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Antecedents of circular manufacturing and its effect on environmental and financial performance: A practice-based view

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  • Liu, Yanping
  • Farooque, Muhammad
  • Lee, Chang-Hun
  • Gong, Yu
  • Zhang, Abraham

Abstract

Despite the worldwide recognition of the Circular Economy (CE) philosophy, its comprehensive adoption in manufacturing is not well understood in literature and practice. This study theorizes circular manufacturing (CM) by extending the cleaner production concept according to the design thinking of CE. Drawing on the practice-based view, it develops a conceptual model on the antecedents and performance outcomes of CM and the moderating role of Industry 4.0 (I4.0) production technologies on CM-to-environmental and financial performance relationships. The research adopts a mixed-methods approach to examine the hypothesized relationships. Survey data from 255 Chinese manufacturers are analyzed using structural equation modeling and hierarchical regression. Two qualitative case studies verify the survey findings and offer additional insights. The findings suggest that by strengthening a CE culture and integrated management systems, firms can improve CM implementation and consequently environmental and financial performance. However, investing in I4.0 production technologies may not enhance the impact. Our research contributes to the literature by conceptualizing and operationalizing CM as a new construct. It also provides guidelines for implementing CE in manufacturing.

Suggested Citation

  • Liu, Yanping & Farooque, Muhammad & Lee, Chang-Hun & Gong, Yu & Zhang, Abraham, 2023. "Antecedents of circular manufacturing and its effect on environmental and financial performance: A practice-based view," International Journal of Production Economics, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:proeco:v:260:y:2023:i:c:s0925527323000981
    DOI: 10.1016/j.ijpe.2023.108866
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    3. Daniel Jugend & Hugo Henrique dos Santos & Susana Garrido & Regiane Máximo Siqueira & Jaime A. Mesa, 2024. "Circular product design challenges: An exploratory study on critical barriers," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 4825-4842, July.
    4. Dong Li, 2024. "Sustainable Ecosystems and the Economics of State Ownership: A Three-Stage Structural Framework and Innovative Insights," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 11090-11127, September.
    5. Akhtar, Pervaiz & Ghouri, Arsalan Mujahid & Ashraf, Aniqa & Lim, Jia Jia & Khan, Naveed R & Ma, Shuang, 2024. "Smart product platforming powered by AI and generative AI: Personalization for the circular economy," International Journal of Production Economics, Elsevier, vol. 273(C).
    6. Hala Hmamed & Anass Cherrafi & Asmaa Benghabrit & Sunil Tiwari & Pankaj Sharma, 2024. "The adoption of I4.0 technologies for a sustainable and circular supply chain: an industry‐based SEM analysis from the textile sector," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 2949-2968, May.

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