Skip to main content

ETHNOS_APP

Home • Search • Journals • List 0

Vertical scope and location decisions in captive offshoring

Evidence from US manufacturers in Mexico

Bibliographic Data

ID6420905
AuthorsOctavio Jose Martinez (0000-0002-8874-0665, corresponding author)
Year2025
Volume21
Issue5
Pages690-707
Publication date2025-06-11
Open AccessNo
TypeARTICLE
VenueCritical Perspectives on International Business (JOURNAL)
Journal identifiersISSN: 1742-2043 • E-ISSN: 1758-6062
PublisherEmerald Publishing Limited (PUBLISHER • GB)
DOI10.1108/cpoib-05-2024-0049
OpenAlexW4411212883
LanguageEN
References cited47

Purpose This paper aims to examine how a firm’s vertical scope influences its location preference for captive offshoring. The author contributes to an emerging offshoring literature with a deeper conceptualization and empirical understanding of the interplay between a firm’s vertical integration and location strategies in a host country. Design/methodology/approach Our empirical study focuses on US firms establishing manufacturing plants in Mexico. The primary data comes from Dun and Bradstreet WorldBase, which consists of 562 manufacturing plants owned by US companies that first entered Mexico after the passage of the North American Free Trade Agreement. Following previous work in international business, the author uses a conditional logistic regression in our primary empirical analysis. Findings Firms with vertically integrated activities in their home country are more likely to establish foreign subsidiaries with vertically integrated operations when offshoring their home activities. These firms are also more likely to locate outside industrial clusters than non-integrated firms in the host country. The results suggest that vertically integrated firms substitute internal resources for external resources and derive fewer benefits from industrial agglomerations. Originality/value This paper contributes to the international business literature, practice and public policy. Unveiling an interplay between vertical scope and location choice extends our knowledge and helps managers craft these strategic decisions more effectively. This paper also offers valuable insights for assisting governments in better matching potential foreign investors to regions with diverse levels of industrial development

Business · Economic geography · Economics · International trade · Offshoring · Outsourcing · Political science · Scope (computer science · Computer Science · Global trade and economics · Global trade, sustainability, and social impact · Outsourcing and Supply Chain Management · Marketing

  • Networking off Madison Avenue

    Mohammad Arzaghi, J Vernon Henderson•The Review of Economic Studies•2008

  • Location Strategies and Knowledge Spillovers

    Open Access•Juan Alcacer, Wilbur Chung•Management Science•2007

  • Cities and Skills

    Edward L Glaeser, David C Maré•Journal of Labor Economics•2001

  • The Location and Employment Choices of New Firms

    Dennis W Carlton•The Review of Economics and…•1983

  • Geography, Industrial Organization, and Agglomeration

    Stuart S Rosenthal, William C Strange•The Review of Economics and…•2003

  • Localization of Industry and Vertical Disintegration

    Thomas J Holmes•The Review of Economics and…•1999

  • Scale economies and the geographic concentration of industry

    Gordon Hanson, G H Hanson•Journal of Economic Geography•2001

  • Agglomeration, opportunism, and the organization of production

    Open Access•Robert W Helsley, William C Strange•Journal of Urban Economics•2007

  • Home-field advantage

    Open Access•Octávio Figueiredo, Paulo Guimaraes et al.•Journal of Urban Economics•2002

  • Marshall's scale economies

    Open Access•J Vernon Henderson•Journal of Urban Economics•2003

  • Income and City Size

    Open Access•Irving Hoch•Urban Studies•1972

  • The Costs and Benefits of Ownership

    Sanford J Grossman, Oliver Hart et al.•Journal of Political Economy•1986

  • Agglomeration benefits and location choice

    Open Access•Keith Head, John Ries et al.•Journal of International Economics•1995

Highly citedNo

Tools

Open DOI
Ethnos_APP • Open Source Project • MIT License • Frontend v2.0.0 • Privacy and Cookies • API Documentation: api.ethnos.app/docs • API Source Code: GitHub • DOI: 10.5281/zenodo.17049435 • Frontend Source Code: GitHub • DOI: 10.5281/zenodo.17050053 • cruz.rio.br • Expectantes Misericordiae