Findings – The authors’ analysis documents how relationships between the focal firm and other
supply chain members altered as the new reverse logistic system developed. The modular governance
structure that developed through increased supplier capability coupled with higher levels of
knowledge and information codifications were shown to be important factors in the establishment of a
reverse logistics system. Supplier capability, knowledge codification and transaction complexity were
found to be moderating variables which can enrich the traditional models on buyer-supplier
relationships based on trust and ongoing commitment.