Moderating Effect of Supplier Relationship Maintenance on the Relationship between Circular Economy Practices and Operational Efficiency in Government Agencies in Kenya

Operational efficiency remains a major concern among government agencies in Kenya despite ongoing public procurement reforms aimed at improving transparency, accountability, and value for money. Although Circular Economy Practices (CEP) have been identified as a strategic approach for enhancing sustainable procurement and operational performance, empirical evidence on their effectiveness within the Kenyan public sector remains limited. Moreover, little is known about the role of Supplier Relationship Maintenance (SRM) in strengthening the relationship between circular economy practices and operational efficiency. This study therefore examined the moderating effect of Supplier Relationship Maintenance on the relationship between Circular Economy Practices and Operational Efficiency in government agencies in Kenya. Specifically, the study sought to determine the effect of Circular Economy Practices on Operational Efficiency, establish the effect of Supplier Relationship Maintenance on Operational Efficiency, and examine the moderating effect of Supplier Relationship Maintenance on the relationship between Circular Economy Practices and Operational Efficiency. The study was anchored on the Resource-Based View, Social Exchange Theory, and General Systems Theory. A positivist research philosophy guided the study, while an explanatory cross-sectional survey research design was adopted. The target population comprised 2,450 procurement officers, supply chain managers, finance officers, environmental officers, and heads of procurement departments drawn from ministries, state corporations, constitutional commissions, and semi-autonomous government agencies in Kenya. Using Cochran's sample size determination formula, a sample of 332 respondents was selected through stratified and proportionate random sampling techniques. Primary data were collected using structured questionnaires based on a five-point Likert scale. Data were analyzed using descriptive statistics (means, standard deviations, frequencies, and percentages) in SPSS Version 30, while the hypothesized relationships were tested using Partial Least Squares Structural Equation Modelling (PLS-SEM) in SmartPLS 4. The significance of the structural relationships was assessed using the bootstrapping procedure with 5,000 resamples. The findings established that Circular Economy Practices had a positive and statistically significant effect on Operational Efficiency (β = 0.648, t = 13.524, p < 0.001), while Supplier Relationship Maintenance also exerted a positive and statistically significant effect on Operational Efficiency (β = 0.534, t = 9.817, p < 0.001). The study further found that Supplier Relationship Maintenance significantly moderated the relationship between Circular Economy Practices and Operational Efficiency (β = 0.214, t = 3.642, p < 0.001), indicating that strong supplier relationships enhance the operational benefits derived from circular economy practices. The study concludes that integrating circular economy initiatives with effective supplier relationship maintenance significantly improves operational efficiency within government agencies. The study recommends that policymakers strengthen sustainable public procurement policies by institutionalizing circular economy practices and collaborative supplier relationship management, while procurement managers should promote long-term supplier partnerships, supplier development, transparent communication, and information sharing to enhance operational efficiency and sustainable public service delivery.