Determinants of the transition towards circular economy in SMEs: A sustainable supply chain management perspective

Abstract

This paper develops a model to explore the relationships between social pressure, environmental commitment, green economic incentives, supply chain relationship management, sustainable supply chain design, and circular economy capability. Through data gathered from 212 small and medium enterprises (SMEs), this study applies confirmatory factor analysis (CFA) and structural equation modelling (SEM) to test the model developed. The findings provide three main contributions to the body of literature. First, they confirm that environmental commitment and green economic incentives have a significant positive impact on supply chain relationship management and sustainable supply chain design. Second, they highlight the role of supply chain relationship management and sustainable supply chain design to improve the circular economy capabilities of SMEs. Third, they show a positive effect of social pressure on environmental commitment and green economic incentives. These results induce practitioners, academicians, and policy makers to design strategic plans to encourage circular economy transition of SMEs and supply chains, as well as to focus their attention on the role of sustainability in supply chain management domain.