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

Li, Xinwei, Tse, Ying Kei ORCID: https://orcid.org/0000-0001-6174-0326, Zhang, Minhao and Phi, Hoang Dinh 2023. Impact of relocation strategy on brand trustworthiness and word-of-mouth: experimental vignette research on the US fashion industry. International Journal of Production Economics 257 , 108775. 10.1016/j.ijpe.2023.108775

Preview

PDF - Published Version Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (3MB) | Preview

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.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Elsevier
ISSN:	1873-7579
Date of First Compliant Deposit:	9 January 2023
Date of Acceptance:	8 January 2023
Last Modified:	09 May 2023 20:21
URI:	https://orca.cardiff.ac.uk/id/eprint/155597

Actions (repository staff only)

Edit Item