Circular agri-food systems: A governance perspective for the analysis of sustainable agri-food value chains

Abstract Different organizational arrangements have supported the adoption of sustainable-oriented innovations (SOIs) in the agri-food industry. However, despite the promises of SOIs, diffusion has been slow. We claim that the gap between the creation and diffusion of SOIs is due to the neglect of the governance dimension of sustainable agri-food value chains. This study contributes to bridging this gap by providing a theoretical framework that disentangles the governance elements of circular agri-food systems. After discussing the organizational logic of linear systems, we outline five propositions that shed light on different governance aspects related to the establishment and stability of circular agri-food systems: (i) complementarities, (ii) interdependencies, (iii) the role of a leading organization, (iv) the role of a bridging organization, and (v) the influence of technology. We argue that circularization should only occur if the potential benefits of the adoption of SOIs are higher than the overall production costs and the costs of designing an organizational architecture compared with other feasible agri-food systems configurations, whether linear or circular. Governance costs might explain why the diffusion of SOIs is often slower than predicted by scholars, entrepreneurs, and policymakers.