Eco-innovations are increasingly regarded as an essential component in societies’ transition to sustainability, due to their potential to reduce the environmental impact of resource-intensive production and consumption activities. Because a firm’s knowledge base alone might not be sufficient as a source of diversified knowledge, the firm must look for ways to capture, interpret, and deploy knowledge from its external networks. Supply networks stand as one of the key sources in the hunt for the novel knowledge outside the focal firm. Supported by concepts in network theory, this paper is aimed at investigating how collaboration for innovation is more likely to materialize in a supplier network. The theoretical propositions elaborate on the role of power, tie strength, and geographical proximity in the development of innovations for the circular economy. Overall, this study extends the discussion of traditional buyer-supplier relationships by emphasizing a wider network perspective in which network effects and the complex nature of collaboration are highlighted.