What is reshoring and what is it not?

Author: Albachiara Boffelli

While I was about to start writing an article concerning the impact of Covid-19 on the reshoring phenomenon (spoiler alert: this will be one of the future articles on the Young SCholars blog), I realized that, most likely, many of our readers first needed clarification of what reshoring is and what it is not. If you are thinking “Yes, I’m one of them”, do not worry! It took me three years of PhD research to understand the many different perspectives and to find a satisfying definition of the phenomenon. In this article, my aim is to guide you through a similar learning process. Starting from the term etymology, “Reshoring” is made of the prefix “Re” and the word “shoring”, as such it entails the reconsideration of a shoring, or, in other words, a location decision. This first consideration is essential to highlight that reshoring is basically a location, or better, a relocation decision.

Depending on the destination, the reshoring can be characterized as:

• Backshoring: return to the home country;
• Nearshoring: relocation to the home region (e.g., Europe for Italian companies);
• Further offshoring: relocation to another offshore country.

Together with the location decision, a company also has to consider whether to make internally (in-house production) or to buy externally (outsourced production). Therefore, the location and the make or buy decisions are strictly intertwined, allowing to identify different types of reshoring. To help to visualize the set of alternatives available to reshoring companies, I developed the following picture in my final dissertation (and I am looking forward to knowing what our readers think about it):

Relocation options. Source: Boffelli (2020), “Exploring the reshoring process: advancing knowledge through primary and secondary case studies.”

This picture outlines all the different relocation options that have been identified in the literature, to the best of my knowledge. Being offshoring the precursor of reshoring, the starting point to read the graph is the offshore country. From there, a company can choose among further offshoring (red arrows), nearshoring (blue arrows), and reshoring (green arrows). Moreover, for each location decision, the different options connected to the ownership both in the starting and final country are highlighted and named in analogy with Gray et al. (2013). Nowadays, scholars have reached a common understanding on what reshoring is, and the so-called “What” question can be considered as answered. To me, the most satisfying definition of the relocation to the home country was provided by Fratocchi et al. (2014), who defined “Back-reshoring” as “a voluntary corporate strategy regarding the home country’s partial or total relocation of (in-sourced or outsourced) production to serve the local, regional or global demands”. Hopefully, this article helped in clarifying what scholars mean by “Reshoring”. Of course, research has then moved from explaining “What” reshoring is to answer to other questions (for an extensive literature review, refer to Barbieri et al. (2018)). These questions might be addressed in future articles, stay tuned!