Does reshoring drive circular economy practices? A capabilities-based perspective

This study explores the mechanisms through which reshoring initiatives contribute to the adoption of circular economy practices, and how contextual factors structurally enable or constrain these mechanisms. We analyse a longitudinal case study of a company producing locally assembled bicycles in the UK and a product-as-a-service model to understand how circular economy practices emerge from the interaction between firm-level resource orchestration and institutional conditions. Drawing on Resource Orchestration Theory and Institutional Theory, the study identifies three causal mechanisms through which reshoring facilitates circular economy practices: internal production control as an enabler of integration and experimentation; supply base reconfiguration towards innovative local SMEs as an enabler of co-development of circular components; and the creation of a local innovation ecosystem as an enabler of systemic value change. The activation of these mechanisms is contingent on institutional and contextual conditions, such as regulatory incentives and supply chain realities, suggesting that reshoring alone is insufficient to drive circularity.