Examining how government subsidies influence firms’ circular supply chain management: The role of eco-innovation and top management team

Abstract

With increasing concerns about sustainability from policymakers, the industry, and the wider society, circular supply chain management (CSCM) has been recognized as an important route to achieving sustainability targets. However, adopting circular supply chain management faces challenges and uncertainty. How to leverage external and internal resources to enable firms' CSCM has become an increasingly prominent topic. Based on the resource-based view and upper echelons theory, this study examines how critical factors, i.e., eco-innovation and top management team (TMT)'s experience, impact the relationship between government subsidies and CSCM. By analyzing data of listed firms in China from 2011 to 2019, our empirical results show that eco-innovation mediates the relationship between subsidies and CSCM. Furthermore, the impact of subsidies on eco-innovation is mainly moderated by TMT with R&D experience, while the impact of eco-innovation on CSCM adoption is mainly moderated by TMT with environmental management experience and supply chain management experience. This study enriches the literature on CSCM and advances our understanding of the channel through which government subsidies affect firm decisions in CSCM.