The Impact of Reshoring on European MNEs’ Performance
Abstract: The purpose of this study is to examine whether European production firms, that reshore parts of their manufacturing processes back to the originating country of the firm, perform financially differently than prior to the reshoring process. The performances of the firms are quantified by the financial indicators of return on equity, return on assets, and net profit margin. It also examines if these three performance indicators are affected differently depending on the scale of the reshoring operation relative to the total size of the firm. To effectively analyse the aforementioned, the study performs a paired-sample T-test for the three metrics, comparing the pre and post reshoring. Three OLS-regressions are also conducted to gain further insights into how a reshoring process has affected the performance indicators of a company. Based on a sample of 34 European companies that have performed a reshoring, the results of the conducted tests show no significant difference in performances for the sampled companies’ ex-ante or ex-post a reshoring of manufacturing activity. This suggests that firms that are planning to make a reshoring move cannot expect a certain outcome of that decision, either positive or negative, in terms of this paper's chosen variables.
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