Impact of relocation strategy on brand trustworthiness and word-of-mouth: Experimental vignette research on the US fashion industry

Xinwei Li, Ying Kei Tse, Minhao Zhang, Hoang Dinh Phi

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

To avoid continued global uncertainty, multinational enterprises have begun to reconsider relocating operations to emerging countries. While re-shoring has been a phenomenon that is well studied, the literature largely overlooks the customer response to far-shoring. Therefore, this research investigates the effects of different far-shoring strategies on customer trustworthiness and satisfaction from the perspective of three countries - i.e., far-shoring country (Vietnam; N = 208), host country (China; N = 203), home country (US; N = 198). We conduct a three-stage experiment with four far-shoring conditions (i.e., production, design, production & design, remain) with three countries' consumers. Stage 1 carries the baseline measurement of customers' established brand preference; Stage 2 measures customers' trustworthiness and satisfaction changes after far-shoring motivation; Stage 3 measures customers' trust recovery after far-shoring decision. Results show that far-shoring to Vietnam (far-shoring economy) can significantly recover purchase intention compared with remaining in China. For the host economy (China), operating in China obtained the greatest purchase intention and word-of-mouth recovery. Lastly, for the home economy (US), relocating to Vietnam does not significantly impact customers' purchase intention recovery. However, the strategy of far-shoring design will lead to higher word-of-mouth recovery. Further, building on Eclectic Theory, we examined the “cost” of relocation from customers' perspective. Actionable winning relocation strategies are identified from the perspective of the far-shoring country, host country, and home country consumers, suggesting that businesses should consider the changes in purchase intention and word-of-mouth from customers’ points of view from different economies fully benefiting from relocation strategy and resource allocation.

Original languageEnglish
Article number108775
JournalInternational Journal of Production Economics
Volume257
Early online date9 Jan 2023
DOIs
Publication statusPublished - Mar 2023

Keywords

  • Far-shoring
  • Purchase intention
  • Re-offshoring
  • Relocation strategies
  • Trust recovery
  • Word-of-Mouth

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