Examining the Relationships between Circular Economy Implementation and four Dimensions of Firm Performance

Matthias Schneider, Svenja Damberg, Ulla Saari, Cornelius Herstatt

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review

Abstract

This study builds on firm performance and Circular Economy (CE) research to investigate the relationship between firms’ CE implementation and four dimensions of firm performance, i.e., financial performance, competitiveness, environmental performance, and corporate reputation. We base our hypotheses on sustainability management and firm performance literature and previously validated scales to build a structural path model that examines the relationships between CE implementation and the respective four performance dimensions. We conducted a survey involving 177 respondents from manufacturing and construction companies operating in Germany and analyzed the data with partial least squares structural equation modeling (PLS-SEM). The results of our study confirm a positive relationship between CE implementation and all four dimensions of firm performance. Moreover, we apply advanced quantitative data analysis methods and show that the model has high out-of-sample predictive power. With our study, we explain that the implementation of activities enabling a CE, such as reducing. reinventing, rethinking, restoring, and recirculating, can be an important factor of sustained competitive advantage – especially in the construction and manufacturing industries. These results underline that CE implementation and firm performance are not contradicting each other, but instead can go hand in hand. One of the major contributions of our study is that we build on performance measurement literature to empirically prove the importance of assessing different individual dimensions of firm performance when examining the relationship between CE implementation and firm performance rather than looking at overall firm performance. For practitioners, our study thereby develops and offers empirical evidence for developing CE implementation strategies.
Original languageEnglish
Title of host publicationEURAM 2023 Conference
Subtitle of host publicationTransforming Business for Good
PublisherEuropean Academy of Management, EURAM
Pages1-35
Number of pages35
ISBN (Electronic)978-2-9602195-5-5
Publication statusPublished - 2023
Publication typeA4 Article in conference proceedings
EventEURAM European Academy of Management Conference: Transforming business for good - Trinity Business School, Dublin, Ireland
Duration: 14 Jun 202316 Jun 2023
https://conferences.euram.academy/2023conference/

Publication series

NameEURAM Conference
PublisherEuropean Academy of Management
ISSN (Electronic)2466-7498

Conference

ConferenceEURAM European Academy of Management Conference
Abbreviated titleEURAM 2023
Country/TerritoryIreland
CityDublin
Period14/06/2316/06/23
Internet address

Keywords

  • circular economy
  • circular economy implementation
  • firm performance
  • PLS-SEM

Publication forum classification

  • Publication forum level 0

ASJC Scopus subject areas

  • General Business,Management and Accounting

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