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Flexicurity and relocation of manufacturing

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Abstract

The purpose of this paper is to analyze the concept of flexicurity in the context of reshoring manufacturing to high cost countries. Flexicurity is a combination of flexibility, measured by a high level of worker mobility between jobs; social security, representing a generous system of social welfare and unemployment benefits; and active labor market programs. The paper includes flexicurity data from a Danish questionnaire-survey on offshoring and reshoring manufacturing and empirical insights from two illustrative case studies. The cases demonstrate that the flexicurity model had played an important role in the relocation of manufacturing to Denmark, albeit data from the questionnaire-survey indicates some focus on flexicurity as a factor for moving manufacturing back to home countries.

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Author information

Authors and Affiliations

  1. Department of Entrepreneurship and Relationship Management, University of Southern Denmark, Kolding, Denmark

    Jan Stentoft, Ole Stegman Mikkelsen & Jesper Kronborg Jensen

Authors
  1. Jan Stentoft
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  2. Ole Stegman Mikkelsen
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  3. Jesper Kronborg Jensen
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Corresponding author

Correspondence to Jan Stentoft.

Annex 1: Questions in survey

Annex 1: Questions in survey

Code

Indicator

Mean Value

Standard Deviation

Factor Loading1

Compare Means (Sig.)

OFFPRB

Please consider if your company experienced problems in the following areas from the implementation of moving production abroad (α = 0.947)

2.42

-

-

-

OFFPRB1

Labor safety (e.g. accidents at work, work-related illnesses)

2.20

1.08

.83

.97

OFFPRB2

Labor unrest (e.g. strikes, absenteeism)

2.30

1.09

.72

.65

OFFPRB3

High labor turnover

2.67

1.18

.81

.63

OFFPRB4

Natural disasters (e.g. flooding, earthquakes, pandemics)

2.18

1.02

.74

.79

OFFPRB5

Loss of tacit knowledge (e.g. process knowledge)

2.84

1.21

.72

.29

OFFPRB6

Incomplete production data (e.g. drawings, parts lists, and bill-of-materials)

3.01

1.29

.63

.80

OFFPRB7

Product design changes required by legal regulations in the host country

2.10

1.00

.93

.69

OFFPRB8

Political instability at the receiving location

2.14

1.03

.93

.77

OFFPRB9

Terrorism, sabotage, piracy, theft, industrial espionage

2.07

1.04

.93

.26

OFFPRB10

Production competence at the receiving plant

2.82

1.17

.59

.59

OFFPRB11

Management competence at the receiving plant

2.78

1.19

.70

.94

OFFPRB12

Lack of cultural understanding (e.g. language barriers, cultural differences)

3.07

1.17

-

.47

OFFPRB13

IT security (e.g. attempted attacks on networks)

2.26

1.09

.89

.80

OFFPRB14

Corporate social responsibility issues (e.g. corruption, child labor, working conditions)

2.11

0.96

.93

.67

OFFPRB15

Environmental issues (e.g. pollution, carbon footprint)

2.26

1.03

-

.79

OFFPRB16

Violation of intellectual property rights (IPR)

2.11

0.99

.93

.91

OFFPRB17

Flexicurity

2.24

1.00

.70

.49

RESIMP

Please indicate the importance of the following factors in the recent decision to move production back (α = 0.869)

3.22

-

-

-

RESIMP1

Labor cost

2.90

0.85

-

.80

RESIMP2

Logistics cost

3.37

1.22

-

.82

RESIMP3

Other cost

3.43

0.94

-

.20

RESIMP4

Changes in the currency exchange rates

2.81

0.57

.96

.54

RESIMP5

Production close to or in the market

3.39

0.96

.78

.30

RESIMP6

Access to skills and knowledge

3.70

1.06

.89

.11

RESIMP7

Access to technology

3.46

1.00

.93

.72

RESIMP8

Access to raw materials

3.04

0.88

.80

.55

RESIMP9

Proximity to R&D and product development

3.32

1.06

.80

.26

RESIMP10

Flexibility

4.07

1.03

-

.91

RESIMP11

Lead-time

3.90

1.08

-

.35

RESIMP12

Quality

4.23

0.90

-

.22

RESIMP13

Risk diversification

3.00

0.83

.89

1.00

RESIMP14

Country-specific conditions (e.g. subsidies, taxes, duties)

2.60

0.91

.69

.43

RESIMP15

Trade barriers (e.g. customs, quotas, local content requirement)

2.68

0.90

.62

.19

RESIMP16

Focus on core areas (and outsource non-core)

3.45

1.18

.71

.95

RESIMP17

Avoid investments in new equipment

2.70

0.87

.84

.54

RESIMP18

Requirement from customer (to move with customer)

2.82

0.77

.84

.68

RESIMP19

Follow industry practice

2.72

0.68

.84

.46

RESIMP20

Shortage of qualified personnel

2.74

0.94

.83

.56

RESIMP21

Time-to-market (bringing new products to market faster)

3.33

0.96

.81

.81

RESIMP22

Flexicurity

3.17

0.83

.87

.58

  1. 1Principal Component factor loadings calculated using SPSS v22. The type “-“ indicates that the individual indicator did not load sufficiently on the factor as anticipated

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Stentoft, J., Mikkelsen, O.S. & Jensen, J.K. Flexicurity and relocation of manufacturing. Oper Manag Res 9, 133–144 (2016). https://doi.org/10.1007/s12063-016-0110-3

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  • DOI: https://doi.org/10.1007/s12063-016-0110-3

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