Geopolitical disruptions and the manufacturing location decision in multinational company supply chains: a Delphi study on Brexit

Moradlou, Hamid, Reefke, Hendrik, Skipworth, Heather and Roscoe, Sam (2021) Geopolitical disruptions and the manufacturing location decision in multinational company supply chains: a Delphi study on Brexit. International Journal of Operations and Production Management. ISSN 0144-3577

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This study investigates the impact of geopolitical disruptions on the manufacturing supply chain (SC) location decision of managers in UK multinational firms. The context of study is the UK manufacturing sector and its response to the UK's decision to leave the European Union (EU), or Brexit.

The study adopts an abductive, theory elaboration approach and expands on Dunning's eclectic paradigm of international production. A Delphi study over four iterative rounds is conducted to gather and assess insights into manufacturing SC location issues related to Brexit. The panel consisted of 30 experts and managers from a range of key industries, consultancies, governmental organisations, and academia. The Delphi findings are triangulated using a focus group with 38 participants.

The findings indicate that the majority of companies planned or have relocated production facilities from the UK to the EU, and distribution centres (DCs) from the EU to the UK. This was because of market-seeking advantages (being close to major centres of demand, ease of access to local and international markets) and efficiency-seeking advantages (costs related to expected delays at ports, tariff and non-tariff barriers). Ownership and internalisation advantages, also suggested by the eclectic paradigm, did not play a role in the location decision.

The study elaborates on the OLI framework by showing that policy-related uncertainty is a primary influencing factor in the manufacturing location decision, outweighing the importance of uncertainty as an influencer of governance mode choices. The authors find that during geopolitical disruptions managers make location decisions in tight time-frames with incomplete and imperfect information, in situations of high perceived uncertainty. The study elaborates on the eclectic paradigm by explaining how managerial cognition and bounded rationality influence the manufacturing location decision-making process.

Item Type: Article
Keywords: Manufacturing Location Decision, geopolitical Disruption, offshoring, onshoring, reshoring, Brexit
Schools and Departments: University of Sussex Business School > Management
Research Centres and Groups: UK Trade Policy Observatory
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 08 Feb 2021 08:25
Last Modified: 23 Feb 2021 13:30

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