Making Reshoring Decisions - the Case of a Norwegian Manufacturing Firm

Abstract

Relocating activities to low-cost countries has been, and still is, a prevalent method of reducing production costs for manufacturing companies. In recent years, however, many companies have reconsidered this strategy, and started to move activities back to their home country. Opportunities to reduce labor costs through automation have certainly contributed to this process. The rationale behind the phenomenon, called \reshoring", has been discussed to a large extent in current research literature. How companies make such reshoring decisions, on the other hand, is generally under-researched (Wiesmann, Snoei, Hilletofth, & Eriksson, 2017). This will be the primary focus of this master's thesis, which aims to understand the role of managerial accounting information in reshoring decisions. In order to understand this, we have adopted a single case study methodology. Two embedded cases in a Norwegian manufacturing company have been studied by interviewing key decision-makers. We found that the company had a rather pragmatic approach to decisionmaking. Financial and non- nancial information were integrated by using a multi-criteria analysis method. This approach did not emphasize the quanti cation of qualitative factors, but drew on the experience of decision-makers to weigh qualitative factors. Important factors such as proximity to innovation environments, protection of intellectual property, and e ciency of communication without cultural boundaries had signi cant in uence on the decision. These factors are acknowledged by literature, but this thesis provides more in-depth understanding of how they a ect the reshoring choice. A model of the company's decision-making process is presented, and is found to have a distinct resemblance to the generic purchasing process de ned by van Weele (2014). For this company, reshoring is a special case of sourcing where the best option is in the home country.