findings suggest that there is a transformation in the manufacturing industries with some gradual replacement of labor-intensive and lower technology-intensive industries toward higher technology-intensive industries. Practical implications Moving production across national borders is one option in the strategies of firms to stay competitive. Companies must carefully consider the relevance of various decision-making drivers when determining strategies for their production networks. Social implications Manufacturing industries have traditionally been important for employment in the relatively small and open economies of the Nordic countries. From the social perspective, it is important to understand the ongoing transformation and its implications. Originality/value There are few empirical studies available of the ongoing backshoring movement, utilizing data from company decision makers instead of macroeconomic factors.