Background: Reshoring is a relatively new phenomenon that is gaining momentum amongst manufacturing firms. Due to the vast increase in offshoring over the years, the global supply chains of many firms have lost their value, thus driving a need for firms to reshore. Seven main categories of reshoring drivers have been identified in previous research where the governmental impact on a reshoring decision is a subcategory given minimal attention. The increased cross-border interaction amongst firms has led to the increased importance of governmental influence on reshoring. There is evidence that governmental policies and incentives play a prominent role in leading firms to reshore. However, there is a lack of research on what governmental policies and incentives affect firms in making the decision to reshore.

Purpose: The purpose of this bachelor thesis is to contribute to the current reshoring literature by expanding upon the role that governments play in influencing a firm to reshore through intervention by implementing policies and providing incentives. The aim of this thesis is to contribute to the research on reshoring by drawing on primary and secondary data of reshored firms in Sweden and the U.K. to develop a deeper understanding of the role that governmental drivers play in the reshoring process.                        

Method: This qualitative research is based on an interpretivist research philosophy and takes on the form of a multiple case study conducted on firms within the manufacturing sector in Sweden and the U.K. resulting in findings from seven firms. A literature review was carried out leading to the formation of the frame of reference. Semi-structured interviews, secondary data, and a database search were the main means of data collection used in this research paper. A thematic analysis of the collected data was utilized in order to capture the relevant themes that arose across the data set thus leading to a detailed and categorized description of it.      

Conclusion: Through the combination of collected empirical data along with the findings of the frame of reference, the most significant governmental policies and incentives affecting a firm’s decision to reshore are identified. Dunning’s Eclectic Paradigm of International Production is applied as a framework to see if governmental policies and incentives driving reshoring lead to ownership, locational, or internalization advantages of the firm. Labor regulation, labor flexibility, and environmental regulation are found to be the most significant governmental policies driving firms to reshore within Sweden and the U.K. Financial support and access to skills and knowledge are identified as the most significant governmental incentives that drive firms to reshore within Sweden and the U.K. Although the identified governmental policies and incentives are increasing in importance, other drivers are found to be more significant in driving a firm to reshore.