Circular Economy Performance Research Articles

Financial performance of new circular economy companies in rural settings

AbstractThis study examines how rural conditions affect the establishment and performance of new circular economy (CE) companies—those that reduce, reuse, recycle, and recover materials in their processes—focusing on their longevity, financial performance, and distribution of economic value to stakeholders. We hypothesize that while rural conditions generally lead to fewer business establishments, the liability of rurality is less severe for CE companies than for others. We also anticipate that new CE companies will grow more slowly but achieve better performance, resulting in higher survival rates compared to those in other sectors. Our empirical analysis includes all CE companies established in Spain over the past decade. The results indicate that rural CE companies have higher survival rates than their urban counterparts, even after controlling for factors like subsidies and personnel costs. Although rural CE companies exhibit slower growth, they achieve greater profitability. Thus, the CE sector in rural areas demonstrates sustainability not only through its circular practices but also in financial terms, offering significant implications for investors seeking sustainable ventures.

Developing circularity metrics for the maritime industry: A stakeholder focused study

Embracing circular practices is crucial for reducing the maritime industry's environmental impact. However, the industry lacks tailored circular economy metrics to effectively measure its circularity practices and performance. To address this gap, a comprehensive review was conducted, analysing over 400 circularity metrics used in various other industries. From this extensive review, these metrics were refined and adapted to develop 57 circularity metrics tailored to the maritime sector. These novel metrics aim to guide maritime stakeholders in assessing and improving their circularity performance. Their relevance was validated through stakeholder engagement and consultations, and practicality was demonstrated through a detailed case study in three private shipyards. This case study showcased the metrics' applicability and highlighted their potential benefits in real-world scenarios by providing suggestions for improving the circularity performance of the facilities. This study marks the first comprehensive maritime circularity assessment, providing a structured pathway for the future adoption and implementation of circularity principles within the maritime industry. By establishing these metrics, the study sets a foundational framework for stakeholders to enhance sustainability and promote circular economy practices in maritime operations. Quantifying circular economy performance will enable stakeholders to track progress, identify best practices, and drive transition.

Sustainable Supply Chain Management in Enhancing Circular Economy Performance: Study Case in Indonesia

The concept of circular economy entails the reduction of resource inputs and the reclamation of waste in order to tackle the environmental, economic, and social challenges that sprang from the persistence of the linear economic model. Implementing a circular economy certainly has its own challenges. One of which is to find a sustainable supply chain. Sustainable supply chains are designed and man¬aged by combining practices responsible for the environment and society throughout the life cycle of a product or service. This is possible to achieve through good collaboration between supply chains and having a supply chain design with a sustainable concept. Thus, this research discusses the effect of sustainable supply chain management on circular economy performance mediated by circular economy capability. The objects of this research are 82 courier service companies on Java Island. This research employed quantitative design. The data collection method involved distributing online questionnaires to middle – top managers as respondents. The results show that sustainable supply chain management has a positive effect on environmental performance, then sustainable supply chain management has a positive effect on financial performance. Furthermore, circular economy capability partially mediates the correlation between sustainable supply chain management and environmental performance, and partially mediates the correlation between sustainable supply chain management and financial performance. This research conveys the direction of further research in the same re¬search context.

A study on green practice infusion of the SMES in the context of circular economy

Sustainable development has attracted widespread attention worldwide, and the circular economy has become one of the essential policies of many countries. Small and medium-sized enterprises are important drivers of world economic growth and can significantly impact the environment. Therefore, SMEs are critical players in implementing a circular economy as the basis for creating a sustainable society. Although a wealth of research on SME environmental management issues can be found in the literature, more must be known about the infusion of green practices in SMEs. The primary purpose of this study is to explore the green practice infusion of Taiwanese SMEs, a context that is particularly relevant due to Taiwan’s strong focus on environmental sustainability and its circular economy industrial development policy. Through a questionnaire survey, this study examined the factors that influence green practice infusion behavior in Taiwanese SMEs and the impact of green practice infusion on circular economy performance. The findings show that the relative advantages and compatibility of the circular economy, organizational support, human resource quality, regulatory pressure, and government support significantly impact the green practice infusion of Taiwanese SMEs. The effects of complexity, customer pressure, and environmental uncertainty on SMEs’ infusion of green practices are not statistically significant. Circular economy performance is positively correlated with green practice infusion. This study can broaden the research scope of SMEs’ environmental management and contribute to a deeper understanding of SMEs’ green practice infusion and circular economy.

Advancing circular economy of pallets: A comprehensive evaluation framework

The pursuit of sustainable development highlights the circular economy (CE) as a viable approach. Pallets, transporting over 80% of global trade, lack CE performance (CEP) evaluation, hindering sustainability efforts in logistics. This study develops a comprehensive framework comprising 17 indices across the pallet lifecycle to evaluate CEP in China, based on literature review, field studies, and integration of material flow analysis and life cycle assessment. Results reveal significant variation in CEP across pallet types. Wooden pallets generate substantial waste, with a high waste-to-weight ratio of 58.60%, due to inefficient processing. Plastic pallets exhibit high material efficiency (99.88%), but face environmental challenges due to non-renewable resources reliance. Steel pallets demonstrate exemplary waste management but are underutilised. Paper pallets need better durability and fly ash pallets have environmental concerns due to adjuvants. The proposed framework offers an effective tool for promoting sustainability in logistic carrier industries, with applicability extending beyond pallets.

A novel hybrid decision‐making framework for measuring Industry 4.0‐driven circular economy performance for textile industry

AbstractThe sustainability strategy focuses on conscious production and consumption, with the circular economy (CE) as an innovative approach to maximize resource value and minimize waste. Industry 4.0 technologies like AI, robotics, and blockchain play a significant role in enhancing the competitiveness of businesses pursuing the CE. These advanced technologies help organizations achieve their sustainability goals, particularly within the CE framework. The study analyses how Industry 4.0‐driven CE practices impact sustainable business performance, using the Indian textile industry as a case study. The researchers developed a three‐stage hybrid decision‐making framework, integrating various methods to assess sustainable performance. A novel three‐stage hybrid decision‐making framework was developed by integrating Kendall's agreement test (Kendall's W), fuzzy Delphi, best–worst method (BWM), full consistency method (FUCOM), and combined compromise solution (CoCoSo) methods. The findings highlight positive outcomes such as enhanced incentives, government support, greener logistics, and improved monitoring of emissions, waste, and pollution. However, there is room for further improvements to address market demand and increase the profitability of green products.

Mapping Circular Economy Performance: EU Member States Analysis and Insights

Abstract The concept of the circular economy was created around the desire to extend the life of products and, implicitly, their use in an economy. The waste reduction process is founded on the basis of the three R's - reduce, reuse, recycle, which aims to conserve natural resources. In order to determine the contribution made by the European Union (EU) states regarding the circular economy sector, a descriptive analysis was carried out at the level of the member countries, followed by the identification of their ranking regarding the performances recorded in accordance with the analyzed indicators, a final step being the realization of a cluster analysis through which to determine the similarities and differences between them. Among the results obtained, it was found that the countries in the center of the EU have among the highest values in terms of private investment related to circular economy sectors, but also for resource productivity, although they have among the lowest percentages of people employed in this field, but and among the largest greenhouse gas emissions from production activities.

The Effect of Institutional Pressure on Circular Economy Performance in Courier Express Parcel in Indonesia

The Effect of Institutional Pressure on Circular Economy Performance in Courier Express Parcel in Indonesia

Does Environmental Regulation Affect Circular Economy Performance? Evidence from China

Environmental regulation is an important means to solve the environmental pollution challenges faced by economic development. Under the predicament of economic growth facing enormous environmental challenges, this paper aims to explore whether environmental regulation has a promoting effect on the circular economy performance, construct the mechanism through which environmental regulation impacts circular economy performance, as well as test regional heterogeneity on the impact of environmental regulation on circular economy performance under different levels of economic development. Exploring these factors is of great significance for meeting people’s demand for better living environments and promoting green and sustainable economic development. This paper takes interprovincial panel data of China from 2011 to 2022 as the sample and adopts structural equation modeling to explore the influence mechanism of environmental regulation on circular economy performance by constructing a measurement system of environmental regulation and circular economy performance. The results indicate the following: environmental regulation has a significant role in promoting circular economy performance, and there is a partial mediating effect of industrial structure upgrading within it; heterogeneity analysis shows that the promoting effect of environmental regulation on circular economy performance varies according to the different levels of regional economic development. Therefore, environmental regulation policies should be moderately adjusted to promote balanced economic and environmental development; environmental regulation policies should be enriched to promote industrial structure transformation and upgrading; regional synergistic governance should be improved to facilitate the promotion of the circular economy.

Tourism's circular economy: Opportunities and challenges from an integrated theoretical perspective

AbstractThis study explored circular economy (CE) performance in small‐ and medium‐sized enterprises (SMEs) in the tourism sector. The study's theoretical framework comprised value–belief–norm theory, institutional theory, upper echelon theory (UET), and the dynamic capabilities (DCs) approach. Empirical data from 286 Indian SMEs were analyzed using partial least squares structural equation modeling. The results indicated that personal norms, coercive pressures (CP), mimetic pressures (MP), and top management commitment toward the environment influenced CE performance through DCs. However, normative pressures (NP) did not significantly influence CE performance. DCs were a catalyst enabling individual beliefs, organizational factors, and external pressures to push SMEs toward a CE. Nevertheless, possibly due to insufficient resources, SMEs were reluctant in improving their CE performance. Policymakers and SME owners should therefore develop DCs in their organizations to achieve CE performance through appropriate resource assessment and design.

Revisiting circular economy indicators: A circular supply chain perspective

The accurate understanding and measurement of circularity in purchasing and supply management is crucial for organisations aiming to enhance sustainability, reduce costs, and comply with regulations. However, existing circular economy indicators do not account for all circularity dimensions (i.e., C1-monetary, C2-energy and environment, C3-material, C4-temporal and C5-efficiency) and neglect key actors (i.e., collectors, recyclers, manufacturers, users) in the circular supply chain. Consequently, this results in biased decision-making when selecting supply chain partners, hindering the circular economy's progress. This study investigates the effectiveness of circular economy indicators and their constituent circular economy items at the circular supply chain level to better evaluate circular economy accomplishments. Out of the 63 circular economy indicators and 23 circular economy items identified, only three evaluate all five circularity dimensions, while nearly 40 percent fail to consider critical actors within the circular supply chain. Drawing on stakeholder theory, this study proposes a framework for developing an effective circular economy indicator. The proposed framework is validated through a hybrid approach, beginning with the fuzzy analytical hierarchy process to ascertain the weights of circular economy items, followed by the fuzzy technique of order preference similarity to the ideal solution to rank recycling alternatives using the determined weights, and culminating with the linear programming to optimise the circularity based on the established rankings. This research emphasises the importance of covering all circularity dimensions and targeting all circular supply chain actors in aligning the goals of different entities with the broader objectives of the circular economy. It is the first study to provide guidance on developing circular economy indicators and evaluating circular economy performance from a circular supply chain perspective, serving as a solid foundation to achieve circular economy agendas. It affords purchasing and supply practitioners the opportunity to augment decision-making processes, optimise sustainability efforts, and bolster supply chain regulatory adherence and governance.

Shirking in supply chain collaborations: do circular economy entrepreneurship and technical capability moderate impacts for circular economy performance?

PurposeSmall and medium-sized enterprises (SMEs) in emerging economies are encouraged to form supply chain collaborations (SCC) for better circular economy (CE) performance. Yet, the literature remains silent on SMEs’ susceptibility to opportunistic behaviors of supply chain (SC) partners. This study draws on the transaction cost theory (TCT) and the resource-based view (RBV) to investigate the impact of shirking on SCC and CE performance while exploring how circular economy entrepreneurship (CEE) can curb the impacts of shirking on SCC as well as drive technical capability (TC) to moderate the relationship between SCC and CE performance.Design/methodology/approachThe TCT and RBV are used as a theoretical lens to investigate the direct, mediation and moderation effects tested via partial least square structural equation modeling (PLS-SEM) using survey data from 152 managers of SMEs in Nepal.FindingsContrary to past findings, the study results show that shirking, directly and indirectly, has a positive and significant impact on SCC and CE performance, respectively. The results also show that as CEE, which positively and significantly drives TC, moves from low to high levels, the effect of shirking on SCC dampens, and as TC moves from low to high levels, the effect of SCC on CE performance intensifies.Originality/valueThis study’s contribution lies in extending the shirking debate to the CE domain and also in identifying CEE and TC as potent means for SMEs in emerging economies to mitigate shirking impacts and induce SC partner commitments in CE-driven SCC. This study provides relevant theoretical and practical insights.

Trust (in)congruence, open innovation, and circular economy performance: Polynomial regression and response surface analyses

Engaging partner firms in open innovation is critical to overcoming internal resource/capability constraints to achieve firm and supply chain circular economy (CE) performance, yet scholars have not examined this link empirically. Further, while researchers have repeatedly emphasized trust as a key driver of open innovation performance, little is known from a dyadic trust perspective (e.g., congruence vs. incongruence, high–high congruence vs. low–low congruence). To fill these gaps, we propose a theoretical model based on the social exchange theory (SET) and test it using a dyadic dataset of listed Chinese manufacturing firms. The results suggest that 1) rather than unilateral trust from the focal firm or its partners, trust congruence is more predictive of successful open process and product innovations, 2) regarding congruence types (low–low vs. high–high), congruence at higher levels of trust facilitates open product innovation more than low–low trust congruence; interestingly, such an effect is not significant for open process innovation, 3) open process innovation has a positive influence on the focal firm's CE performance, but its impact on supply chain CE performance is not statistically significant, and 4) open product innovation has a significantly positive impact on the focal firm and supply chain CE performance. Our findings still hold after analyzing time-lagged models and alternative measurements as robustness checks. Our study provides meaningful theoretical contributions to the literature and useful, practical insights for managing inter-organizational relationships, open innovation, and CE performance.

Performance Evaluation of Circular Economy Practices: A Literature Review

Objective: This paper aims to map the characteristics of the international scientific literature that address the fragment of literature related to the performance measurement of the circular economy (CE) practices inserted in the companies. Theoretical Framework The bibliographic portfolio defines the characteristics of literature regarding circular economy practices and how they can be evaluated. Method: We analyzed the basic and advanced variables based on the 54 papers from the bibliographic portfolio selected by the research instrument ProKnow-C. Results and Discussion: We then identified that: i) there is no collaboration network between authors on the subject since it is an emergent research field; ii) the origin of the authors who research the most about the subject is the United Kingdom (UK) and the highlighted institution is the brazilian University of São Paulo (USP); iii) the (internal) organizational issues act as the main driver and as a barrier at the same time, considering the complexity to insert CE in a holistic and non-fragmented manner within the organization. Research Implications: The results provide practical contributions in guiding organizations with key mechanisms that can be used to evaluate circular economy practices. Originality/Value: The obtained results hold significant value for the academic community by identifying gaps in the assessment of circular economy performance. These findings pave the way for proposing advancements in circular economy practices, thus contributing to the progression of the field.

Artificial intelligence-based reverse logistics for improving circular economy performance: a developing country perspective

PurposeReverse logistics services are designed to move goods from their point of consumption to an endpoint to capture value or properly dispose of products and materials. Artificial intelligence (AI)-based reverse logistics will help Micro, Small, and medium Enterprises (MSMEs) adequately recycle and reuse the materials in the firms. This research aims to measure the adoption of AI-based reverse logistics to improve circular economy (CE) performance.Design/methodology/approachIn this study, we proposed ten hypotheses using the theory of natural resource-based view and technology, organizational and environmental framework. Data are collected from 363 Indian MSMEs as they are the backbone of the Indian economy, and there is a need for digital transformation in MSMEs. A structural equation modeling approach is applied to analyze and test the hypothesis.FindingsNine of the ten proposed hypotheses were accepted, and one was rejected. The results revealed that the relative advantage (RA), trust (TR), top management support (TMS), environmental regulations, industry dynamism (ID), compatibility, technology readiness and government support (GS) positively relate to AI-based reverse logistics adoption. AI-based reverse logistics indicated a positive relationship with CE performance. For mediation analysis, the results revealed that RA, TR, TMS and technological readiness are complementary mediation. Still, GS, ID, organizational flexibility, environmental uncertainty and technical capability have no mediation.Practical implicationsThe study contributed to the CE performance and AI-based reverse logistics literature. The study will help managers understand the importance of AI-based reverse logistics for improving the performance of the CE in MSMEs. This study will help firms reduce their carbon footprint and achieve sustainable development goals.Originality/valueFew studies focused on CE performance, but none measured the adoption of AI-based reverse logistics to enhance MSMEs’ CE performance.

Opening the black box of the use phase in circular economy life cycle assessments: Environmental performance of shell jacket reuse

AbstractLife cycle assessment (LCA) is highly needed and widely used to assess the environmental performance of circular economy (CE) measures such as reusing and sharing. However, the results of such LCAs are hampered by limited knowledge about the use phase of consumer products and oversimplification of important use phase aspects such as product functionality, user behavior, displacement, and rebound effects. This paper aims to validate the usefulness of a framework designed to assist practitioners in the generation and utilization of such knowledge in LCAs of circular measures. To validate the framework, a case study is used: reuse of shell jackets enabled by “premium secondhand” stores for outdoor equipment and clothing. The paper demonstrates that conclusions about the environmental performance of reuse can easily be altered depending on the functional unit definition, whether real user behavior data are used, and whether imperfect displacement and rebound effects are considered. For instance, shell jacket life cycles that include reuse and thus may be labeled “circular” have significantly higher environmental impact per use occasion than “linear” ones (used by one principal user the entire lifespan), since “circular” shell jackets are used less frequently, in particular during their first use span. Through facilitating the generation and utilization of environmentally relevant use phase data, which are otherwise often overlooked, the framework seems capable of supporting a better understanding of the environmental performance of CE measures.

Exploring lean manufacturing drivers for enhancing circular economy performance in the pharmaceutical industry: a Bayesian best–worst approach

PurposeThe imperative to conserve resources and minimize operational expenses has spurred a notable increase in the adoption of lean manufacturing within the context of the circular economy across diverse industries in recent years. However, a notable gap exists in the research landscape, particularly concerning the implementation of lean practices within the pharmaceutical industry to enhance circular economy performance. Addressing this void, this study endeavors to identify and prioritize the pivotal drivers influencing lean manufacturing within the pharmaceutical sector.FindingsThe outcome of this rigorous examination highlights that “Continuous Monitoring Process for Sustainable Lean Implementation,” “Management Involvement for Sustainable Implementation” and “Training and Education” emerge as the most consequential drivers. These factors are deemed crucial for augmenting circular economy performance, underscoring the significance of management engagement, training initiatives and a continuous monitoring process in fostering a closed-loop practice within the pharmaceutical industry.Research limitations/implicationsThe findings contribute valuable insights for decision-makers aiming to adopt lean practices within a circular economy framework. Specifically, by streamlining the process of developing a robust action plan tailored to the unique needs of the pharmaceutical sector, our study provides actionable guidance for enhancing overall sustainability in the manufacturing processes.Originality/valueThis study represents one of the initial efforts to systematically identify and assess the drivers to LM implementation within the pharmaceutical industry, contributing to the emerging body of knowledge in this area.

Measuring the impact of circular economy performance on financial performance: The moderating role of stakeholder engagement

AbstractThis paper investigates whether and to what extent circular economy performance affects the financial performance of a global sample of listed agri‐food firms. Furthermore, the potential moderating role of stakeholder engagement in empowering this relationship has been tested. A circular economy performance index has been developed based on Environmental Social and Governance scores reclassified in the light of the reuse, reduce, recovery and recycling (4R) paradigm. Then, a multivariate regression model from 2015 to 2022 has been carried out. A broader theoretical framework has been adopted, combining the natural resource‐based view and stakeholder theory. The results show a positive relationship between the circular economy performance, the financial performance and the boosting function played by stakeholder engagement. The study findings provide stimuli for academics and managers to reflect on the profitability of the circular economy and the pivotal role of stakeholder engagement in giving a significant impulse to the circular transition.

Measuring the circular economy in Europe: Big differences among countries, great opportunities to converge

AbstractThe main aim of this article is to analyze the circular economy (CE) transition of European countries between 2014 and 2021, using the European Commission approach of production and consumption, waste management, secondary raw materials, and competitiveness and innovation. To do so, we have built a multidimensional Circular Economy Index that classifies European countries according to their progress towards a circular economy. We used data from the Eurostat database and extracted all circular economy indicators for the EU27 countries plus Liechtenstein, Norway, Switzerland, the United Kingdom, and Iceland. The time series starts in 2014 and ends in 2021 and we have used 15 variables grouped in four dimensions by means of a second order factor analysis with a Promax rotation. We have also applied a hierarchical cluster analysis to group countries by circular economy performance. Our results suggest an improvement in circular economy performance between 2014 and 2021 in Europe. We likewise find there is a ‘four‐speed Europe’ in terms of a circular economy, highlighting the good results of the Netherlands, Germany, Italy, and Belgium.

The Impact of Green Supply Chain Management on Circular Economy Performance: The Mediating Roles of Green Innovations

Background: This study investigated the impact of green supply chain management (GSCM) on circular economy (CE) performance. The mediating roles of three green innovation types, namely green product innovation, green process innovation, and green management innovation, are also examined. Methods: This study’s population comprised all companies in the manufacturing sector in Jordan. A simple random method was applied to gather data from 278 companies. The research model was evaluated in terms of validity and reliability, which were found to be satisfactory. Hayes’s PROCESS macro in IBM SPSS was applied for hypothesis testing. Results: The findings showed that GSCM directly and positively affected CE performance. Moreover, GSCM showed positive impacts on the three types of green innovation. In addition, the three innovation types demonstrated positive impacts on CE performance and proved to positively mediate the GSCM–CE performance relationship. Conclusions: The present study is the first, to the best of our knowledge, to examine the mediating effect of green innovations on the GSCM–CE performance relationship. It is also among the first to examine the impact of GSCM on three different types of green innovation that represent technological and non-technological innovations.