IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i6p5181-d1097573.html
   My bibliography  Save this article

Exploring the Reverse Relationship between Circular Economy Innovation and Digital Sustainability—The Dual Mediation of Government Incentives

Author

Listed:
  • Fazal Ur Rehman

    (Science and Research Centre, Faculty of Economics and Administration, University of Pardubice, 532 10 Pardubice, Czech Republic)

  • Basheer M. Al-Ghazali

    (Department of Business Administration-DCC, King Fahd University of Petroleum & Minerals, Dhahran 31261, Saudi Arabia
    Center for Finance and Digital Economy, King Fahd University of Petroleum & Minerals, Dhahran 31261, Saudi Arabia)

  • Adel Ghaleb Haddad

    (Vision Technology, Manama 18623, Bahrain)

  • Ehab Abdullatif Qahwash

    (Department of Information Systems and Operations Management, King Fahd University of Petroleum & Minerals, Dhahran 31261, Saudi Arabia)

  • M. Sadiq Sohail

    (Center for Finance and Digital Economy, King Fahd University of Petroleum & Minerals, Dhahran 31261, Saudi Arabia
    Department of Management and Marketing, King Fahd University of Petroleum & Minerals, Dhahran 31261, Saudi Arabia)

Abstract

The current study aims to examine the reverse association between circular economy innovation (CEI) and digital sustainability (DS), as well as the dual mediation of government incentives (GI) among firms. Data was collected through a structured-questionnaire-based survey among financial institutions (banks, insurance, and financial companies) in Pakistan, Malaysia, and China. The study collected data via structured questionnaires in an online survey and analysed the data using partial least squares structural equation modelling (PLS-SEM), to find results. The results revealed that CEI has a two-way relationship with the DS among firms in the defined context. Furthermore, the results confirmed the dual mediating role of GI between CEI and DS among firms. The outcomes can guide the policy makers to focus on the practices of CEI in the settings of the relevant state support schemes, to enhance the practices of DS among firms in emerging markets. The implications of the study are presented at the end of this study.

Suggested Citation

  • Fazal Ur Rehman & Basheer M. Al-Ghazali & Adel Ghaleb Haddad & Ehab Abdullatif Qahwash & M. Sadiq Sohail, 2023. "Exploring the Reverse Relationship between Circular Economy Innovation and Digital Sustainability—The Dual Mediation of Government Incentives," Sustainability, MDPI, vol. 15(6), pages 1-21, March.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:6:p:5181-:d:1097573
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/6/5181/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/6/5181/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Phil Brown & Nancy Bocken & Ruud Balkenende, 2019. "Why Do Companies Pursue Collaborative Circular Oriented Innovation?," Sustainability, MDPI, vol. 11(3), pages 1-23, January.
    2. Jarrahi, Mohammad Hossein, 2018. "Artificial intelligence and the future of work: Human-AI symbiosis in organizational decision making," Business Horizons, Elsevier, vol. 61(4), pages 577-586.
    3. Gianmarco Bressanelli & Federico Adrodegari & Daniela C. A. Pigosso & Vinit Parida, 2022. "Circular Economy in the Digital Age," Sustainability, MDPI, vol. 14(9), pages 1-6, May.
    4. Sara Picas & Pedro Reis & António Pinto & José Luís Abrantes, 2021. "Does Tax, Financial, and Government Incentives Impact Long-Term Portuguese SMEs’ Sustainable Company Performance?," Sustainability, MDPI, vol. 13(21), pages 1-16, October.
    5. George van Leeuwen & Pierre Mohnen, 2017. "Revisiting the Porter hypothesis: an empirical analysis of Green innovation for the Netherlands," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(1-2), pages 63-77, February.
    6. Dejan Ravšelj & Aleksander Aristovnik, 2018. "The Impact of Private Research and Development Expenditures and Tax Incentives on Sustainable Corporate Growth in Selected OECD Countries," Sustainability, MDPI, vol. 10(7), pages 1-16, July.
    7. Tai Ming Wut & Daisy Lee & Wai Man Ip & Stephanie W. Lee, 2021. "Digital Sustainability in the Organization: Scale Development and Validation," Sustainability, MDPI, vol. 13(6), pages 1-14, March.
    8. Parvez Alam Khan & Satirenjit Kaur Johl & Shakeb Akhtar, 2022. "Vinculum of Sustainable Development Goal Practices and Firms’ Financial Performance: A Moderation Role of Green Innovation," JRFM, MDPI, vol. 15(3), pages 1-24, February.
    9. Milena P. Ilić & Marko Ranković & Milutin Dobrilović & Rocsana Bucea-Manea-Țoniş & Larisa Mihoreanu & Mădălina Ionela Gheța & Violeta-Elena Simion, 2022. "Challenging Novelties within the Circular Economy Concept under the Digital Transformation of Society," Sustainability, MDPI, vol. 14(2), pages 1-11, January.
    10. Trevor D. Wilmshurst & Geoffrey R. Frost, 2001. "The role of accounting and the accountant in the environmental management system," Business Strategy and the Environment, Wiley Blackwell, vol. 10(3), pages 135-147, May.
    11. Gustavo Cattelan Nobre & Elaine Tavares, 2017. "Scientific literature analysis on big data and internet of things applications on circular economy: a bibliometric study," Scientometrics, Springer;Akadémiai Kiadó, vol. 111(1), pages 463-492, April.
    12. Jie Wu & Steven Si, 2018. "Poverty reduction through entrepreneurship: incentives, social networks, and sustainability," Asian Business & Management, Palgrave Macmillan, vol. 17(4), pages 243-259, September.
    13. de Jesus, Ana & Mendonça, Sandro, 2018. "Lost in Transition? Drivers and Barriers in the Eco-innovation Road to the Circular Economy," Ecological Economics, Elsevier, vol. 145(C), pages 75-89.
    14. Zhen Liu & Jing Liu & Mohamed Osmani, 2021. "Integration of Digital Economy and Circular Economy: Current Status and Future Directions," Sustainability, MDPI, vol. 13(13), pages 1-27, June.
    15. Gerard George & Ryan K. Merrill & Simon J. D. Schillebeeckx, 2021. "Digital Sustainability and Entrepreneurship: How Digital Innovations Are Helping Tackle Climate Change and Sustainable Development," Entrepreneurship Theory and Practice, , vol. 45(5), pages 999-1027, September.
    16. Monasterolo, Irene & Raberto, Marco, 2018. "The EIRIN Flow-of-funds Behavioural Model of Green Fiscal Policies and Green Sovereign Bonds," Ecological Economics, Elsevier, vol. 144(C), pages 228-243.
    17. Cracolici, Maria Francesca & Cuffaro, Miranda & Lacagnina, Valerio, 2018. "Assessment of Sustainable Well-being in the Italian Regions: An Activity Analysis Model," Ecological Economics, Elsevier, vol. 143(C), pages 105-110.
    18. Blum, Helcio & Legey, Luiz F.L., 2012. "The challenging economics of energy security: Ensuring energy benefits in support to sustainable development," Energy Economics, Elsevier, vol. 34(6), pages 1982-1989.
    19. Fazal Ur Rehman & Basheer M. Al-Ghazali & Mohamed Riyazi M. Farook, 2022. "Interplay in Circular Economy Innovation, Business Model Innovation, SDGs, and Government Incentives: A Comparative Analysis of Pakistani, Malaysian, and Chinese SMEs," Sustainability, MDPI, vol. 14(23), pages 1-31, November.
    20. Fazal ur Rehman & Basheer M. Al-Ghazali, 2022. "Evaluating the Influence of Social Advertising, Individual Factors, and Brand Image on the Buying Behavior toward Fashion Clothing Brands," SAGE Open, , vol. 12(1), pages 21582440221, March.
    21. Desirée F. Pacheco & Jeffrey G. York & Timothy J. Hargrave, 2014. "The Coevolution of Industries, Social Movements, and Institutions: Wind Power in the United States," Organization Science, INFORMS, vol. 25(6), pages 1609-1632, December.
    22. Trang Thi Pham & Tsai-Chi Kuo & Ming-Lang Tseng & Raymond R. Tan & Kimhua Tan & Denny Satria Ika & Chiuhsiang Joe Lin, 2019. "Industry 4.0 to Accelerate the Circular Economy: A Case Study of Electric Scooter Sharing," Sustainability, MDPI, vol. 11(23), pages 1-16, November.
    23. Hong Nham, Nguyen Thi & Ha, Le Thanh, 2022. "Making the circular economy digital or the digital economy circular? Empirical evidence from the European region," Technology in Society, Elsevier, vol. 70(C).
    24. Manuel Pedro Rodríguez Bolívar & Andrés Navarro Galera & Laura Alcaide Muñoz & María Deseada López Subirés, 2016. "Risk Factors and Drivers of Financial Sustainability in Local Government: An Empirical Study," Local Government Studies, Taylor & Francis Journals, vol. 42(1), pages 29-51, January.
    25. Gerlach, Heiko & Zheng, Xuemei, 2018. "Preferences for green electricity, investment and regulatory incentives," Energy Economics, Elsevier, vol. 69(C), pages 430-441.
    26. Giovanna Bimonte & Maria Grazia Romano & Maria Russolillo, 2021. "Green Innovation and Competition: R&D Incentives in a Circular Economy," Games, MDPI, vol. 12(3), pages 1-14, September.
    27. Petra Christmann & Glen Taylor, 2001. "Globalization and the Environment: Determinants of Firm Self-Regulation in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(3), pages 439-458, September.
    28. Emilio Abad-Segura & Mariana-Daniela González-Zamar & Juan C. Infante-Moro & Germán Ruipérez García, 2020. "Sustainable Management of Digital Transformation in Higher Education: Global Research Trends," Sustainability, MDPI, vol. 12(5), pages 1-24, March.
    29. Kirti Nayal & Shashank Kumar & Rakesh D. Raut & Maciel M. Queiroz & Pragati Priyadarshinee & Balkrishna E. Narkhede, 2022. "Supply chain firm performance in circular economy and digital era to achieve sustainable development goals," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1058-1073, March.
    30. Popkova, Elena G. & De Bernardi, Paola & Tyurina, Yuliya G. & Sergi, Bruno S., 2022. "A theory of digital technology advancement to address the grand challenges of sustainable development," Technology in Society, Elsevier, vol. 68(C).
    Full references (including those not matched with items on IDEAS)

    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. Fazal Ur Rehman & Basheer M. Al-Ghazali & Mohamed Riyazi M. Farook, 2022. "Interplay in Circular Economy Innovation, Business Model Innovation, SDGs, and Government Incentives: A Comparative Analysis of Pakistani, Malaysian, and Chinese SMEs," Sustainability, MDPI, vol. 14(23), pages 1-31, November.
    2. Shuanglian Chen & Zhehao Huang & Benjamin M. Drakeford & Pierre Failler, 2019. "Lending Interest Rate, Loaning Scale, and Government Subsidy Scale in Green Innovation," Energies, MDPI, vol. 12(23), pages 1-22, November.
    3. Huang, Zhehao & Liao, Gaoke & Li, Zhenghui, 2019. "Loaning scale and government subsidy for promoting green innovation," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 148-156.
    4. Kristoffersen, Eivind & Blomsma, Fenna & Mikalef, Patrick & Li, Jingyue, 2020. "The smart circular economy: A digital-enabled circular strategies framework for manufacturing companies," Journal of Business Research, Elsevier, vol. 120(C), pages 241-261.
    5. Mateusz Wielopolski & Willem Bulthuis, 2023. "The Better Building Initiative — a Collaborative Ecosystem Involving All Stakeholders as Catalyst to Accelerate the Adoption of Circular Economy Innovations in the Construction Sector," Circular Economy and Sustainability,, Springer.
    6. Sultan Çetin & Catherine De Wolf & Nancy Bocken, 2021. "Circular Digital Built Environment: An Emerging Framework," Sustainability, MDPI, vol. 13(11), pages 1-34, June.
    7. Magdalena Rusch & Josef‐Peter Schöggl & Rupert J. Baumgartner, 2023. "Application of digital technologies for sustainable product management in a circular economy: A review," Business Strategy and the Environment, Wiley Blackwell, vol. 32(3), pages 1159-1174, March.
    8. Antonella Zucchella & Pietro Previtali & Roger Strange, 2022. "Proactive and reactive views in the transition towards circular business models. A grounded study in the plastic packaging industry," International Entrepreneurship and Management Journal, Springer, vol. 18(3), pages 1073-1102, September.
    9. Phu Nguyen-Van & Tuyen Tiet & Quoc Tran-Nam, 2024. "Synergy in environmental compliance, innovation and export on SMEs' growth," Working Papers hal-04441426, HAL.
    10. Fabio De Felice & Antonella Petrillo, 2021. "Green Transition: The Frontier of the Digicircular Economy Evidenced from a Systematic Literature Review," Sustainability, MDPI, vol. 13(19), pages 1-26, October.
    11. Ipek Kazancoglu & Yigit Kazancoglu & Emel Yarimoglu & Aysun Kahraman, 2020. "A conceptual framework for barriers of circular supply chains for sustainability in the textile industry," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1477-1492, September.
    12. Rodríguez-Espíndola, Oscar & Cuevas-Romo, Ana & Chowdhury, Soumyadeb & Díaz-Acevedo, Natalie & Albores, Pavel & Despoudi, Stella & Malesios, Chrisovalantis & Dey, Prasanta, 2022. "The role of circular economy principles and sustainable-oriented innovation to enhance social, economic and environmental performance: Evidence from Mexican SMEs," International Journal of Production Economics, Elsevier, vol. 248(C).
    13. Yafeng Han & Tetiana Shevchenko & Bernard Yannou & Meisam Ranjbari & Zahra Shams Esfandabadi & Michael Saidani & Ghada Bouillass & Kseniia Bliumska-Danko & Guohou Li, 2023. "Exploring How Digital Technologies Enable a Circular Economy of Products," Sustainability, MDPI, vol. 15(3), pages 1-20, January.
    14. Kolade, Oluwaseun & Odumuyiwa, Victor & Abolfathi, Soroush & Schröder, Patrick & Wakunuma, Kutoma & Akanmu, Ifeoluwa & Whitehead, Timothy & Tijani, Bosun & Oyinlola, Muyiwa, 2022. "Technology acceptance and readiness of stakeholders for transitioning to a circular plastic economy in Africa," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    15. Gerard George & Ryan K. Merrill & Simon J. D. Schillebeeckx, 2021. "Digital Sustainability and Entrepreneurship: How Digital Innovations Are Helping Tackle Climate Change and Sustainable Development," Entrepreneurship Theory and Practice, , vol. 45(5), pages 999-1027, September.
    16. Daniela Rybarova & Katarina Remenova & Maria Kmety Bartekova & Helena Majduchova, 2023. "Analysis of the Attitudes of Central European Small- and Medium-Sized Enterprises towards Adaptation to the Low-Carbon Economy and Its Implementation Barriers," Energies, MDPI, vol. 16(22), pages 1-13, November.
    17. Anja Eisenreich & Johann Füller & Martin Stuchtey, 2021. "Open Circular Innovation: How Companies Can Develop Circular Innovations in Collaboration with Stakeholders," Sustainability, MDPI, vol. 13(23), pages 1-23, December.
    18. Teresa Riso & Carla Morrone, 2023. "To Align Technological Advancement and Ethical Conduct: An Analysis of the Relationship between Digital Technologies and Sustainable Decision-Making Processes," Sustainability, MDPI, vol. 15(3), pages 1-21, January.
    19. Mohammed Alojail & Surbhi Bhatia Khan, 2023. "Impact of Digital Transformation toward Sustainable Development," Sustainability, MDPI, vol. 15(20), pages 1-20, October.
    20. Allal-Chérif, Oihab & Costa Climent, Juan & Ulrich Berenguer, Klaus Jurgen, 2023. "Born to be sustainable: How to combine strategic disruption, open innovation, and process digitization to create a sustainable business," Journal of Business Research, Elsevier, vol. 154(C).

    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:gam:jsusta:v:15:y:2023:i:6:p:5181-:d:1097573. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.