Establishing linkages between circular economy practices and sustainable performance: the moderating role of circular economy entrepreneurship

Abstract

PurposeThis paper aims to examine the mechanism of how circular economy practices (CEP) and circular economy entrepreneurship (CEE) promote sustainable supply chain management (SCM) and facilitate sustainable performance (SP) for small and medium-sized enterprises (SMEs) in the food value chain in emerging economy. In this context, this mechanism involves the mediating role of sustainable SCM in the relationship between CEP and SP. Simultaneously, it involves the moderating role of CEE in the link between CEP and sustainable SCM.Design/methodology/approachThe paper follows a quantitative approach. Based on systematic literature review on the field, the nexus amongst the constructs were proposed. The Smart partial least square (PLS) version 3.3.2 was employed to analyze structural equation modeling (SEM) to investigate the relationships between constructs and latent variables. There were 457 valid responses obtained from the survey participants, those are managers at senior and middle levels. The data collected was then used for quantitative analysis and assessment.FindingsThe main finding of this study is twofold. First, it sheds light on how CEE associates in strengthening the influence of CEP on sustainable SCM. By this way, the better the CEE, the stronger the impact of the CEP on the sustainable SCM, leading to long-term sustainability. Second, it reveals how sustainable SCM mediates the link between CEP and SP. By this way, the better the CEP, the more the SCM is sustainable, ultimately leading to SP. This contribution is paramount because experimental research on this mechanism has not been intensively explored in the current literature.Originality/valueThe originality of this study is the provision of scientific knowledge and practical mechanisms for the introduction and application of CEP to business behaviors and practices in a real-world context that exists as a research gap in the current literature. In this respect, this study contributes to expanding the existing literature in the field by providing empirical evidence for the mechanism as stated. Furthermore, it provides a practical mechanism for SMEs in given context to enable them apply efficiently the circular economy perspective to their businesses to help them achieve SP. These contributions may be of interest to business practitioners, business leaders, academics and policymakers in the areas that are of their concerns.