IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v30y2021i8p4171-4187.html
   My bibliography  Save this article

Understanding the effect of market orientation on circular economy practices: The mediating role of closed‐loop orientation in German SMEs

Author

Listed:
  • Corinna Vera Hedwig Schmidt
  • Bastian Kindermann
  • Cassian Felix Behlau
  • Tessa Christina Flatten

Abstract

The implementation of circular economy (CE) practices is considered a key driver towards sustainable development of firms. Earlier studies point to the general strategic approach of market orientation as an antecedent to CE practice implementation. Still, insights are limited as the mechanisms underlying this relationship remain unclear. Based on a sample of 121 German small and medium‐sized enterprises (SME), we empirically examine how the strategic approach of closed‐loop orientation mediates the relationship between market orientation and the implementation of three types of CE practices. Using structural equation modelling, we find that while market orientation is positively related to all three types of CE practices, closed‐loop orientation mediates these relationships for only two. Our study extends CE literature by suggesting that market orientation is translated into closed‐loop orientation to spur CE practice implementation. We also offer a differentiated understanding of CE practice implementation in the context of German SMEs.

Suggested Citation

  • Corinna Vera Hedwig Schmidt & Bastian Kindermann & Cassian Felix Behlau & Tessa Christina Flatten, 2021. "Understanding the effect of market orientation on circular economy practices: The mediating role of closed‐loop orientation in German SMEs," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 4171-4187, December.
    • Handle: RePEc:bla:bstrat:v:30:y:2021:i:8:p:4171-4187
    DOI: 10.1002/bse.2863
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.2863
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.2863?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Prasanta Kumar Dey & Chrisovaladis Malesios & Debashree De & Pawan Budhwar & Soumyadeb Chowdhury & Walid Cheffi, 2020. "Circular economy to enhance sustainability of small and medium‐sized enterprises," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2145-2169, September.
    2. Marcos Ferasso & Tatiana Beliaeva & Sascha Kraus & Thomas Clauss & Domingo Ribeiro‐Soriano, 2020. "Circular economy business models: The state of research and avenues ahead," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3006-3024, December.
    3. Agarwal, Atul & Giraud-Carrier, François C. & Li, Yuan, 2018. "A mediation model of green supply chain management adoption: The role of internal impetus," International Journal of Production Economics, Elsevier, vol. 205(C), pages 342-358.
    4. Tomohiko Sakao & Mario Fargnoli, 2010. "Customization in Ecodesign," Journal of Industrial Ecology, Yale University, vol. 14(4), pages 529-532, August.
    5. Thun, Jörn-Henrik & Hoenig, Daniel, 2011. "An empirical analysis of supply chain risk management in the German automotive industry," International Journal of Production Economics, Elsevier, vol. 131(1), pages 242-249, May.
    6. Kirchherr, Julian & Piscicelli, Laura & Bour, Ruben & Kostense-Smit, Erica & Muller, Jennifer & Huibrechtse-Truijens, Anne & Hekkert, Marko, 2018. "Barriers to the Circular Economy: Evidence From the European Union (EU)," Ecological Economics, Elsevier, vol. 150(C), pages 264-272.
    7. Annachiara Longoni & Davide Luzzini & Marco Guerci, 2018. "Deploying Environmental Management Across Functions: The Relationship Between Green Human Resource Management and Green Supply Chain Management," Journal of Business Ethics, Springer, vol. 151(4), pages 1081-1095, September.
    8. Yu‐Xiang Yen, 2018. "Buyer–supplier collaboration in green practices: The driving effects from stakeholders," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1666-1678, December.
    9. Jens Horbach & Vanessa Oltra & Jean Belin, 2013. "Determinants and Specificities of Eco-Innovations Compared to Other Innovations--An Econometric Analysis for the French and German Industry Based on the Community Innovation Survey-super-1," Industry and Innovation, Taylor & Francis Journals, vol. 20(6), pages 523-543, August.
    10. Fredrick Betuel Sawe & Anil Kumar & Jose Arturo Garza‐Reyes & Rohit Agrawal, 2021. "Assessing people‐driven factors for circular economy practices in small and medium‐sized enterprise supply chains: Business strategies and environmental perspectives," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 2951-2965, November.
    11. Hanna H. Salo & Johanna Suikkanen & Ari Nissinen, 2020. "Eco‐innovation motivations and ecodesign tool implementation in companies in the Nordic textile and information technology sectors," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2654-2667, September.
    12. Alan Murray & Keith Skene & Kathryn Haynes, 2017. "The Circular Economy: An Interdisciplinary Exploration of the Concept and Application in a Global Context," Journal of Business Ethics, Springer, vol. 140(3), pages 369-380, February.
    13. Erlinda N. Yunus & Michael D. Michalisin, 2016. "Sustained competitive advantage through green supply chain management practices: a natural-resource-based view approach," International Journal of Services and Operations Management, Inderscience Enterprises Ltd, vol. 25(2), pages 135-154.
    14. V. Daniel R. Guide & Luk N. Van Wassenhove, 2009. "OR FORUM---The Evolution of Closed-Loop Supply Chain Research," Operations Research, INFORMS, vol. 57(1), pages 10-18, February.
    15. Mateusz Lewandowski, 2016. "Designing the Business Models for Circular Economy—Towards the Conceptual Framework," Sustainability, MDPI, vol. 8(1), pages 1-28, January.
    16. Mariachiara Colucci & Alessandra Vecchi, 2021. "Close the loop: Evidence on the implementation of the circular economy from the Italian fashion industry," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 856-873, February.
    17. Vasileios Rizos & Arno Behrens & Wytze Van der Gaast & Erwin Hofman & Anastasia Ioannou & Terri Kafyeke & Alexandros Flamos & Roberto Rinaldi & Sotiris Papadelis & Martin Hirschnitz-Garbers & Corrado , 2016. "Implementation of Circular Economy Business Models by Small and Medium-Sized Enterprises (SMEs): Barriers and Enablers," Sustainability, MDPI, vol. 8(11), pages 1-18, November.
    18. Christoph G. Schmidt & Kai Foerstl & Birte Schaltenbrand, 2017. "The Supply Chain Position Paradox: Green Practices and Firm Performance," Journal of Supply Chain Management, Institute for Supply Management, vol. 53(1), pages 3-25, January.
    19. Elena Aurelia Botezat & Anca Otilia Dodescu & Sebastian Văduva & Silvia Liana Fotea, 2018. "An Exploration of Circular Economy Practices and Performance Among Romanian Producers," Sustainability, MDPI, vol. 10(9), pages 1-17, September.
    20. Claudia Marcela Betancourt Morales & Jhon Wilder Zartha Sossa, 2020. "Circular economy in Latin America: A systematic literature review," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2479-2497, September.
    21. Md. Abdul Moktadir & Anil Kumar & Syed Mithun Ali & Sanjoy Kumar Paul & Razia Sultana & Jafar Rezaei, 2020. "Critical success factors for a circular economy: Implications for business strategy and the environment," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3611-3635, December.
    22. Jens Horbach & Christian Rammer, 2020. "Circular economy innovations, growth and employment at the firm level: Empirical evidence from Germany," Journal of Industrial Ecology, Yale University, vol. 24(3), pages 615-625, June.
    23. Maria Barreiro‐Gen & Rodrigo Lozano, 2020. "How circular is the circular economy? Analysing the implementation of circular economy in organisations," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3484-3494, December.
    24. Johan Jansson, 2011. "Consumer eco‐innovation adoption: assessing attitudinal factors and perceived product characteristics," Business Strategy and the Environment, Wiley Blackwell, vol. 20(3), pages 192-210, March.
    25. Nagendra Kumar Sharma & Kannan Govindan & Kuei Kuei Lai & Wen Kuo Chen & Vimal Kumar, 2021. "The transition from linear economy to circular economy for sustainability among SMEs: A study on prospects, impediments, and prerequisites," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 1803-1822, May.
    26. Jean-Marie Courrent & Sonia Chassé & Waleed Omri, 2018. "Do Entrepreneurial SMEs Perform Better Because They are More Responsible?," Journal of Business Ethics, Springer, vol. 153(2), pages 317-336, December.
    27. Fenna Blomsma & Geraldine Brennan, 2017. "The Emergence of Circular Economy: A New Framing Around Prolonging Resource Productivity," Journal of Industrial Ecology, Yale University, vol. 21(3), pages 603-614, June.
    28. Donato Masi & Steven Day & Janet Godsell, 2017. "Supply Chain Configurations in the Circular Economy: A Systematic Literature Review," Sustainability, MDPI, vol. 9(9), pages 1-22, September.
    29. Matthias Ehrgott & Felix Reimann & Lutz Kaufmann & Craig Carter, 2011. "Social Sustainability in Selecting Emerging Economy Suppliers," Journal of Business Ethics, Springer, vol. 98(1), pages 99-119, January.
    30. William H. Glick & George P. Huber & C. Chet Miller & D. Harold Doty & Kathleen M. Sutcliffe, 1990. "Studying Changes in Organizational Design and Effectiveness: Retrospective Event Histories and Periodic Assessments," Organization Science, INFORMS, vol. 1(3), pages 293-312, August.
    31. Patrick Schroeder & Kartika Anggraeni & Uwe Weber, 2019. "The Relevance of Circular Economy Practices to the Sustainable Development Goals," Journal of Industrial Ecology, Yale University, vol. 23(1), pages 77-95, February.
    32. Serdar Cop & Uju Violet Alola & Andrew Adewale Alola, 2020. "Perceived behavioral control as a mediator of hotels' green training, environmental commitment, and organizational citizenship behavior: A sustainable environmental practice," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3495-3508, December.
    33. Xinshu Zhao & John G. Lynch & Qimei Chen, 2010. "Reconsidering Baron and Kenny: Myths and Truths about Mediation Analysis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 37(2), pages 197-206, August.
    34. Vanessa Prieto‐Sandoval & Marta Ormazabal & Carmen Jaca & Elisabeth Viles, 2018. "Key elements in assessing circular economy implementation in small and medium‐sized enterprises," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1525-1534, December.
    35. Cristina Ciliberto & Katarzyna Szopik‐Depczyńska & Małgorzata Tarczyńska‐Łuniewska & Alessandro Ruggieri & Giuseppe Ioppolo, 2021. "Enabling the Circular Economy transition: a sustainable lean manufacturing recipe for Industry 4.0," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3255-3272, November.
    36. Qinghua Zhu & Yong Geng & Kee‐hung Lai, 2011. "Environmental Supply Chain Cooperation and Its Effect on the Circular Economy Practice‐Performance Relationship Among Chinese Manufacturers," Journal of Industrial Ecology, Yale University, vol. 15(3), pages 405-419, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nathalia Suchek & João J. Ferreira & Paula O. Fernandes, 2022. "A review of entrepreneurship and circular economy research: State of the art and future directions," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2256-2283, July.
    2. Manish Mohan Baral & Subhodeep Mukherjee & Rajesh Kr Singh & Venkataiah Chittipaka & Yigit Kazancoglu, 2023. "Exploring antecedents for the circular economy capability of micro, small and medium enterprises: An empirical study," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5785-5806, December.
    3. Marco Antonio Paula Pinheiro & Daniel Jugend & Ana Beatriz Lopes de Sousa Jabbour & Charbel Jose Chiappetta Jabbour & Hengky Latan, 2022. "Circular economy‐based new products and company performance: The role of stakeholders and Industry 4.0 technologies," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 483-499, January.
    4. Viktor Koval & I Wayan Edi Arsawan & Ni Putu Santi Suryantini & Serhii Kovbasenko & Nadiia Fisunenko & Tetiana Aloshyna, 2022. "Circular Economy and Sustainability-Oriented Innovation: Conceptual Framework and Energy Future Avenue," Energies, MDPI, vol. 16(1), pages 1-19, December.
    5. McDougall, Natalie & Wagner, Beverly & MacBryde, Jill, 2022. "Competitive benefits & incentivisation at internal, supply chain & societal level circular operations in UK agri-food SMEs," Journal of Business Research, Elsevier, vol. 144(C), pages 1149-1162.
    6. Raghuveer Negi & Amit Kumar Gupta & Vidhu Gaur, 2023. "Effect of green marketing orientation dimensions on green innovation and organizational performance: A mediation‐moderation analysis," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5435-5458, December.
    7. Bimpizas-Pinis, Meletios & Calzolari, Tommaso & Genovese, Andrea, 2022. "Exploring the transition towards circular supply chains through the arcs of integration," International Journal of Production Economics, Elsevier, vol. 250(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luca Marrucci & Fabio Iannone & Tiberio Daddi & Fabio Iraldo, 2022. "Antecedents of absorptive capacity in the development of circular economy business models of small and medium enterprises," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 532-544, January.
    2. Omar Alhawari & Usama Awan & M. Khurrum S. Bhutta & M. Ali Ülkü, 2021. "Insights from Circular Economy Literature: A Review of Extant Definitions and Unravelling Paths to Future Research," Sustainability, MDPI, vol. 13(2), pages 1-22, January.
    3. Alexandra Barón Dorado & Gerusa Giménez Leal & Rodolfo de Castro Vila, 2022. "Environmental policy and corporate sustainability: The mediating role of environmental management systems in circular economy adoption," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 830-842, July.
    4. Patricia van Loon & Luk N. Van Wassenhove & Ales Mihelic, 2022. "Designing a circular business strategy: 7 years of evolution at a large washing machine manufacturer," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1030-1041, March.
    5. Gabi Försterling & Ronald Orth & Benjamin Gellert, 2023. "Transition to a Circular Economy in Europe through New Business Models: Barriers, Drivers, and Policy Making," Sustainability, MDPI, vol. 15(10), pages 1-40, May.
    6. Animesh Ghosh & Prabha Bhola & Uthayasankar Sivarajah, 2022. "Emerging Associates of the Circular Economy: Analysing Interactions and Trends by a Mixed Methods Systematic Review," Sustainability, MDPI, vol. 14(16), pages 1-41, August.
    7. Chia‐Hao Ho & Steffen Böhm & David Monciardini, 2022. "The collaborative and contested interplay between business and civil society in circular economy transitions," Business Strategy and the Environment, Wiley Blackwell, vol. 31(6), pages 2714-2727, September.
    8. Mura, Rita & Vicentini, Francesca & Botti, Ludovico Maria & Chiriacò, Maria Vincenza, 2023. "Economic and environmental outcomes of a sustainable and circular approach: Case study of an Italian wine-producing firm," Journal of Business Research, Elsevier, vol. 154(C).
    9. Nagendra Kumar Sharma & Kannan Govindan & Kuei Kuei Lai & Wen Kuo Chen & Vimal Kumar, 2021. "The transition from linear economy to circular economy for sustainability among SMEs: A study on prospects, impediments, and prerequisites," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 1803-1822, May.
    10. Alexandra Barón & Rudi de Castro & Gerusa Giménez, 2020. "Circular Economy Practices among Industrial EMAS-Registered SMEs in Spain," Sustainability, MDPI, vol. 12(21), pages 1-25, October.
    11. Soni, Vivek & Gnekpe, Christian & Roux, Mélanie & Anand, Rashmi & Vann Yaroson, Emilia & Kumar Banwet, Devinder, 2023. "Adaptive distributed leadership and circular economy adoption by emerging SMEs," Journal of Business Research, Elsevier, vol. 156(C).
    12. Manavalan Ethirajan & Thanigai Arasu M & Jayakrishna Kandasamy & Vimal K.E.K & Simon Peter Nadeem & Anil Kumar, 2021. "Analysing the risks of adopting circular economy initiatives in manufacturing supply chains," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 204-236, January.
    13. 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.
    14. Chembessi Chedrak & Gohoungodji Paulin & Juste Rajaonson, 2023. "“A fine wine, better with age”: Circular economy historical roots and influential publications: A bibliometric analysis using Reference Publication Year Spectroscopy (RPYS)," Journal of Industrial Ecology, Yale University, vol. 27(6), pages 1593-1612, December.
    15. Gilbert Silvius & Aydan Ismayilova & Vicente Sales-Vivó & Micol Costi, 2021. "Exploring Barriers for Circularity in the EU Furniture Industry," Sustainability, MDPI, vol. 13(19), pages 1-25, October.
    16. Maryam Hina & Chetna Chauhan & Rajat Sharma & Amandeep Dhir, 2023. "Circular economy business models as pillars of sustainability: Where are we now, and where are we heading?," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 6182-6209, December.
    17. Cheffi, Walid & Kaleem Zahir-ul-Hassan, Muhammad & Omer Farooq, Muhammad & Baqrain, Abdelrahman & Mohamed Habib Mansour, Mourad, 2023. "Ethical leadership, management control systems and circular economy in SMEs in an emerging economy, the UAE," Journal of Business Research, Elsevier, vol. 156(C).
    18. Nathalia Suchek & João J. Ferreira & Paula O. Fernandes, 2022. "A review of entrepreneurship and circular economy research: State of the art and future directions," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2256-2283, July.
    19. Md. Abdul Moktadir & Anil Kumar & Syed Mithun Ali & Sanjoy Kumar Paul & Razia Sultana & Jafar Rezaei, 2020. "Critical success factors for a circular economy: Implications for business strategy and the environment," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3611-3635, December.
    20. Rohit Agrawal & Vishal A. Wankhede & Anil Kumar & Sunil Luthra, 2021. "Analysing the roadblocks of circular economy adoption in the automobile sector: Reducing waste and environmental perspectives," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 1051-1066, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:30:y:2021:i:8:p:4171-4187. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.