Analysing domestic sourcing under the influence of economic nationalism and nearshoring

State interventions that discriminate against foreign commercial interests can represent a source of supply risk for firms trading with foreign suppliers. As companies consider reshoring, nearshoring is an alternative to domestic sourcing. This study examines the influence of economic nationalism, nearshoring, and their interaction on domestic sourcing among firms headquartered in the country. Building on institutional theory, contingency theory, and transaction cost economics, this research formulates hypotheses and analyzes archival data on 5,830 firms in 39 nations over the 2012–2020 period, using instrumental variable estimation to reinforce result robustness. Economic nationalist policies are positively associated with the domestic sourcing proportion. Meanwhile, nearshoring correlates negatively with domestic sourcing, but its interaction with economic nationalism is non-significant. Overall, this study offers insights into economic nationalism and nearshoring that have been underexplored in global supply chains. Furthermore, it informs policymakers how economic nationalism and nearshoring affect their domestic supply chain development goals.