Please dont go! Understanding the host-country factors affecting relocation choices to minimize job losses

Manufacturing offshoring has been a strategy widely implemented by manufacturing firms to gain a competitive advantage. More recently, firms have begun to modify their internationalization strategies by choosing to undertake Relocations of Second Degree (RSD) initiatives, i.e. a change of location with respect to the First Host Country either towards a Second Host Country (re-internationalization) or towards the Home Country of the foreign firm (de-internationalization). This research aims to analyze how the intensity of RSDs, expressed in terms of jobs lost in the First Host Country, is affected by different Host Country-specific Factors. By relying on data from the European Restructuring Monitor, including 281 observations of intra-EU relocations that occurred between 2002 and 2018, we highlight that the job reduction occurs less intensively if Country B’s business environment is characterized by a high degree of R&D expenditures, skilled workforce and flexible labour market. Similarly, when host countries present a decreasing level of wages and a higher percentage of immigrants compared to emigrants, fewer jobs are relocated. Finally, in high-tech industries, the presence of Industry 4.0 policies in the First Host Country plays a relevant role in lightening the impact of workforce relocations.