Artificial Intelligence and Backshoring Strategies

Abstract

The Industry 4.0 technologies, such as artificial intelligence (AI), are transforming the manufacturing processes and affecting the location of manufacturing activities across countries, with a potentially positive impact on the backshoring of production processes. The chapter aims at providing empirical evidence on the relationship between AI and relocation, exploring how AI is related to both the offshoring and backshoring strategies, using data from an international sample of 124 German and Italian manufacturing companies. Following the investigation of AI use by German and Italian manufacturing companies, the study analyses the differences in some strategic factors and the offshoring and backshoring decisions between German and Italian companies, AI users and non-users, and between the German and Italian AI users. Results show that the most important differences concern AI users and non-users and indicate a higher value of AI use for backshoring rather than offshoring strategies. The findings enable the derivation of both theoretical and managerial contributions.