Circular supply chain governance: A qualitative-empirical study of the European polyurethane industry to facilitate functional circular supply chain management

Abstract

For many industries, the transition towards a circular economy (CE) is rather challenging because firms need to collaborate with actors within and beyond immediate industry boundaries. Scholars and practitioners expect synergies for circular supply chain management (CSCM) by understanding the role of governance both from a CE perspective and a sustainable supply chain management (SSCM) perspective. However, a systematic analysis of governance mechanisms in their vertical and particularly horizontal (re-)direction is still absent in the extant literature. In response, this study delivers a qualitative-empirical analysis of governance mechanisms’ directions based on evidence from the European polyurethane industry. Major findings indicate that whereas governance mechanisms for vertical collaboration—mostly discussed in SSCM—are of limited value to facilitate functional CSCM, governance mechanisms for horizontal collaboration can promote the closing of resource loops. In addition, we find three strategic prerequisites for organizations that facilitate horizontal relationships: (1) the development of a CE-enabling environment, (2) the innovation of a circular business model, and (3) the formation of strategic alliances with specialized partners within and outside the industry. If the proposed governance mechanisms for horizontal collaboration can be system(at)ically integrated into supply chain management practices, managers may be better equipped to organize collaboration for functional circular supply chains.