Is Reshoring better than offshoring? the effect of offshore supply dependence

The aim of this paper is to investigate the effect of offshore supply dependence (OSD) on offshoring-reshoring profit comparisons. The authors find that OSD hampers a reshoring manufacturer's responsiveness to demand information updates and might significantly affect offshoring-reshoring comparisons, such that reshoring may yield lower profits than offshoring in many cases, including when offshoring has no baseline-cost advantage. The authors also find that OSD affects how salient costs (e.g., customs duties, shipping costs) affect offshoring-reshoring profit comparisons. Finally, they further identify common component designs as a mitigating measure to make reshoring more appealing under OSD.