A Behavioral and Risk-Management View of Reshoring

This paper adopts risk management arguments in line with the behavioral view of the internationalization process of firms to offer an alternative view of the phenomenon of reshoring. So far, research has been looking at reshoring as a decision, based on arguments of full or at least bounded rationality, in accordance with assumptions from the economic tradition. We conceptualize reshoring as part of firms’ nonlinear internationalization process and we extend previous work by focusing on firm’s commitment, knowledge and uncertainty as key variables to explain firms’ behavior when taking decisions to reshore. While arguing for two alternative assumptions, those of bounded rationality and sheer ignorance, in terms of managers’ knowledge when taking reshoring decisions, we elaborate a set of propositions concerning the effects of risk contingencies on a firm’s commitment behavior leading to reshoring. This paper contributes to international business research by discussing behavioral and risk management aspects related to reshoring.