How do circular economy and blockchain technology adoption relate to firm financial performance?

Environmental challenges and increasing resource consumption may be mitigated through organizational circular economy (CE) practices. Implementing CE practices requires organizations to rethink, develop, and implement new initiatives and processes. It has been argued that blockchain technology (BCT) can support corporate and supply chain CE practices. However, empirical evidence on whether BCT adoption can complement corporate CE practices when considering firm financial performance is virtually non-existent. Using the resource-based view and a dataset of 1766 firm-year observations of Chinese listed companies, we investigate the relationship between corporate CE practices and financial performance, as well as the moderating effect of BCT adoption. Initial findings reveal a significantly positive relationship between corporate CE practices and financial performance. However, counterintuitively, BCT adoption not only directly negatively relates to firm financial performance but also weakens the positive relationship between CE practices and financial performance. Further analysis found that these direct and indirect negative effects of BCT adoption are only observed in resource-constrained firms, supporting our argument from a resource scarcity perspective. This study provides new insights into the nuanced relationship among CE practices, BCT adoption, and financial performance from the resource-based view. These insights provide new and valuable guidance for researchers and practitioners.