Contents lists available at ScienceDirect Journal of Business Research journal homepage: www.elsevier.com/locate/jbusres A model for international production relocation: Multinationals' operational flexibility and requirements at production plant level Jesús F. Lampón a , Pablo Cabanelas b,⁎ , Francisco Carballo-Cruz c a Department of Business Management and Marketing, Faculty of Business and Tourism, University of Vigo, Campus As Lagoas, 32004 Ourense, Spain b Department of Business Management and Marketing, School of Business Studies, University of Vigo, Torrecedeira 105, 36208 Vigo, Spain c Department of Economics, School of Economics and Business (EEG), University of Minho, Campus de Gualtar, 4715-057 Braga, Portugal ARTICLE INFO Keywords: International production relocation model Location theory Multinational enterprises Operational flexibility Production plant requirements ABSTRACT This paper reviews location theory to formulate a model for international relocation of production. The results highlight the role of internal factors and the appropriateness of the behavioural approach of location theory for explaining international production relocation. From a theoretical standpoint, the operational flexibility of multinational enterprises for transferring resources internationally proposes a transition from an economic geography perspective to a managerial perspective. With empowered multinationals and in a context in which internal factors have a great influence on decision-making, plant level variables gain importance for improving understanding of international production mobility. 1. Introduction The forces driving globalization, such as de-regulation of markets, and advances in information and communication technologies have led to strong processes of international relocation of production, with the corresponding economic and social impacts (Cavusgil, Knight, & Riesenberger, 2008; Farrell, 2005). The extent and conse- quences of this phenomenon in several industries have been analysed from both political and academic standpoints (Pennings & Sleuwaegen, 2000; Sleuwaegen & Pennings, 2006). It is also a topical phenomenon due to the amount of recent backshoring processes, defined as the return of production to its initial location (Arlbjørn & Mikkelsen, 2014; Kinkel, 2014; Stentoft, Olhager, Heikkilä, & Thoms, 2016). In the academic literature, location theory (Hayter, 1997) is a recurrent background for the study of relocation. This theory, which was formulated and developed in economic geography and spatial economics, aims to explain the forces that push a firm from its current location to an alternative (optimal) one. Various models for relocation processes have been formulated based on the neoclassical, institutional and behavioural approaches of location theory (Brouwer, Mariotti, & Van Ommeren, 2004; Hayter, 1997), with location and external and internal factors as explanatory variables (Holl, 2004; Knoben, 2011; Knoben & Oerlemans, 2008; Van Dijk & Pellenbarg, 2000). Although these contributions have allowed us to find out more about the motivations for relocation, from a managerial and interna- tional perspective they have two major shortcomings. First, they overlook the specificities of multinational enterprises (MNEs), particu- larly their operational flexibility which allows them to transfer resources and capacities internationally (Beugelsdijk & Mudambi, 2013; Dasu & Li, 1997; Kogut & Kulatilaka, 1994). Greater attention should therefore be paid to parent companies' internal strategies in the framework of international relocation. Second, relocation studies have given little relevance to factors at production plant level. So, from the theoretical point of view, this study contributes to an open debate on the various trends in location theory for explaining international production relocation. Internal factors within MNEs have gained weight over external or location factors in decision-making. This is in line with the principles of the Resource Based View, which explain corporate differences mainly on the basis of internal factors. A second contribution lies in the use of the production plant as a new level of analysis. This could complement the parent company perspective allowing for the inclusion, among others, of plant-level requirements in relocation decisions. The combination of both contributions gives a predictive model for relocation based on operational flexibility in the parent company and plant-level factors. The model is tested using a new and thorough database with information on firms in the automobile parts manufacturing sector, created specifically for this research. The choice of this sector is justified by its great worldwide impact in terms of production and employment and because it involves very heterogeneous products, processes, technologies and supply chain conditions, and includes many http://dx.doi.org/10.1016/j.jbusres.2017.04.007 Received 5 August 2016; Received in revised form 7 April 2017; Accepted 8 April 2017 ⁎ Corresponding author. E-mail addresses: jesus.lampon@uvigo.es (J.F. Lampón), pcabanelas@uvigo.es (P. Cabanelas), fcarballo@eeg.uminho.pt (F. Carballo-Cruz). Journal of Business Research 77 (2017) 95–101 Available online 19 April 2017 0148-2963/ © 2017 Elsevier Inc. All rights reserved. MARK