Please dont go! Understanding the host-country factors affecting relocation choices to minimize job losses

Albachiara Boffelli, Paolo Barbieri, Stefano Elia, Luciano Fratocchi, Matteo Kalchschmidt, Daniele Sirtori and Maddalena Spreafico

Chapter 11 in Research Handbook on Foreign Exit, Relocation and Re-entry, 2022, pp 235-258 from Edward Elgar Publishing

Abstract: Manufacturing offshoring has been a strategy widely implemented by manufacturing firms to gain a competitive advantage. More recently, firms have begun to modify their internationalization strategies by choosing to undertake Relocations of Second Degree (RSD) initiatives, i.e. a change of location with respect to the First Host Country either towards a Second Host Country (re-internationalization) or towards the Home Country of the foreign firm (de-internationalization). This research aims to analyze how the intensity of RSDs, expressed in terms of jobs lost in the First Host Country, is affected by different Host Country-specific Factors. By relying on data from the European Restructuring Monitor, including 281 observations of intra-EU relocations that occurred between 2002 and 2018, we highlight that the job reduction occurs less intensively if Country B's business environment is characterized by a high degree of R&D expenditures, skilled workforce and flexible labour market. Similarly, when host countries present a decreasing level of wages and a higher percentage of immigrants compared to emigrants, fewer jobs are relocated. Finally, in high-tech industries, the presence of Industry 4.0 policies in the First Host Country plays a relevant role in lightening the impact of workforce relocations.

Keywords: Business and Management; Economics and Finance (search for similar items in EconPapers)
Date: 2022
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