Factors for Considering Manufacturing Investment Decisions in Finland vs Abroad: A Mixed-method Comparison of Large and Small Firms
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With the advent of modern transportation and communication technologies, businesses could globalize their operations easily. Companies relished the freedom to capture the cost benefits of resources by offshoring all or some part of their manufacturing to lower cost countries. However, the benefits started to cease with time resulting in rising costs, quality issues and other risks. Therefore, some of the same businesses started to ponder on options to reclaim the manufacturing advantages elsewhere, especially back home giving rise to the phenomenon called reshoring. The objective of this thesis is to identify the factors influencing the decision to offshore, reshore, or initiate new investments in Finland. The primary focus is on the manufacturing companies based in Finland and the impact of the identified factors on their decision-making. The study explores the factors that pushed manufacturing companies to leave Finland in the first place, and then goes on to identify the pull factors that brought them back from their earlier offshored production location. In order to initiate the production location discussion of manufacturing companies, database study was conducted to reveal the investment trend, magnitude and countries of investment locations by large Nordic manufacturing companies. The results show large investments both in terms of number and magnitude made abroad compared to investments in home country. This was followed by qualitative research conducted in two Finnish manufacturing firms. Semi-structured interviews were organized with key personnel involved in offshoring and reshoring decision-making. Various push and pull factors present in offshoring from and reshoring to Finland were identified and discussed in detail. The study is limited to primary information collection from small and medium enterprises and their decision drivers. In future, however, more SMEs and large enterprises could also be involved in the research and analysis.