DETERMINANTS OF BACKSOURCING DECISIONS AMONG MANUFACTURING FIRMS IN THE EUROPEAN UNION

Abstrakt

Global disruptions such as the COVID-19 pandemic, geopolitical instability, and trade tensions have intensified the need for companies to reconsider their global supply chain strategies. Backsourcing, defined as the reintegration of previously outsourced business processes or production activities into a firm’s internal operations, has emerged as a strategic response to these challenges. This paper examines the determinants, advantages, and challenges of backsourcing among manufacturing companies in the European Union (EU). Building upon theoretical foundations from transaction cost economics, real options theory, and institutional economics, the study integrates these perspectives into an econometric framework designed to identify the key drivers of backsourcing decisions. Using insights derived from the European Reshoring Monitor, a binary logistic model is developed to assess the likelihood of backsourcing. The results suggest that quality control, technological capability, labor cost differentials, and supply chain disruptions significantly increase the probability of backsourcing, while market uncertainty and high reintegration costs reduce it. The findings contribute to the growing literature on strategic sourcing reversals and provide managerial and policy recommendations for fostering sustainable and resilient supply chains within the EU.