Exploring antecedents for the circular economy capability of micro, small and medium enterprises: An empirical study

Abstract

AbstractMicro, small and medium enterprises (MSMEs) play an important role in the economies of developing countries. The circular economy (CE) is considered a long‐term initiative for protecting the environment by reducing waste and greenhouse gas emissions, recycling and ending planned obsolescence. This research aims to explore antecedents for the CE capability in the context of the Indian MSMEs. The current study used the extended theory of planned behaviour and institutional theory to measure CE capabilities. Seven hypotheses are developed in this study. The survey‐based research is carried out with 296 responses from the MSMEs of different sectors in India. Hypothesis testing is done using the structural equation modelling approach. Major constructs identified for this study are green economic incentives (GEIs), social pressure (SP) and attitude. These constructs have a significant association with the CE capability of MSMEs. Environmental commitment (EC) and sustainable supply chain design (SSCD) act as mediators. Insights from this study will help the top management of MSMEs to understand antecedents for CE capability. The findings show that SP and GEIs are positively associated with EC and SSCD. It is found that EC and SSCD play a complimentary mediation role. The research findings will provide a solid foundation for understanding the importance of CE capability in MSMEs and developing strategic plans to facilitate implementing CE in these small sized firms.