Network effects of partial reshoring in the internationalization process

Abstract

A growing number of firms is considering reshoring as an option to cope with the increasingly complex international business environment. However, especially when concerning only part of the activities outsourced to suppliers, reshoring may harm the firm’s business relationships in the host country and restrain access to essential resources and capabilities. This paper examines the impact that reshoring outsourced activities has on the host-country network. Building on a case study and key concepts from the business network view of internationalization, the study reveals concurring but contrasting effects for the reshoring firm: the tangible commitment of the firm and its structural embeddedness in the foreign market diminish, while the intangible commitment and relational embeddedness simultaneously increase. Accordingly, the resulting host-country network counts fewer but deeper relationships. The study advances our knowledge of both internationalization and reshoring. The former is extended by furthering the understanding of the network and nonlinear views of internationalization, while the latter by exposing the multidirectional network effects of partial reshoring and discussing it in relation to recent global disruptions.