Abstract
With the rising need to protect and preserve the environment coupled with pressure from stakeholders, businesses are looking for ways to minimise the harmful effects of their operations on the environment by enhancing their circular economy capabilities and implementing sustainable manufacturing practices. Most prior research has investigated how circular economy and sustainable manufacturing enhance environmental performance, but scant research has explored the configurational effects of circular economy capabilities and sustainable manufacturing practices on environmental performance. This study employs a multi-method approach on a sample of 285 manufacturing firms, to examine the effects of circular economy capabilities and sustainable manufacturing practices on environmental performance from the theoretical lenses of resource orchestration theory. First, the study uses PLS-SEM to determine the symmetric effects of circular economy capabilities and sustainable manufacturing practices on environmental performance. Second, the study adopts fsQCA to unravel the best permutation of circular economy capabilities, sustainable manufacturing practices, or (3) a combination of both circular economy capabilities and sustainable manufacturing practices to enhance or diminish environmental performance. We found that Sensing capabilities, Seizing capabilities, and Reconfiguring capabilities, as well as Sustainable product design, Sustainable manufacturing process, Sustainable Supply chain management, and Sustainable end-of-life management, have substantial effects on environmental performance. The finding further highlights that the configurations of circular economy capabilities and sustainable manufacturing practices rather than individual capabilities or practices strongly affect environmental performance. The findings support the value of circular economy capabilities and sustainable manufacturing practices for the manufacturing sector.
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