Abstract
Recent years have seen a growing interest in the separate areas of responsible governance mechanisms and circular economy practices. However, the literature lacks evidence on supplier capabilities as a responsible governance mechanism pathway for buyer firms to improve their circular economy practices. Drawing on the natural resource-based view, and the dynamic capabilities perspective, this study examines suppliers’ supply chain ambidexterity and big data predictive analytics capabilities as enabling factors in support of buyer firms’ responsible governance mechanism for circular economy practices improvements. Using data from surveys conducted among 404 firms (202 focal firm-supplier dyads), the results suggest that the focal firm’s supplier-selection mechanism significantly and positively influences its circular economy practices while the supplier-development mechanism has no such effect. We find further that the governance mechanisms vary in their effects on suppliers’ supply chain ambidexterity and subsequent big data analytics capabilities and circular economy practices improvements outcomes. In sum, our findings provide unique insights into the role of suppliers’ capabilities for responsible governance mechanisms to circular economy practices improvements from the perspective of the dyad.