Cost Reduction through Relocation, or the Construction of Myths in Discourse

Abstract

The findings of recent studies into relocation by German companies are puzzling: companies relocate because they are willing to cut costs, but entrepreneurs and managers seem to have failed to predict further and sometimes fatal costs associated with relocation. This paper sheds light on why relocation has become a general trend among German companies, despite those inefficiencies and costs. It points to the role of the discourse in creating the myth of relocation as a strategy to reduce costs. Discourse can in fact help to diffuse ideas independently of their empirical truth and give voice to influential actors who are able to induce isomorphic processes. In order to give an account of why companies' decisions to relocate have become so popular in Germany, regardless of their economic soundness, the paper draws on an analysis of German newspapers and business press that were published between January 1990 and July 2005.

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