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Reshoring vs. Offshoring: Why Companies Are Bringing Production Back Home
This study explores the recent waves of reshoring within Germany’s automotive sector, focusing on key firms such as BMW, Mercedes-Benz, Audi, and Porsche. Using a qualitative case study approach and grounded Transaction Cost Economics (TCE), Resource Based View (RBV), and Institutional Theory, the paper examines how factors such as rising coordination costs, supply chain disruptions, technological advancements (e.g., industry 4.0, AI) and sustainability regulations (e.g., the European Green Deal) drive reshoring decisions. Data was collected from public reports, press releases, and Industry analyses. Findings indicate that reshoring is driven not just with cost but is a strategic move toward building supply chain resilience, innovation capacity, and regulatory compliance. While some firms reshore as a response to offshore failures, others resort to proactive localization in order to be competitive in the long run. The study contributes to the literature on reshoring through the offering of sectoral, theory-guided analysis and emphasizing the institutional and technological transformation in reconfiguring the global value chain for the automotive sector