RIGHT-SHORING: OFFSHORING TO RESHORING FOR A SUSTAINABLE MANUFACTURING LOCATION DECISION IN THE HEALTHCARE INDUSTRY

Author

Gawon Yun, University of Rhode IslandFollow

Date of Award

2020

Degree Type

Dissertation

Degree Name

Doctor of Philosophy in Business Administration

Specialization

Operations and Supply Chain Management

Department

Business Administration

First Advisor

Douglas N. Hales

Abstract

Firms have increasingly offshored manufacturing to foreign countries in the past decades due to the expected benefits driven by low manufacturing costs in developing economies. With changes in competition and government pressure for domestic production, however, manufacturing firms have reevaluated these decisions leading some to reshore manufacturing activities. Recent studies have investigated various reshoring motivations and developed conceptual frameworks that can be used as tools in reshoring decisions. However, the complexity in decision making remains high due to product and industry specific traits impacting the manufacturing process. Examples include the increasing concern over product quality and changing regulations. Two industries that are heavily impacted by reshoring decisions are medical device and pharmaceutical companies. Theoretical support for these decisions have been limited with most studies relying on Transaction Cost Economics (TCE) and Resource Based Review (RBV). While valuable, these theories are insufficient to explain the growing number of decision variables involved in reshoring. This study proposes that Dunning’s ownership, location, and internalization (OLI) framework explains more of the recent decision variables related to reshoring. Based on four sub-paradigms of the OLI framework, this study develops a reshoring decision model using a systematic literature review (SLR) and semi-structured interviews. Then, the study tests the model using a large-scale survey. Results show that reshoring decisions in the medical device and pharmaceutical industries are dominated by quality and regulatory requirements that involve long and complex validation processes, among others. Lastly, using authentic industry parameters in an analytical model, this study demonstrates the impact of reshoring and offshoring cost factors on reshoring decisions. Managerial and theoretical implications are discussed.

Recommended Citation

Yun, Gawon, "RIGHT-SHORING: OFFSHORING TO RESHORING FOR A SUSTAINABLE MANUFACTURING LOCATION DECISION IN THE HEALTHCARE INDUSTRY" (2020). Open Access Dissertations. Paper 1137.
https://digitalcommons.uri.edu/oa_diss/1137