From resource dependence to embeddedness: how the circular economy reshapes power and dependence dynamics in buyer-supplier relationships

Purpose This paper examines the impact of circular economy (CE) adoption on power and dependence dynamics in buyer-supplier relationships. It challenges the shared assumption that dependence among buyer and suppliers should be reduced by illuminating the mutually beneficial outcomes derived from CE adoption, which are captured through applying embeddedness theory. Design/methodology/approach Through a longitudinal case study and abductive reasoning, we examine a manufacturing firm's first CE initiative involving its suppliers across two material streams: steel and plastic. This research develops middle-range theory by introducing embeddedness theory as opposed to resource dependence theory in the CE context. Findings Results show that buyer-supplier relationships in the CE context are characterised by high mutual dependence. While this condition has been viewed as detrimental for the actors involved, it allows for governance mechanisms based on trust, information exchange, and joint action in which actors refrain from exercising power and shift towards non-mediated power types. Originality/value This study advances CE research by introducing embeddedness theory to investigate the less studied power and dependence dynamics through a longitudinal perspective. Additionally, this scholarship highlights the need for a comprehensive evaluation of mutual dependence, as traditional metrics may overlook key nuances in the CE context.