Manufacturing Relocation Ambiguity Model: A Prerequisite for Knowledge Management

Abstract

AbstractKnowledge management and manufacturing relocation have been treated as independent spheres. However, for a relocation to be fruitful, knowledge management needs to be incorporated. The purpose of this research is to shed light on the lack of knowledge management in dynamic manufacturing relocation. In particular, the research focuses on the ability to change, adapt and revert manufacturing relocation decisions, that is, the dynamic nature (or use) of the concept. A Swedish company was used as a case study. Nine in‐depth interviews were conducted with key informants at the company's headquarters in Sweden and its factory in China to capture a dyadic perspective. The findings demonstrate that: (1) knowledge transfer is crucial to create/sustain competitive advantage in the offshoring and reshoring phase; (2) lack of knowledge transfer results in limited learning outcomes with operational and strategic consequences in the relocation; (3) resistance to knowledge transfer in the offshoring creates a knowledge gap that consequently leads to relocation ambiguity in the reshoring phase; and (4) companies need to develop knowledge management strategies to promote knowledge transfer and learn from their international relocation, to cope with relocation ambiguity. Our theoretical contribution introduces the knowledge ambiguity framework, which is a result of insufficient knowledge transfer in the dynamic manufacturing relocation. Even if an organization relocates efficiently, it can fail to take advantage of knowledge transfer and development as potential learning for the organization.