Cost-driven motives to relocate manufacturing abroad among small- and medium-sized manufacturers The influence of Industry 4.0

Purpose The purpose of this paper is to advance the understanding of how Industry 4.0 related technologies affect the relocation of manufacturing abroad by small and medium-sized enterprises. Design/methodology/approach This paper contains an empirical analysis of how Industry 4.0 related technologies affect the cost-driven relocation of manufacturing abroad based on 191 comprehensive and full responses to a questionnaire survey distributed in 2018 among small- and medium-sized Danish manufacturers. Findings This paper builds upon data, which reveals that companies' pursuit of cost-focused competitive strategies is positively correlated with relocating manufacturing abroad. However, the data also shows that the more Industry 4.0-ready decision-makers are, the less cost-focused strategy drives manufacturing abroad. Furthermore, perceived barriers to Industry 4.0 related technologies promote the cost-driven relocation of manufacturing abroad whereas perceived drivers decrease this phenomenon. Research limitations/implications - This paper is based on the answers given by a single respondent from each company and only on Danish respondents. Practical implications - The results indicate a need to invest resources to obtain a better knowledge of Industry 4.0 related technologies when used in processes involved in decisions about where to locate manufacturing. Originality/value This paper contains new, empirically founded information about how Industry 4.0 related technologies affect the cost-driven relocation of manufacturing abroad from the perspective of small- and medium-sized manufacturers.

Automated summary

This study provides empirical analysis on how Industry 4.0 related technologies impact the cost-driven relocation of manufacturing abroad from the perspective of small- and medium-sized manufacturers in Denmark. The data shows a positive correlation between companies' cost-focused competitive strategies and relocating manufacturing abroad, but decision-makers who are more Industry 4.0-ready tend to have less cost-focused strategies that drive manufacturing relocation.