The mediating role of Supply Chain Management inter-organizational capabilities for achieving superior Circular Economy performance

Manufacturing companies are implementing Circular Economy in response to increasing environmental pressures and resource constraints. However, the role of operational organizational capabilities in enabling Circular Economy practices such as reuse, remanufacturing and recycling is still poorly addressed in literature. Building on the relational view to complement the traditional Resource-Based View, this study investigates how intra- and inter-organizational capabilities affect the adoption of Circular Economy practices by manufacturing firms. Drawing on data from a survey of 154 Italian manufacturing companies and employing Structural Equation Modelling, the analysis reveals that the development of intra-organizational capabilities is necessary but insufficient drivers of Circular Economy adoption. Instead, these capabilities contribute to Circular Economy only when mediated by inter-organizational capabilities at the Supply Chain level. These findings extend the current theoretical understanding of Circular Economy implementation by manufacturing companies by highlighting the centrality of relational capabilities in translating internal organizational efforts into circular outcomes. From a managerial perspective, the results suggest that firms seeking to improve their Circular Economy performance should prioritize collaborative approaches and investment with external partners.