Local embeddedness, technological capability and collaboration as catalysts for circular economy social performance: insights from social embeddedness and network theories

Abstract

The circular economy (CE) substitutes the linear take-make-dispose approach with reduction, reuse, recycling and recovery of materials across production, distribution and consumption. Although existing studies have advanced CE largely through its environmental and economic dimensions, comparatively less emphasis has been given to its social dimension. This has led to increasing calls to address the scarcity of literature on the social implications of CE and on the mechanisms through which firms promote or facilitate social initiatives within the CE context. Drawing on social embeddedness and network theories, this study investigates whether local embeddedness directly influences CE social performance and whether this relationship is mediated by technological and collaboration capabilities. A survey was conducted involving 215 managers of manufacturing firms in Ghana. Subsequently, a variance-based structural equation modeling approach was utilized to assess both direct and mediated effects within the structural relationships among the study variables. The empirical analysis, based on 215 survey responses from mangers of manufacturing firms, demonstrates that local embeddedness significantly impacts circular economy social performance, along with technological and collaboration capabilities. Additionally, the findings indicate that both collaboration and technological capabilities partially mediate the relationship between local embeddedness and CE social performance. The social dimension of the circular economy must be improved in order to facilitate the achievement of the sustainable development goals (SDGs) in emerging economies. By viewing local embeddedness as a strategic approach for gaining stakeholder insights and support, managers can foster mutually beneficial relationships that can further cultivate collaborative and technological capabilities. Managers can further harness these capabilities to overcome resource constraint, achieve social innovation and address other social concerns. Managers by considering the social expectations of stakeholders and being locally embedded can effectively drive context-specific social initiatives that can enhance long-term CE social performance. This research advances the existing literature on the circular economy by emphasizing local embeddedness as a key driver of CE social performance and by positioning collaboration and technological capabilities as effective mechanisms for achieving circular social performance within the local context of businesses.