Impact of relocation strategy on brand trustworthiness and word-of-mouth: Experimental vignette research on the US fashion industry

Xinwei Li, Ying Kei Tse, Minhao Zhang and Hoang Dinh Phi

International Journal of Production Economics, 2023, vol. 257, issue C

Abstract: To avoid continued global uncertainty, multinational enterprises have begun to reconsider relocating operations to emerging countries. While re-shoring has been a phenomenon that is well studied, the literature largely overlooks the customer response to far-shoring. Therefore, this research investigates the effects of different far-shoring strategies on customer trustworthiness and satisfaction from the perspective of three countries - i.e., far-shoring country (Vietnam; N = 208), host country (China; N = 203), home country (US; N = 198). We conduct a three-stage experiment with four far-shoring conditions (i.e., production, design, production & design, remain) with three countries' consumers. Stage 1 carries the baseline measurement of customers' established brand preference; Stage 2 measures customers' trustworthiness and satisfaction changes after far-shoring motivation; Stage 3 measures customers' trust recovery after far-shoring decision. Results show that far-shoring to Vietnam (far-shoring economy) can significantly recover purchase intention compared with remaining in China. For the host economy (China), operating in China obtained the greatest purchase intention and word-of-mouth recovery. Lastly, for the home economy (US), relocating to Vietnam does not significantly impact customers' purchase intention recovery. However, the strategy of far-shoring design will lead to higher word-of-mouth recovery. Further, building on Eclectic Theory, we examined the “cost” of relocation from customers' perspective. Actionable winning relocation strategies are identified from the perspective of the far-shoring country, host country, and home country consumers, suggesting that businesses should consider the changes in purchase intention and word-of-mouth from customers’ points of view from different economies fully benefiting from relocation strategy and resource allocation.

Keywords: Relocation strategies; Far-shoring; Re-offshoring; Purchase intention; Word-of-Mouth; Trust recovery (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:257:y:2023:i:c:s0925527323000075

DOI: 10.1016/j.ijpe.2023.108775

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