Further offshoring, nearshoring, and reshoring: Exploring the role of experience

Abstract Research Summary This study examines the role of firms' experience in shaping strategic decisions to relocate offshored activities. Adopting an experiential learning perspective, we test the influence of two types of experience—international production experience and reshoring experience—on the choice of relocating to another foreign country (i.e., further offshoring), the home region (i.e., nearshoring), or the home country (i.e., reshoring). The study highlights the contrasting influence of the different types of experience, the narrower relevance of reshoring experience to relocation decisions, and the potential substitution effect between further offshoring and nearshoring. It extends international strategy literature by highlighting how different types of experience influence relocation decisions, and reshoring research by introducing the concept of reshoring experience and by examining reshoring alongside other relocation options. Managerial Summary Firms frequently reconsider where to locate international operations to stay competitive. This study explores how firms' experience influences decisions to relocate activities to the following alternatives: another foreign country (i.e., further offshoring), the home region (i.e., nearshoring), or the home country (i.e., reshoring). We show that firms with extensive international production experience may favor further offshoring or nearshoring while being less inclined to reshore. Conversely, firms with prior reshoring experience tend to reshore, but face an internal managerial tension depending on the degree to which they possess each type of experience, as they exercise opposing forces on the reshoring decision. Managers should be aware of these patterns, which could facilitate, as well as limit, their relocation decision‐making.