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2023 (1)

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Dissertation
The Drivers and Consequences of Reshoring: A Difference-in-Difference Analysis with Different Treatment Timing
Authors: --- --- ---
Year: 2023 Publisher: Leuven KU Leuven. Faculteit Economie en Bedrijfswetenschappen

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Abstract

In times of increasing global value chain complexity, supply chain disruptions and geopolitical tensions, reshoring – i.e. the act of bringing back certain business operations from a foreign country – is gaining momentum. However, this trend and its impact is insufficiently researched. This thesis aims to increase awareness around reshoring by investigating the most prominent motivations and by evaluating the impact this strategic action has on several company variables such as revenues and the cost of employees. A difference-in-difference approach with different treatment timing in combination with propensity score matching is used to assess this impact. Results show that mainly quality-related reasons and increased use of technology such as automation are the most important drivers behind reshoring. Additionally, one can observe significantly increased revenues and a lower cost of employees in a number of years after reshoring, but in general, the average treatment effect is indecisive. Finally, these insights are projected on a potentially relevant industry for reshoring, i.e. the flax industry. To the author’s knowledge, this particular evaluation methodology has never been used to investigate the act of reshoring, nor have there been any studies to assess the impact of reshoring on company variables. Therefore, this thesis may function as a baseline for future research and for corporate managers reshoring.

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