Managing dependence on scarce natural resources: how institutional logic and autonomy shape supply chain strategies

Natural resource scarcity (NRS) is a growing global issue that has several impacts at all business levels. NRS can arise locally or globally, both for non-renewable resources like coal, oil and minerals and for renewable ones like water, wood and agricultural products. The clean energy transition is seriously conditioned by NRS as it shifts resource needs from coal, gas and oil, which power traditional internal combustion engines, to lithium, nickel, cobalt and other critical raw materials such as rare earth elements (REEs), which are crucial to the emerging technologies but also driving factors of supply chain (SC) disruptions in the next future because of a mismatch between their rising demand and their availability (IEA, 2021).

In this regard, the Natural Resource Dependence Theory (NRDT), which extends the Resource Dependence Theory (RDT) “because of its focus on external dependence on scarce resources and the uncertainty that it creates” (Tashman, 2021, p. 1280), introduces NRS as a critical factor shaping organizations’ strategy, particularly in situations where firms are dependent on scarce natural resources (Tashman, 2021), whose access is threatened by ecological boundaries or controlled by external actors (Rockström et al., 2009; Wang et al., 2008). However, little attention has been paid to how companies introduce NRS into SC strategy formulation. To advance the research on NRS, an SC management perspective is necessary “to explain the mechanisms of influence of indirect natural resource dependence through other organizations, as well as strategies for managing it” (Tashman, 2021, p. 1305). In fact, despite its crucial role in businesses’ survival (Bergmann et al., 2016; Tashman and Rivera, 2016; Dias et al., 2022) and its strategic relevance for firms (Kalaitzi et al., 2018), NRS and the related mitigation strategies have been relatively underexplored in SC literature compared to other types of SC risks (Bell et al., 2012; Bell et al., 2013; Kalaitzi et al., 2018; Kalaitzi et al., 2019). Particularly, to the best of the authors’ knowledge, no empirical studies have investigated the connection between the natural resource dependence in the SC and the strategies adopted to manage it, systematically linking this connection with strategic drivers and levers that companies use to mitigate the dependence. To fill this gap and increase our understanding of how NRS enters strategic SCM decision-making, we analyse strategies (what), strategic drivers (why) and strategic levers (how) adopted by firms to manage dependence on scarce natural resources. Thus, our research examines the following research questions:

We adopt the REEs industry in Europe, which is highly dependent on China (around 95%) for primary sources of raw materials (IEA, 2021), as our research setting because of the intense power relations at an industrial and political level and the organizations’ exposure to uncertainty related to NRS. We conducted extensive qualitative research, using a multiple-case study methodology, where all major industrial actors were contacted to be part of the study. Building on NRDT and RDT, we identify the relevant SC strategies (buffering vs bridging), the strategic drivers that direct the adoption of the different strategies (institutional logic and autonomy) and the actionable strategic levers, namely, Importance of the Resource (IR), Supplier’s Substitutability (SS) and the Discretion over the Resource (DR) (Pfeffer and Salancik, 2003; Kalaitzi et al., 2018).

The paper offers a theoretical contribution that lies at the interface between NRS and SC management (Bell et al., 2012; Kalaitzi et al., 2018; Kalaitzi et al., 2019). In fact, to the extent of our knowledge, it is the first to empirically study SC strategies, strategic drivers and levers using NRDT as the theoretical framework, drawing detailed findings about the interplay between SC strategies and strategic drivers and revealing the role of IR, SS and DR in leveraging over the strategic solutions identified in the various cases.

Tashman (2021) proposed the NRDT theoretical framework to understand how organizations manage their dependence on natural resources, incorporating socio-ecological systems, ecosystem scale and institutional logic as key elements. Unlike traditional RDT, which focuses on inter-organizational networks, NRDT focuses on socio-ecological systems, which are dynamic and complex systems composed of interacting physical, biological and social elements (Chapin et al., 2009). The concept of socio-ecological systems considers that ecosystems are not just sources of resources but adaptive systems influenced by human activity. Through this concept, NRDT captures socio-ecological processes that create resource scarcity that was not addressed in RDT (McGinnis and Ostrom, 2014). Different from transactional inter-organizational networks, socio-ecological systems are inclusive systems where natural and human processes affect organizational dependencies (Tashman, 2021). A socio-ecological perspective is appropriate for connecting SC strategies to uncertainties arising both from the natural scarcity of raw materials and from the socio-economic and geopolitical processes that influence the availability of the resource itself, as for companies operating in the REEs’ permanent magnets industry (Table 1). By focusing on socio-ecological systems, NRDT has been used to study various natural scarce resources and their implications for business, such as snow precipitation and ski resorts (Tashman and Rivera, 2016), small agricultural farms (Dias et al., 2022), energy (de Abreu et al., 2017), oil and gas (Bowen et al., 2018) and wine (Galbreath et al., 2020).

NRDT posits that the scale of the ecosystem service influences how organizations perceive and manage uncertainty due to natural resource dependence. Local ecosystems, where resources can be controlled, often encourage private, individualized management strategies. In contrast, larger, geographically dispersed ecosystems lead to systemic uncertainty, requiring collective approaches involving multiple stakeholders (Ostrom, 1999). Thus, the ecosystem scale determines whether organizations view ecosystem uncertainty as manageable independently or necessitating cooperative governance structures (Tashman, 2021). When firms face a non-local scarcity of a provisioning service, namely, a tangible natural resource that organizations source and consume, like in the case of REEs’ permanent magnets firms, the systemic uncertainties induce organizations to adopt a collaborative SC approach, especially with the direct suppliers of the scarce resource they are dependent upon (Table 1).

NRDT introduces two contrasting institutional logics that shape organizational approaches to resource management: economizing and ecologizing. Economizing logic frames natural resources as private assets for efficiency and profit maximization, whereas ecologizing logic emphasizes sustainability and public welfare, seeing natural resources as finite public goods (Hoffman and Jennings, 2021). Organizations aligning with economizing logic often use eco-development strategies to optimize resource output, sometimes degrading non-critical ecosystem services. Meanwhile, those following ecologizing logic use eco-mitigation strategies, focusing on conservation and ecosystem health (York et al., 2016; Berchicci and King, 2007). Reasonably, the institutional logic’s spectrum is influenced by the level of active agency the firm has in relation to institutional processes (Oliver, 1991). In fact, as the active agency of the organization passes from passivity to increasing active resistance, the organization’s institutional logic transitions from an ecosystemic logic to a more economizing one (Table 1).

According to RDT, the relationship between the firm and its external environment revolves around the resources the firm requires and the external stakeholders that have control over them, as they have the power to withhold resources from the firm if their concerns are not taken into consideration (Wry et al., 2013; Oliver, 1991; Pfeffer and Salancik, 2003). The strategical responses to such resource dependencies can be categorized under two general macro-strategies: buffering and bridging (Pfeffer and Salancik, 2003). In this paper, we adopt the conceptualization of strategic responses of Bode et al. (2011), whose definitions have been widely used in the SC management literature (e.g. Mishra et al., 2016; Manhart et al., 2020). On the one hand, buffering strategies imply adopting measures to manage uncertainty by establishing safeguards that shield the enterprise from the risks associated with procurement. Buffering strategies operate regardless of the existing supply relationships, aiming to reduce supplier dependence and mitigate the likely negative consequences of disruptions (Meznar and Nigh, 1995; Bode et al., 2011). To avoid reliance on single sources, the enterprise implements measures to mitigate shocks, such as increased inventory, flexible production processes, multiple suppliers and SC reconfiguration (Kalaitzi et al., 2018). On the contrary, bridging strategies encompass actions to manage uncertainty by expanding and strengthening existing supply relationships or transforming them into procurement partnerships. Bridging strategies operate within the supply relationships by seeking to balance the scarcity of resources by offering suppliers long-term forecasts and contracts and treating them as partners (Meznar and Nigh, 1995; Bode et al., 2011; Kalaitzi et al., 2019). Enterprises using bridging strategies can improve supplier relationships through formal or informal actions. This ranges from building trust with partner firms (e.g. involving them in the definition of product strategies, periodic meetings on the progress of the business), investing in collaborative agreements and enhancing information exchange (Kalaitzi et al., 2018).

Moreover, RDT literature shows that companies should leverage three conditions in establishing their strategy to manage dependence on scarce resources (Kalaitzi et al., 2018; Kalaitzi et al., 2019). These strategic levers are recognized to determine the level of dependency of an organization upon its network of relationships (Pfeffer and Salancik, 2003; Caniëls and Gelderman, 2007): IR, which is the magnitude the resource affects outcomes of the firm; SS, determined by the availability of suppliers and the costs in switching from one to another; and DR, which is the control that the firm has over the resource from a socio-political point of view. The literature provides only limited insights regarding the interplay between buffering, bridging and the three strategic levers. While some studies converge to indicating that IR is positively related to buffering and negatively to bridging (Meznar and Nigh, 1995; Van den Bosch and Van Riel, 1998; Kalaitzi et al., 2018), only the work of Kalaitzi et al. (2018) has examined SS and DR. Their findings indicate that high levels of both SS and DR result in fewer buffering and bridging initiatives by companies. However, the limited empirical evidence and insights into the connections between elements of NRDT and SC strategies reveal a significant gap in the literature that requires further investigation.

The seminal work from Meznar and Nigh (1995) demonstrated that bridging and buffering strategies to manage resource dependencies are influenced by the size of the organization and the importance of its resources. As a matter of fact, these two factors determine the power of the organization, which in RDT literature refers to the possibility of resisting external social pressure since it makes it more difficult for society to revoke its legitimization by widening the breadth of the firm’s operations and the connections with other actors. Particularly, organizational power in external relationships is positively related to the use of buffering strategies from the organization (Meznar and Nigh, 1995; Van den Bosch and Van Riel, 1998; Manhart et al., 2020). This is also in line with Bode et al. (2011), who postulate that dependence on SC partners favours the adoption of buffering and bridging strategies by firms, but as dependence gets stronger, bridging is preferred over buffering as relationship power is unbalanced towards the partner organization. Extending the RDT’s view to the entrepreneurial ecosystem perspective, Roundy and Bayer (2019) argued that nascent entrepreneurial ecosystems depend more on the external environment for critical resources. Adopting Meznar and Nigh’s (1995) lens in this context, they posit that the ecosystem’s size is an antecedent of the ecosystem’s power, thus leading to buffering strategies, whereas the ecosystem’s collaborative values lead to the use of bridging strategies. Coherently, we argue that in an SC perspective, power in external relationships can be proxied by the relative autonomy of the focal organization from its external stakeholders, which results from a combination of factors, including the size of the organization, the level of integration in the SC and its ability to overcome geopolitical barriers in managing the scarce natural resource.

Linking the research objectives and rationale outlined in the introduction with the insights from the literature review, we propose a research framework that integrates strategies, strategic levers and drivers from NRDT and SC management literature to explore how companies address NRS through specific configurations (Figure 1).

The paper investigates real-world strategic decision-making under NRS from a phenomenon-driven approach (Lumineau et al., 2025). To this end, it uses a multiple-case study method, ideal for refining less-theorized areas like NRS and SC management, by integrating existing theoretical constructs and empirical data, allowing for theory elaboration (Ketokivi and Choi, 2014). A constructivist approach (Ridder, 2017) was used to remain open to unexpected findings while building on the study’s theoretical foundation. Through open-ended questions and replication logic, the research explores contingent factors related to NRS and SC mechanisms. Although findings may not be universally applicable, the comparative analysis enhances external validity and offers insights extendable to similar industries (Yin, 2014).

To set our investigation, we found the critical raw materials business landscape in Europe appropriate for responding to the research questions because of its exemplary characteristics. Demand for critical raw materials is forecasted to rise by at least four times by 2040 to feed the technologies for the clean energy transition (IEA, 2021). Moreover, from the supply point of view, these materials are deemed critical because of their concentration in one or a few exporting countries in at least one of the SC steps (e.g. extraction, separation and refining). As a matter of fact, from a few years on, increasing pressures from institutional stakeholders have led various European initiatives to spread in an attempt to diminish dependence on third countries and secure a stable flow of critical raw materials in Europe. Initiatives such as the establishment of the European Battery Alliance in 2017 and of the European Raw Materials Alliance in 2020 are among the most relevant ones, as they strive to create a level-playing field in Europe to establish, respectively, batteries and raw materials SCs. In March 2023, the European Commission recognized the strategic role of critical raw materials at a policy level by proposing the Critical Raw Materials Act. The act has set ambitious targets that are challenging to achieve. These are focused on improving supply security to reduce uncertainty and dependencies on third countries by creating in-house primary extraction, diversifying supplying sources and improving recycling and reuse (EC, 2023a). Among critical raw materials industries, we chose the REEs because these materials are heavily involved in the energy transition, especially in the form of Neodimium-Iron-Boron magnets, which are used in wind turbines and rotors of electric vehicles. Notably, demand for REEs magnets in the following years is expected to grow with the adoption of electric vehicles and wind turbines (CEPS, 2022). Furthermore, the European Union classified REEs as the most critical raw materials because of the huge risks of supply shortage (EC, 2023b).

REEs magnets SC in Europe are scarcely developed (Figure 2). The direct flow of the magnet chain begins with the phase of Exploration and Mining, which is currently still not performed in Europe. Some companies in northern European countries have started exploration activities, but no extraction of REEs ores is currently ongoing (Rare Earth Norway in the Fen complex in Norway; LKAB in the Kiruna district in Sweden; and FMG in the Sokli deposit in Finland).

European companies that perform separation import REEs carbonates from outside the continent (CEPS, 2022). Separation is the SC step in which, by chemical processing, rare earth oxides are isolated from all the other materials in the ores. Oxides go through refining and processing into rare earth metals, which are the input for the manufacturing phase. Magnet manufacturing is a high-value-added phase in which magnets are shaped into specific applications to fulfil end customers’ needs. The reverse chain can begin at different points of the direct one since scraps and swarf are generated during refining, manufacturing and final use. Moreover, waste from electrical and electronic equipment (WEEE) represents a source for the recycling chain, as this waste material can be collected, dismantled to extract the magnetic components and then recycled. Depending on the quality of the input magnet, the recycling phase can be performed through two different technologies: direct recycling entails a new shaping of already magnetized powders (making the quality of the output strongly dependent on the quality of the input), whereas indirect recycling is a new separation process with secondary materials instead of virgin ones (CEPS, 2022).

The study focuses on the European REEs magnets SC, a meaningful real-world setting complying with phenomenon-driven research quality criteria related to pertinence, reach, insightfulness, magnification and expediency (Lumineau et al., 2025). Given the lack of significant study constraints regarding participation in the research, we used a purposive sampling strategy (Etikan et al., 2016). The research units were firms that met the following criteria: belonging to the target industry, centrality of REEs in the firm’s business model, representation of the entire SC within the sample ^[1], inclusion of key European countries with REE SCs and a commitment to participate in the research. Homogeneity was searched in terms of dependence on scarce natural resources within a meaningful real-world research setting. Within this homogeneous setting, we welcomed heterogeneity in other dimensions, such as firms’ size, maturity, SC positioning and location (in the various European countries), as these dimensions are associated with different configurations, SC strategies and actionable strategic levers. The authors collaborated with the European Institute of Innovation & Technology Raw Materials. This European consortium supports securing the supply of critical raw materials to the European industry by driving innovation and research along the raw materials value chain. Access to the consortium’s network provided the initial contact point for selecting firms to include in our study sample. Then, participation in raw materials events and conferences, such as the Raw Materials Summit 2023, the Raw Materials Week 2023 in Brussels and the Magnetic Materials and Applications 2023 in Hanau, provided occasions of networking and direct contact with the firms operating in the critical raw materials sector. The first author’s attendance at such events and engagement with the critical raw materials sector’s professionals was fundamental to deeply engaging in the industry’s logic and collecting preliminary information and firms’ willingness to participate in the data collection phase. The companies were chosen based on their potential to carry valuable and new information to the cases and their willingness to participate in the data collection (Table 2). Considering that a few companies did not agree to participate in the research and that the dimension of the European REEs magnet industry is close to the study sample, we can state that we achieved the highest possible coverage of European organizations working in the chosen industry.

The first and foremost important data collection method was interviews with representatives of the sample firms, held between July and November 2023. Interviewees were primarily CEOs or directors of their firms, but for more structured firms, managing-level professionals were also considered adequately knowledgeable to carry out the interviews. Interviews were based on semi-structured protocol, lasted approximately 1 h and covered multiple topics, from the characteristics of the firm and the technological process used to the stages of the SC covered, from the supplying strategies and issues to the relationships with customers, from the reasons and strategies adopted in managing REEs scarcity to the institutional logic and ties of the firm ^[2]. As the cases range from start-ups to mature firms, the semi-structured questions allowed the researchers to be flexible and let the interviewees report the most relevant information. Given the qualitative nature of most of the collected data, other sources of information were considered to triangulate data and increase construct validity (Yin, 2014). These sources are secondary data such as annual reports, sustainability reports, news and press releases available from the websites of the sample firms; news and press releases available from other sources; site visits for some of the cases; direct observation of the first author during formal and informal occasions of engagement with firms’ representatives; and a validation questionnaire sent to the sample firms during September–October 2024, aimed at a written assessment of the dimensions identified in the previous steps of analysis. In total, we collected approximately 7 h of recorded interviews, 5 h of non-recorded interviews (due to carrying out the interviews during events or conferences without the possibility of recording) for a total of 15 interviews carried out, 4 h of site visits, 45 press releases, 11 reports (sustainability, investors and products reports), 7 completed questionnaires (one from each case), plus multiple informal verbal and written exchanges with representatives of all case studies (Table 3).

The data analysis procedure follows the extended case method (López-Gamero et al., 2011). After an initial exploration of the relevant concepts and theories found in the literature, providing the basis for a subsequent comprehensive case description, we run the first exchange with the sample cases by holding, transcribing and coding all the interviews using Gioia’s approach (Gioia et al., 2013). The coding method is an abductively derived coder 1-led coding, where the other members of the research team act in the reconciliation of codes (Cole, 2024). As a first step, the first author identified terms and narratives used by the interviewees to describe the SC practices, strategies and strategic levers and also identified all the statements related to the firm’s institutional logic, as well as its integration in the SC and degree of autonomy. Thus, he devised the 1° order concepts that adhere to the informants’ words. Commonalities and differences among the 1° order concepts were then identified to code them into more general categories called 2° order themes. During this phase, the second and third authors independently processed, debated and reviewed the initial codes. They offered their interpretations and suggested ways to improve and organize the codes into 2° themes and aggregate dimensions. The proposals from the first three authors were then collectively discussed in joint meetings, incorporating inputs from the fourth author, who contributed with a more detached and objective perspective. To finalize the coding structure, we relied on consensus-building through collective agreement ^[3] (Cole, 2024). As per the theory elaboration aim of this paper (Ketokivi and Choi, 2014), the 2° order themes are informed by the underlying theories (NRDT and RDT) and adjusted to fit with the 1° order codes. From such a process, themes such as institutional logic and autonomy stand out as key drivers of the strategies adopted by the cases. Themes were finally combined into the aggregate dimensions: SC strategies, Strategic levers and Strategic drivers. The whole data structure for strategies, strategic levers and strategic drivers is presented in Figure 3.

Afterwards, a second exchange phase with the cases was run to obtain feedback on each case’s dimensions of analysis through a validation questionnaire. This phase happened several months after the interviews when the researchers had already developed the data structure, which directly informs the design of the validation questionnaire. The analysis of the questionnaires’ responses was aimed at spotting discrepancies with the findings of the interviews. We found consistent evidence in terms of SC strategies adopted by each case. Nearly all cases highlighted the critical importance of institutional and regulatory support in the REEs industry and magnetic technological competence for market survival, which are 1° order themes of DR, thus representing the main discrepancy between the first and second exchanges.

This section summarizes the findings regarding the combined emergence of SC strategies, strategic levers and drivers. Table 4 presents their co-occurrence for each case and proposes labels for six different configurations of strategies, strategic drivers and strategic levers identified among the cases.  Appendix 2 Table A2 details the paper’s main findings regarding the extracted codes, representative quotations from the cases and the evaluation of the literature’s dimensions for each case to provide supportive evidence for the analysis carried out in this section.

Case study firms adopt SC strategies as buffering or bridging strategies (Figure 3).

Among bridging strategies, firms are implementing partnerships both downstream and upstream, respectively, with original equipment manufacturers (OEMs) and suppliers. They are intensifying the information exchange with their partners and/or pursuing a vertical integration strategy. Cases A and G, for example, are separators of REEs trying to implement indirect recycling processes. In this configuration, companies input dismantled magnets in the recycling process, thus relying on a supply of secondary material. Continuity of the input flow of separated magnets is vital for these companies because the separation plant implements a chemical process of separation that requires a stable flow of input to work properly. Anyway, continuity of the secondary input is critical because:

• there are few magnet makers in Europe, and the availability of magnet scraps on the market is low;

• there is no standard and little information regarding the presence of magnetic content in electronic waste, the relative magnets’ concentration, the feasibility of finding and extracting the magnetic part from electronic equipment; and

• the exchange of information around waste from electronic equipment is limited.

In this context, companies tend to partner with big manufacturers of electronic products to reduce the complexity of the number of different end-of-life magnets treated. Such partnerships could increase interaction among SC members, provide information on the potential value of electronic waste and increase identification capacity.

For the same reasons, companies also look for industrial partnerships with recycling companies: they provide the technical knowledge of the separation process, and the partner companies put up the dismantling operations:

Case F mainly carries out bridging strategies in terms of upstream partnerships with suppliers. The company is a magnet manufacturer holding a power position inside the SC because of technological competence, which makes its customers (e.g. OEMs) dependent on its supply of high-quality and customized magnets. The company has a relatively big presence in the market, and these elements allow the company to leverage long-term stable relationships with its suppliers (“We do have very long-standing relationships. Therefore, we don’t change suppliers all the time”, Case F). Case E instead is investing massively to vertically integrate along the magnets’ SC, both upstream with an exploration project in Greenland and downstream with a magnet-making plant to be launched in 2025 in Estonia and a recent acquisition of a magnet maker based in the UK. This allows the company to achieve a great deal of independence and make SC choices regarding prices, quality, or sustainability on its own (“[.]we have no choice but to vertically integrate”, Case E).

Buffering strategies comprehend the creation of stock, increasing inventory to fight potential SC disruptions, spot purchases from different suppliers to not rely on single or few contracts, promoting recycling to create in-house sources of raw materials and focusing on product range and quality offered. Cases B and C, for example, as direct recyclers, have developed relationships that mainly revolve around single-spot purchases with the greatest possible number of suppliers to minimize shortage risks and widen purchasing choices to face a disruption in supplying scrap magnets to their production processes.

Case F also developed a diversification strategy regarding suppliers to maximize its chances of supplier substitution and reduce dependence on single sources. Thus, the company can pursue both bridging and buffering strategies by diversifying the supplier base and, simultaneously, building long-term commercial relationships and leveraging its power position in the SC. In addition, companies that have manufacturing units pursue a buffering strategy by recycling magnet swarf and directly re-entering it into the production process.

From a recurring exchange between the theoretical logic of the paper and the data, we identified institutional logic and autonomy as strategic drivers, meaning that in the context analysed, characterized by a strong dependence on scarce natural resources, the magnitude and direction assumed by these factors drive firms’ strategic responses to SC issues.

We found institutional logic to mainly revolve around two perspectives: the ecosystem perspective that goes towards building a competitive playground at the communitarian level, and the competitive perspective that emphasizes free competition as an individual firm. The ecosystem and competitive perspectives primarily differ for the stakeholders deemed as salient. The competitive firm gives utmost importance to market stakeholders, like customers, suppliers, employees and shareholders, shaping its SC strategic decisions on their requirements. Case E representative declares that the whole European magnets business unit was built to satisfy the requirements of some of their most important customers, who are European automotive companies asking their suppliers to diversify from China’s critical raw materials and improve their Environmental, Social and Governance standards:

Instead, the ecosystem perspective promotes a vision of creating the SC geopolitical competitiveness through enforcing regulation at a communitarian level and creating alliances. Direct recycling companies (Cases B and C), for example, are lobbying to promote a European regulation for magnet scraps: they recognize that the fundamental but scarce resource needed for their production process is currently being exported outside the European Union and that only a focused regulatory action can invert this trend and diminish their reliance on such a scarce natural resource.

Case F looks at the European perspective as a big block for raw materials sourcing that should work jointly to promote the availability of primary and secondary materials for the whole European Union ecosystem of magnet makers.

The European Battery Alliance and the European Raw Materials Alliance initiatives might empirically represent such an ecosystem case at the European level. The first one, for example, is a valid example of how a negotiated environment inside the European Union can be set up to address a natural resource dependence issue. Critical raw materials companies envision the same role for the raw materials alliance.

Informed by NRDT, we deductively reconducted the institutional logic of the cases to a spectrum that ranges from the ecosystemic logic (informed by the ecosystem perspective) to the economizing logic (informed by the competitive perspective) based on the quotes reported and the questionnaires’ results.

We found the concept of autonomy in the SC to be the most appropriate to describe the dynamics of adopting SC strategies. It determines how the firm can manage the dependence on the scarce natural resources in the SC as higher degrees of autonomy allow strategic choices that are otherwise not feasible. Autonomy is affected by the ability to integrate the SC, namely, how much the firm can overcome SC risk by gaining control over SC steps, by the size of the company’s operations in the SC (i.e. in the permanent magnet business) and by the level of internalization of the SC, as in the context of analysis the geographical location of some of the operations revealed to be necessary.

The ability to integrate the SC was reported by almost all cases as a critical factor in obtaining autonomy in the value chain. Therefore, in a context where dependence on scarce natural resources is high, obtaining direct control over some or all the SC steps seems preferable to concentrating on a single step, as it allows the firm to avoid having multiple contracts with suppliers. It gives end customers a guarantee of the firm’s reliability, thus marking an important and significant competitive advantage over less integrated firms.

Size represents a requisite to sustainably carrying out certain SC steps. A key example is the magnet dismantling process, which requires both knowledge of the discarded magnets and their presence in waste from electronic equipment. It also requires a critical volume of recycling operations, which could make magnet dismantling economically feasible. Case D, for example, declares that it has built the magnet extraction knowledge inside the start-up by working on hard-disk drives and electric vehicle motors dismantling. Still, it decided to partner with a big recycling company as they were not able to put up a dismantling unit on their own:

Internalization of the SC allows magnet firms to achieve autonomy concerning specific SC processes that are not possible to be carried out in specific geographies either because of the total unavailability of materials (e.g. absence of REEs’ mining in Europe) or because of lack of the necessary regulatory permits and social licence to operate (e.g. radioactive waste treatment from the magnet separation process).

We deductively reconducted the autonomy of the cases to a spectrum that ranges from low to high autonomy level based on the quotes reported and the questionnaires’ results.

Figure 4 represents the configurations and strategies from Table 4 using institutional logic and autonomy as dimensions of analysis, providing a graphical representation of the above findings. It should be noted that the ecosystemic logic promotes bridging strategies, whereas the economizing one promotes buffering. In addition, as the firm’s SC autonomy increases, the company tends to adopt a mix of strategies comprising both bridging and buffering. This could happen because autonomy is related to power in external relationships, and an increase of power with customers and suppliers allows the firm to adopt bridging strategies as long-standing relationships or vertical integration, but at the same time, to leverage on spot purchases and stock whenever the scarce resources are needed.

Strategic levers represent fields of action that firms might implement to manage dependence on scarce natural resources. Following Kalaitzi et al. (2018), we identified three leverages that influence SC management, namely, SS, DR and IR.

SS entails supplier diversification among different industries and geographies and the firm’s overall number of active suppliers, as these elements influence the availability of suppliers and the chances of switching from one to another to avoid possible SC disruptions. Regarding the number of suppliers, firms in the REEs magnets are generally aware of the necessity of working with various sources of inputs to escape eventual out-of-stock of the scarce resource (“you have to work yourself on multiple sources to secure inputs because otherwise, you will never know”, Case C). Moreover, to leverage SS, these sources should come from different countries and industries to reduce the most the risk of disruption due to geopolitical, market or physical unavailability of the resource:

SS lever is mainly adopted by companies that employ buffering strategies, as a higher number of diversified suppliers favours spot purchase behaviours and the creation of stock whenever supply is available on the market. For these reasons, this lever is mainly adopted by cases B and C, coupled with an economizing logic, which emphasizes the attempt to minimize shortage risks and widen purchasing choices to the detriment of building long-term relationships.

DR refers to the firm’s overall control over the scarce natural resource in relation to a multitude of social, political, regulatory, technological and environmental factors. Institutional support was included as a discretion lever because in the REEs magnets industry, the support from a trusted institutional partner is the key to developing the complex technological processes that sustain magnets’ recycling or separation (“almost all these companies (start-ups operating in REEs), [.] are spinoffs. So, they come from University Research Centers”, Case B). Generally, the development of expertise to create a competitive playground has been heavily driven by the reliance on European projects and funding (“We developed the expertise (on magnet recycling) on our side in a (European) project and at the university in Potsdam”, Case D). In addition, in some European countries such as France and Germany, there are attempts to create state-level systems that try to set up a level playing field for the companies operating in the country. Thus, there’s evidence that the institutional support received influences the strategic choices of the REEs firm, contributing to their DR.

The absence of clear regulation over dismantling, collecting and recycling e-waste appears to be a factor that limits the level of control over REEs. Therefore, all cases stated the necessity of strengthening European REEs magnets’ regulation. In addition to the regulatory issues, the social licence to operate is also critical since the potential opposition from European local communities threatens the very life of a company operating in this sector (e.g. separation of REEs entails producing radioactive by-products):

The geopolitical risk problem points in the same direction, as European companies are facing a structural disadvantage in terms of raw materials cost, which is around 30% on magnets. This factor limits the discretion that European companies have over REEs, and it highlights the role of regulation in bridging this entry gap. An envisaged intervention concerns the stock of secondary magnets, which should be forced to stay in the European Union, as it represents the main source of available raw materials directly possessed by European companies:

Technological competence is a key element of competitiveness for all the cases, and it was the only factor that did not differ in the words of the informants depending on their institutional logic, autonomy or strategy adopted. This was also confirmed by the validation questionnaire. It thus appears as an entry-level factor for the highly technological REEs industry, and this justifies the widespread phenomenon of start-ups born from research centres and universities. In addition, talent localization is another factor that brings control over resources. When the company can create a hub of talents and make synergies among different processes and plants, then it is leveraging on DR:

Finally, SC sustainability is another factor that contributes to DR, as European companies tend to leverage it to respect European Environmental, Social and Governance standards, being in this way more attractive to OEMs, which need to respect such standards. Therefore, environmental sustainability could be seen as one of the main levers of differentiation with respect to Chinese magnet offering (“main strength is our process. It’s, I think, the greenest way to recycle end of life magnet”, Case D).

DR lever is used in all cases, at least for its component of technological competence. However, companies that have an ecosystemic logic tend to leverage more on factors pertaining to DR, such as regulation, geopolitical risk and SC sustainability (Cases G, D and F). Also, a higher degree of autonomy favours the chances to implement SC sustainability initiatives and lessen the geopolitical risk (Case E).

The IR is determined by the impact that the scarce resource has on the firm’s performance. It is influenced by factors such as price volatility, cost and complexity of the production processes and availability of supply materials. Price volatility is a critical issue in the REEs magnets industry as commodities whose prices are anchored to market indices and mainly controlled by Asian markets. It is especially critical for secondary materials as a market does not exist for magnet scraps, and therefore, prices are not defined. These elements frame the heavy dependence on REEs as raw materials of European companies. However, some companies able to control price volatility (e.g. through vertical integration) have a powerful leverage to diminish the IR for them. In this regard, price volatility (control) represents a key determinant of the IR:

Similar logic can be applied to material availability. The absence of a real market for REEs makes it difficult not only to have stable prices but also to have a continuous flow of materials coming in to sustain the production process. The difficulty in getting both primary and secondary materials is shared among all the cases:

Regarding material availability, obtaining substantial autonomy from external suppliers through diversification (Case F) or vertical integration (Case E) seems the only way to strategically address the issue. In terms of the cost of magnets, firms declare the criticality of the magnets’ dismantling operations, which are very complex and incur high costs related to developing the knowledge to identify the magnets inside the waste from electronic equipment, collect the waste, disassembly it and direct the components towards their best environmental and economic recovery (Case A). Finally, transportation costs can be an issue for scrap magnet supply, as when long distances must be covered, transportation costs could rise to an unsustainable share of the overall price of the scrap magnet:

IR is thus leveraged by cases that show a high degree of autonomy. However, it is critical for most cases with low autonomy, which struggle with the suppliers and are dependent upon an unstable market governed by Chinese-set price volatility.

Figure 5 resumes the considerations regarding the role that the three levers play in transitioning from one SC configuration to another, highlighting the main axis of increased adoption for each lever.

This section discusses empirical findings in relation to extant literature to answer the research questions. We theorize how SC strategies are employed to manage dependence on scarce natural resources and the role of strategic drivers and levers in directing and sustaining the strategic solutions adopted by firms. The results of this study indicate that there’s no evidence of an SC-wide strategy but of differentiated strategies that lead to the concurrent adoption of different SC solutions (Hilletofth, 2009). We argue that the uncertainty caused by NRS emphasizes the use of a typical set of strategies reflecting the need to address natural resource dependence and the difficulty in assessing the best strategic solution. Our results help disentangle the relationships between these strategies and typical strategic drivers and levers in this context.

The study highlights that companies showing a low degree of autonomy and an ecosystemic institutional logic comply and balance pressures from different stakeholders, but they do not have specific leverages to act on (Cases A and G). When transitioning towards a more economizing logic, firms seem to adopt buffering strategies as the preferred way to position themselves in the SCs. This finding aligns with Bode et al. (2011), who posit an inverted U-shaped relationship between buffering and level of dependence, leading to a maximum rate of buffering adoption at a medium level of dependence, as in the niche company and focused company configurations. In line with NRDT, sample firms with an economizing logic adopt eco-development strategies that maximize the short-term chances of securing scarce natural resources. In an SC view, this translates into buffering actions to create a shield of slack resources to avoid supply disruptions.

The study also shows that companies assume power in their relationships with SC partners as autonomy increases. This fact complies with major RDT’s literature demonstrating that size positively affects organizational power (Meznar and Nigh, 1995; Van den Bosch and Van Riel, 1998); however, in our conceptualization of strategic drivers, size is the internal factor that contributes to autonomy, in addition to the more externally focused ability to integrate the SC and degree of internationalization of the SC. In this view, the regional network solution (Case D) represents an ecosystemic setting where the players bargain between themselves to form stable relationships and create independence from third parties. If the network is particularly extended and integrated, it can lead to a proper ecosystem or an alliance that becomes part of the institutional context and has the power to influence norms and values (Case F). Therefore, organizations adopt bridging strategies by forming close interrelationships to diminish the external uncertainty in the market (Bode et al., 2011).

On the contrary, in the economizing logic, firms open their business to different markets whenever needed to avoid institutional pressures. As autonomy gets higher, the firm can leverage its power position to challenge some institutional norms without excessive concerns about being pushed out of the market for the power position it holds (Meznar and Nigh, 1995). In such a case, RDT literature states that companies tend to adopt a buffering strategy (Meznar and Nigh, 1995; Roundy and Bayer, 2019; Bode et al., 2011), as it happens in the focused company configuration (Case C). In addition, our study indicates that bridging strategies are used simultaneously in an attempt to manage NRS with differentiated strategies (Hilletofth, 2009). This happens for Case F, which is diversifying the supplier base to reduce SC disruption risk while simultaneously having the power to maintain long-term relationships with suppliers. Case E is even more representative, as it pursues a bridging strategy (downstream and upstream integration) to reach autonomy on the market and obtain control over price and quantities, an outcome that is usually achieved through buffering (Kalaitzi et al., 2018). As a matter of fact, under the threats of NRS and the uncertainty it creates, companies find it difficult and riskier to make investments and pursue innovation (e.g. recycling, closed-loop SC, eco-design of products) with their resources. Thus, the interplay between bridging and buffering strategies becomes stronger (Kalaitzi et al., 2019; Hillman et al., 2009; Bell et al., 2013).

Our findings show that adopting different SC solutions to manage dependence on scarce natural resources leads to acting on different RDT leverages (IR vs SS vs DR). SC solutions, where SS is the preferred lever adopted, bring the firm to diversify the suppliers’ base to prevent SC disruption, leveraging the availability of alternative suppliers and the low switching costs. However, this can lead to the implementation of both buffering and bridging strategies. In such a case, analysing the importance of resource scarcity for the firm offers key insights to determine the strategic choice towards bridging or buffering.

IR should be intended as preferable if low, as it represents the magnitude by which the scarce resource affects the firm’s performance. Literature associates a high IR with the adoption of buffering strategies (Meznar and Nigh, 1995; Van den Bosch and Van Riel, 1998; Kalaitzi et al., 2018). Our study adds that when IR is scarcely affecting the firm, it can pursue buffering and bridging at the same time, leveraging both IR and SS. In fact, in the niche company and focused company configurations, Cases B and C perform a strict buffering strategy, supplying and accumulating scrap magnets whenever available from their suppliers because they are not controlling the availability of supply, and an eventual disruption would heavily influence their financial outcomes. Instead, case E has gained greater control over prices and quantities of its input resources by carrying out a bridging strategy through vertical integration and can leverage on a low IR with its customers, which asks for price volatility control and sourcing geographical optionality that only case E can guarantee. In network configurations, the main actionable lever to manage dependence is DR, as discretion mainly arises at a policy level, particularly in critical raw materials contexts where geopolitical struggles heavily influence the business environment.

The findings about the strategic levers bring novelty to the NRDT literature. Kalaitzi et al. (2018) concluded that both SS and DR lessen firms’ buffering and bridging activities. Our evidence integrates these findings, showing that DR may positively influence the adoption of bridging strategies in a strong ecosystem orientation. At the same time, a higher SS may lead to greater adoption of buffering in a strong economizing orientation. The institutional perspective, rather than technological, is thus the key to explaining these diverging findings. An ecosystemic logic is associated with SC configurations that aim at building cohesive networks where DR can be favourably leveraged through bridging strategies with network partners. As a representative from Case F explains, in the REE industry:

The critical raw materials landscape in Europe is threatened by a significant dependence on third countries for imports and by an ever-growing demand related to the use of these materials in green technologies. The SC delocalization trend in the past years has led to the dismissal of nearly all operations in most critical raw materials industries (Wagner and Bode, 2008), but in the past few years, driven by political and regulatory support (e.g. the Critical Raw Materials Act), new business initiatives are emerging at several SC steps to sustain European resilience over critical raw materials. This paper disentangles SC dynamics to manage dependence over scarce natural resources in this context. We drew on NRDT and RDT, analysing the adoption of buffering and bridging strategies depending on the institutional logic and the autonomy of the firm in the SC as strategic drivers. Then, we examined how strategic levers (IR, SS and DR) can be used within the identified SC strategies to manage external dependencies on scarce resources. In addition, we analysed their role in facilitating transitions between strategic solutions, highlighting the primary axes of leverage and growth.

To do this, we carried out seven case studies belonging to the REEs magnets European industry, analysing their SC positioning, strategies, processes, suppliers and customers relationships and prominent business criticalities.

This study offers evidence of real-world cases to the growing body of research on NRS implications for the firm (Tashman, 2021; Dias et al., 2022; de Abreu et al., 2017; Galbreath et al., 2020; Tashman and Rivera, 2016). The study investigates the case of REEs magnets in Europe, a natural resource that is non-renewable and scarce at a non-local level, representing a novel context of analysis for NRDT where the SC-wide perspective and the focus on external relationships and collaborations assume utmost importance. The theoretical contributions of the paper indeed concern both SC and NRS literature.

Firstly, this paper links the adoption of diversified SC management strategies when firms manage dependence on a naturally scarce resource (Hilletofth, 2009) to six different SC configurations that differ in terms of institutional logic, autonomy and strategic solutions adopted. The paper contributes to NRDT literature, showing how and under what conditions firms that depend upon natural resources and face uncertainty concerning those resources form relationships with others to obtain these resources or pursue vertical integration (Sarkis et al., 2011; Carter and Rogers, 2008). In particular, the study proposes that in sectors where natural resources are scarce and competition becomes intense (López-Gamero et al., 2011), firms adopt buffering strategies to shield the firm even from the partnering organizations. By doing that, we advance NRS and SC literature by showing that NRS favours the interplay between bridging and buffering strategies, as companies are more prone to collaborate along the SC to reduce uncertainty while simultaneously creating their own safeguard against possible SC disruptions.

Secondly, we elaborate on NRDT by extending the perspective of strategic responses to NRS (Tashman, 2021) at an SC level. We introduce two drivers of SC strategic responses to NRS: institutional logic and autonomy. The first one, taken from NRDT, is deployed as economizing and ecosystemic logic, highlighting the institutional orientation in the firm’s external relationships. The ecosystemic logic not only resonates with the “ecologizing” perspective of the NRDT in its emphasis on transforming environmental governance institutions to promote sustainability but also enriches this perspective by highlighting the critical role of SC dynamics in achieving sustainable use and equitable distribution of scarce natural resources at the ecosystem level – specifically within the European Union, as examined in this study. Autonomy, instead, extends the established finding of RDT that firm size positively influences power in external relationships (Meznar and Nigh, 1995; Van den Bosch and Van Riel, 1998). At the SC level, this concept is proposed to include both SC size and its degree of integration and internationalization, recognizing these factors as key elements influencing power in external relationships.

Thirdly, we fill a gap in RDT by clarifying the role of strategic levers in managing SCs under NRS. We integrated Kalaitzi et al.’s (2018) findings by revealing how the DR and SS levers combine with institutional logic, suggesting that DR favours bridging, mainly when the firm adopts an ecosystemic logic, whereas SS leads to buffering, mainly when the firm adopts an economizing logic.

Overall, our conceptualization of the effect of strategic levers on SC configurations and strategies systematically shows how IR, SS and DR combine with the adoption of buffering and bridging strategies in different SC solutions, contributing to the interface of NRDT and SC management.

This study provides important managerial implications for SC managers in developing strategies to cope with NRS. Firstly, this paper details six strategic configurations that SC managers operating in industries under NRS threat can refer to. Particularly, the paper’s framing is based on the consequential interplay between strategic drivers, strategies and strategic levers and can be used as a strategy-implementation guiding framework. Managers can consider the dominant institutional logic and the degree of autonomy of their firm in the SC to frame their positioning with reference to Figure 4 and devise their strategic choices. In addition, the paper also shows the levers that SC managers should act to leverage their configurations. From a broader perspective, managers can use the levers to transition from one configuration to another, following the main axis of growth of each lever (Figure 5) and reaching the envisioned positioning in terms of strategic drivers. Moreover, to our knowledge, this research is the first to target critical raw materials’ SC strategies. We contribute by showing how totally different businesses, with differentiated SC strategies, from start-ups to multinational companies, can co-exist. Based on the findings of this paper, we recommend to critical raw materials practitioners, particularly from start-ups, that bridging strategies consisting of establishing long-term partnerships can be preferable to survive in the long term. We suggest strategically focusing on three factors: price volatility control, localization of technological talent and sustainability of the SC. We also recommend sustained policy intervention and regulatory support, as they have been shown to be indispensable in establishing a European-level playing field for REE magnets. Finally, we argue that our research can be of interest to practitioners involved in other industries suffering similar conditions of dependence on NRS and institutional struggles, such as the automotive industry in relation to REEs magnets but also cobalt and lithium, among the other critical raw materials necessary for the energy transition, and the electronic industry with regard to its dependence on semi-conductors.

This study does not come without limitations as with any scientific work. In fact, our phenomenon-based approach prioritises the understanding of the complexity of NRS-related strategies in a meaningful setting over the immediate generation of widely generalizable theoretical contributions. Consequently, firstly, the reliance of our study on information from organizations willing to participate in the research might hinder the external validity of the findings. Thus, the viewpoints of those who did not respond are not accounted for in this paper, potentially limiting the conclusions drawn and prompting further investigation. However, we tackled this limitation through two methods. Initially, we ensured diversity within our interview pool, welcoming companies of different sizes, SC positions and integration levels, trying to cover as much of the REEs magnets industry as possible (Grabs and Garrett, 2023). We also complemented the interviews with direct observation, with a validation questionnaire, and through analysis of secondary sources to encompass alternative perspectives. Secondly, our insights derive from examining case studies coming from a single sector. While we hypothesize that the presented insights reveal general trends that theoretically apply to all critical raw materials industries, this hypothesis should be tested in future research regarding critical raw materials’ SCs, which is not adequately developed despite the key role of critical raw materials in the energy transition. For example, the positioning of sustainability as a resource dependence, envisioned by Schnittfeld and Busch (2016), should be studied in critical raw materials’ SCs as exposed to huge threats to the environment and the people (Massari and Ruberti, 2013; Golev et al., 2014). Moreover, to sample only organizations facing REEs scarcity issues, our sampling strategy introduced a significant degree of heterogeneity with regard to other firms’ dimensions, such as size, maturity and SC positioning. In certain cases, difficulties in conclusively spotting the sources of the differences across the cases call for additional investigation to further support the generalizability of the findings. Besides these identified needs for further research, among the promising avenues arising from our study, and given the importance of institutional mechanisms in this field, we argue that a valuable research direction would involve analysing the enabling mechanisms among organizations and institutions to foster alliances or ecosystems. Examples of such initiatives might include, for instance, the European Battery Alliance and the European Raw Materials Alliance.

The authors are grateful to the European Institute of Innovation & Technology Raw Materials (EITRM) for the technical support and for the access to its network, which is deeply connected with the whole critical raw materials industry in Europe. Without this support, it would have been impossible to carry out this work.

Table A1 

Table A2