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Closing the loop through eco‐innovation by European firms: Circular economy for sustainable development

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  • Ángela Triguero
  • María C. Cuerva
  • Francisco J. Sáez‐Martínez

Abstract

The purpose of this paper is to analyze the factors influencing the adoption of environmental innovations towards a circular economy (CE) by the EU firms, with special focus on technological capabilities and external support. A multivariate probit model is specified to allow the distinction between three types of eco‐innovative practices: Reduce, Recycle, and Redesign technological processes. Using a novel taxonomy based upon the distinction between narrowing, closing, and slowing loops in the use of resources, we find that financial and technological capabilities are essential drivers for all types of CE actions in the European firms. Similar findings are found for the public funding support but only when the firms are recycling (closing resource loops) and redesigning (slowing resource loops). Knowledge from private companies (pecuniary mode) is relevant to Reduce and Recycle strategies. These two eco‐innovative practices are also shown in firms with a wide external knowledge network. Results also show that there is an inverted U‐shaped relation between the diversity of collaboration and the circular Redesign of products. The paper ends up with some implications for practitioners and policy makers.

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  • Ángela Triguero & María C. Cuerva & Francisco J. Sáez‐Martínez, 2022. "Closing the loop through eco‐innovation by European firms: Circular economy for sustainable development," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2337-2350, July.
    • Handle: RePEc:bla:bstrat:v:31:y:2022:i:5:p:2337-2350
    DOI: 10.1002/bse.3024
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    2. Ren, Qiuzhen & Albrecht, Johan, 2023. "Toward circular economy: The impact of policy instruments on circular economy innovation for European small medium enterprises," Ecological Economics, Elsevier, vol. 207(C).
    3. Nick Clifton & Khine S. Kyaw & Zheng Liu & Gary Walpole, 2024. "An Empirical Study on Public Sector versus Third Sector Circular Economy-Oriented Innovations," Sustainability, MDPI, vol. 16(4), pages 1-26, February.
    4. Fusillo, Fabrizio & Quatraro, Francesco & Santhià , Cristina, 2023. "Leveraging on Circular Economy Technologies for Recombinant Dynamics: Do Localized Knowledge and Digital Complementarities Matter?," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 202302, University of Turin.
    5. Agustí Segarra‐Blasco & Mercedes Teruel & Josep Tomàs‐Porres, 2024. "Circular economy and public policies: A dynamic analysis for European SMEs," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3532-3549, May.
    6. Qingyu Zhang & Aman Ullah & Sana Ashraf & Muhammad Abdullah, 2024. "Synergistic Impact of Internet of Things and Big-Data-Driven Supply Chain on Sustainable Firm Performance," Sustainability, MDPI, vol. 16(13), pages 1-20, July.
    7. Najahul Kamilah Aminy Sukri & Siti Nur ‘Atikah Zulkiffli & Nik Hazimah Nik Mat & Khatijah Omar & Mukhammad Kholid Mawardi & Nur Farah Zafira Zaidi, 2023. "An Analysis of Eco-Innovation Capabilities among Small and Medium Enterprises in Malaysia," Administrative Sciences, MDPI, vol. 13(4), pages 1-24, April.

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