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The Effect of Phases of the Adoption of the Circular Economy on Firm Performance: Evidence from 28 EU Countries

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  • Ilija Moric

    (Faculty of Tourism and Hotel Management, University of Montenegro, Old Town 320, 85330 Kotor, Montenegro)

  • Jelena Šaković Jovanović

    (Faculty of Mechanical Engineering, University of Montenegro, Cetinjska 2, 81000 Podgorica, Montenegro)

  • Rajka Đoković

    (Faculty of Law, University of Montenegro, The street of July 13th 2, 81000 Podgorica, Montenegro)

  • Sanja Peković

    (Faculty of Tourism and Hotel Management, University of Montenegro, Old Town 320, 85330 Kotor, Montenegro)

  • Đurđica Perović

    (Faculty of Tourism and Hotel Management, University of Montenegro, Old Town 320, 85330 Kotor, Montenegro)

Abstract

Although a substantial body of literature has analysed the potential benefits of the circular economy, empirical evidence on the relationship between circular economy-related activities and firm performance is scarce. Rather than analysing only the effect of the circular economy on firm performance, we empirically examine the effects of the different phases of the adoption process of the circular economy on firm performance. Therefore, in this paper, a multiphase framework of circular economy adoption is developed. Employing a propensity-score-matching model on the sample of more than 4000 European SMEs, we show that the adoption of circular economy activities improves firm performance as measured by productivity. In addition, our findings reveal that the impact of circular economy activities on firm performance is dependent on the different phases of the adoption process. Taken together, this study enriches current research on the circular economy by contributing to a more nuanced understanding on the relationship between the different phases of the adoption process and firm performance.

Suggested Citation

  • Ilija Moric & Jelena Šaković Jovanović & Rajka Đoković & Sanja Peković & Đurđica Perović, 2020. "The Effect of Phases of the Adoption of the Circular Economy on Firm Performance: Evidence from 28 EU Countries," Sustainability, MDPI, vol. 12(6), pages 1-12, March.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:6:p:2557-:d:336359
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    2. Zhang Yu & Muhammad Umar & S. Abdul Rehman, 2022. "Adoption of technological innovation and recycling practices in automobile sector: under the Covid-19 pandemic," Operations Management Research, Springer, vol. 15(1), pages 298-306, June.
    3. Anastasia A. Katou & Dimitrios Kafetzopoulos & Anastasia Vayona, 2023. "Investigating the Serially Mediating Mechanisms of Organizational Ambidexterity and the Circular Economy in the Relationship between Ambidextrous Leadership and Sustainability Performance," Sustainability, MDPI, vol. 15(10), pages 1-18, May.
    4. Alice Mazzucchelli & Roberto Chierici & Manlio Del Giudice & Ilenia Bua, 2022. "Do circular economy practices affect corporate performance? Evidence from Italian large‐sized manufacturing firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(6), pages 2016-2029, November.
    5. Rodrigues Dias, Veruska Mazza & Jugend, Daniel & de Camargo Fiorini, Paula & Razzino, Carlos do Amaral & Paula Pinheiro, Marco Antonio, 2022. "Possibilities for applying the circular economy in the aerospace industry: Practices, opportunities and challenges," Journal of Air Transport Management, Elsevier, vol. 102(C).
    6. Ayu Widhiastuti & Muafi Muafi, 2022. "The role of environmental commitment and green creativity on business performance mediated by circular economy implementation," International Journal of Business Ecosystem & Strategy (2687-2293), Bussecon International Academy, vol. 4(4), pages 96-107, October.
    7. Syed Abdul Rehman Khan & Muhammad Umar & Alam Asadov & Muhammad Tanveer & Zhang Yu, 2022. "Technological Revolution and Circular Economy Practices: A Mechanism of Green Economy," Sustainability, MDPI, vol. 14(8), pages 1-14, April.
    8. Viviana D'Angelo & Francesco Cappa & Enzo Peruffo, 2023. "Walking the tightrope: Circular economy breadth and firm economic performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(4), pages 1869-1882, July.
    9. Roberta Angelis, 2022. "Circular Economy Business Models: a Repertoire of Theoretical Relationships and a Research Agenda," Circular Economy and Sustainability,, Springer.
    10. Armand Kasztelan, 2020. "How Circular Are the European Economies? A Taxonomic Analysis Based on the INEC (Index of National Economies’ Circularity)," Sustainability, MDPI, vol. 12(18), pages 1-11, September.

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