Reshoring and insourcing: drivers and future research directions

Abstract

Purpose – Reshoring and insourcing decisions have been discussed in the popular press, yet coverage of these topics in the academic literature is limited. The purpose of this paper is twofold: first, it seeks to develop a more complete understanding of the underlying drivers of reshoring and insourcing decisions and their permutations. Second, it seeks to provide directions for future research to further analyze the link between drivers and outcomes of the reshoring and insourcing phenomena. Design/methodology/approach – This research follows a conceptual approach guided by transaction cost economics (TCE) and organizational buying behavior (OBB) theories. First, a theoretical framework of reshoring and insourcing decisions is developed. Next a comprehensive summary of reshoring and insourcing drivers is evaluated, yielding an in-depth discussion of future research directions (FRDs). Findings – The analysis demonstrates that the framework can be utilized to explain recent insourcing and reshoring changes of firms and to help dismantle the external and organizational challenges associated with reshoring and insourcing decision making. Research limitations/implications – Three FRDs are presented in the light of TCE and OBB. A fourth research direction highlights additional contextual factors outside the scope of these two theoretical lenses. These four research directions yield insightful implications for scholars and contribute to the emerging reshoring and insourcing literature. Practical implications – The full array of potential reshoring and insourcing permutations are structured to allow for an elaboration of their respective drivers. Moreover, enablers and obstacles in implementing the multitude of combined reshoring and insourcing decisions are highlighted and summarized as contextual variables. Originality/value – The concluding conceptual framework guides the evaluation of the reshoring and insourcing driver-outcome relationship across various value creation tasks and provides guidance to scholars and managers alike.