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Bag, S, Dhamija, P, Bryde, DJ and Singh, RK

Effect of Eco-Innovation on Green Supply Chain Management, Circular

Economy Capability and Performance of Small and Medium Enterprises

http://researchonline.ljmu.ac.uk/id/eprint/15931/

Article

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Bag, S, Dhamija, P, Bryde, DJ and Singh, RK (2021) Effect of Eco-Innovation

on Green Supply Chain Management, Circular Economy Capability and
Performance of Small and Medium Enterprises. Journal of Business
Research, 141. pp. 60-72. ISSN 0148-2963

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 Effect of Eco-Innovation on Green Supply Chain Management, Circular Economy
Adoption and Performance of Small and Medium Enterprises

Surajit Bag
Department of Transport and Supply Chain Management,
School of Management,
College of Business and Economics,
University of Johannesburg, South Africa
E-mail: [email protected]

Pavitra Dhamija
Department of Construction Management and Quantity Surveying,
Faculty of Engineering and the Built Environment, University of Johannesburg,
Johannesburg, South Africa
E-mail: [email protected]

David J. Bryde
Liverpool Business School
Liverpool John Moore’s University
Liverpool, Merseyside L3 5UG, UK
E-mail : [email protected]

Rajesh Kumar Singh

Department of Operations Management
Management Development Institute, Gurgaon, India
E-mail: [email protected]

Abstract

The social structures in organisations constitute essential enablers for the betterment of small
and medium enterprises (SMEs) performance. Our papers explore such enablers in the context
of SMEs’ contribution to the Circular Economy (CE), through the lens of institutional and
dynamic capability view theories. We focus on the relationships between institutional
pressures, eco-innovation, green supply chain management (GSCM) practices, CE capability,
big data driven supply chains (BDSC) and performance for CE supply chains. We used a survey
to collect data (n=240) from people working in SMEs in manufacturing sectors in South Africa.
Drawing from institutional theory, we find that coercive, normative and mimetic pressures have
a positive relationship with eco-innovation. Furthermore, eco-innovation is positively
associated with GSCM, with these two concepts significantly related to the building of CE
capability. The final element in our framework shows a positive relationship between GSCM
and CE capability. Our findings reveal some nuances in terms of the relationships between the
concepts. For example, whilst BDSCs have a moderating influence on the relationship between
CE capability and firm performance for CE supply chain, no such influence is evident for the
relationship between GSCM practices and performance. Further work needs to focus on
explaining this and other findings and on validating our theoretical framework.

Keywords: Circular economy, Eco-innovation, Green supply chain management, Firm

performance, Big data driven supply chains, Institutional theory, Dynamic capability view,
SMEs, South Africa
1. Introduction

One of the major concerns for governments of every country, whether classed a developed or
underdeveloped, is to better understand the environmental impact of initiatives aimed at
achieving economic stability (Del Giudice et al., 2020; Jain et al., 2020). If a nation ensures
economic growth, whilst not adversely affecting the planet and its people, it is delivering true
sustainable development (Foster, 2012; Nascimento et al., 2019). The circular economy (CE)
is a response to the desire for sustainable development and hence it is recuperative or
reformative by intent and by strategy (EMT, 2013; Geissdoerfer et al., 2017). It extends
innovative environmental management by synthesizing three major dimensions of industrial
waste management: reduce, reuse, recycle into the process of production and consumption
(Kristoffersen et al., 2020; Fehrer & Wieland, 2021), creating opportunities for human society
to interact with dynamic aspects of nature (Farooque et al., 2019; Confente et al., 2020). It
further focuses on the prevention of resource depletion (Genovese et al., 2017; Dey et al.,
2020), whilst allowing for sustainable growth and development (Jia et al., 2020; Parida et al.,
2019). Once can see characteristics of a CE at both micro (businesses and patrons) and macro
(towns, districts and authorities) levels (Liu et al., 2018a, 2018b; Kristensen & Mosgaard,
2020).
Various industries, such as construction (Gelhard & Delft, 2016) and manufacturing
(Fehrer & Wieland, 2021; Katz‐Gerro & López Sintas, 2016) are contributing to the CE across
the globe; though there is a paucity of evidence in the current literature reflecting the
contribution of small and medium enterprises (SMEs) to CE developments (Lloret, 2016; Lim,
2017). The extant literature is focused on the challenges confronting SMEs to adopt CE (Lieder
& Rashid, 2016; Lahane et al., 2020), the need to contribute to the CE, whilst meeting other
environmental management-related challenges like eco-innovation (Milios et al., 2019; Patwa
et al., 2020) and demands to practice green supply chain management (GSCM) (Rosa et al.,
2019; Barbieri & Santos, 2020).
In our study, we extend the existing, and rather limited, existing knowledge on SMEs’
contribution to the CE through empirical investigation of the context of SMEs and by
modelling the relationships between CE and its antecedents.
Our research seeks answers to three research questions in relation to SMEs’
contribution to the CE. Below, we introduce the derivation of each question. The first question
focuses on the relationship between institutional pressures on firms and eco-innovation and
utilises institutional theory. Harnessing the power of the social structures that exist in firms
constitutes an essential element for the successful development of SMEs (Dubey et al., 2018).
Such developments potentially include an enhanced contribution to the CE, and, in this respect,
institutional theory offers a useful lens through which to view SME’s development (Mazzoni,
2020). Institutional theory explains the influences of the psychological intentions and social
behaviours of individuals that influence the performance of SMEs, including, potentially, their
responses to environmental concerns. Under the umbrella of institutional theory DiMaggio &
Powell (1983) describe three types of pressures on organizations: coercive, normative, and
mimetic. Institutional theory is used to provide a framework on which sustainable business
models for SMEs are built in order to establish manufacturing practices that contribute to the
CE (Bag et al., 2021a, 2021b). What is not yet clear in the literature is what relationship exists
between the types of pressures facing firms, as classified by institutional theory and outcomes
relating to eco-innovation. Hence our first research question, which is: do institutional
pressures (coercive, normative and mimetic) shape eco-innovation in SMEs?
The second research question focuses on the interplay between the variables of eco-
innovation, green supply chain management (GSCM) and CE. Here our focus is informed by
dynamic capability view theory (DCV). DCV theory establishes a link between environmental
disturbances and possible ways to reduce resource spoilage, in order to enhance operational
performances (Patwa et al., 2020); with the harnessing of a firm’s dynamic capabilities a means
of gaining competitive advantages, especially during periods characterised by turbulent
environmental and economic conditions (Wu 2012; Gente & Pattanaro, 2019). The concepts of
CE and GSCM are environmental and economy related and hence are particularly pertinent in
such conditions (Zhu et al., 2005, 2011; Milios et al., 2019). The CE provides growth
opportunities for firms and economies across the globe, especially emerging economies, to
identify the unleashed potential of eco-innovations (Afshari et al., 2020; Duan & Aloysius,
2019; Pan et al., 2019). The growing literature on eco-innovations and CE is evidence of their
importance among researchers, academicians and policy makers (Ripanti & Tjahjono, 2019;
Del Giudice et al., 2020); however, we lack a comprehensive understanding as to the
relationships between eco-innovation and GSCM and the building of capability to contribute
to the CE in SMEs (Costantini et al., 2017; Lu et al., 2019). Hence, the second research question
is what are the relationships between eco-innovation, GSCM and CE capabilities in SMEs?
Our third and final research question focuses on the topic of big data-driven supply
chain management (BDSCM). BDSCM is a method to attain sustainable business processes,
especially in the context of manufacturing organizations (Dewick & Foster, 2018). These
technology-oriented supply chain management practices deliver desired products and services
whilst deploying less time and cost (Adams et al., 2017). With the driver of delivering
sustainability, such supply chains further contribute towards CE practices whilst extending
benefits for the individual SMEs. The existing body of knowledge confirms that eco-
innovation, the development of goods and services that lead to sustainability and GCSM,
combining sustainable practices with traditional supply chain management are crucial
pathways to achieve CE objectives (Vinuesa et al., 2020; Mazzoni, 2020). Therefore, our final
research question is does GSCM practices, under the moderating influence of BDSCM, result
in enhanced firm performance for those SMEs contributing to the CE?
Our empirical focus is on the country of South Africa. South Africa is a country classed
as a developing country, despite an abundance of resources and activities in various industries.
SMEs comprises of sixty to seventy percent of businesses in South Africa. South Africa
industries are under pressure to contribute to sustainable development (Saavedra et al., 2018;
Türkeli et al., 2018). The country has been the focus of research in relation to SMEs, which is
useful in providing context for our study. For example, Frigon et al. (2020) suggests difficulties
that might hinder the effective functioning of SMEs in South Africa in the context of eco-
innovation, which also apply in relation to contributing to the CE. These difficulties include
stringent government regulations (Chiarini, 2017; Costantini et al., 2015, 2017), intense
competition (Pizzi et al., 2020), underrated markets for SMEs products (Jain et al., 2020) and
inadequate human skills/expertise to set-up SMEs (Chappin et al., 2020). Furthermore, moves
to a CE impact on SME firms’ business models (Chiarini, 2014; Gente & Pattanaro, 2019) and
organizational approaches, designs and methods employed (Ripanti & Tjahjono, 2019; Figge
et al., 2020).
We structured our paper as follows. Firstly, we explain the theoretical underpinning of
a study, the hypotheses development and we introduce the theoretical framework. Then we
describe our survey-based methodology; the operationalisation of our constructs, the sampling
strategy, which collected data from SMEs in South Africa and the data collection methods. We
detail the methods for dealing with potential bias. We follow this with a section covering the
data analysis, incorporating the use of Structured Equation Modelling (SEM), how we dealt
with common method bias, how we tested for endogeneity and we present the measurement
model. We finish the section with the results of the hypotheses testing. We then discuss the
results and highlight the theoretical, practical and policy implications of our study. We end the
paper by stating our main conclusions and outlining areas for further study.
2. Theoretical underpinning

2.1 Circular Economy

A circular economy (CE) is a series of abstractions (Ripanti & Tjahjono, 2019), whereby there
is conversion of resources, circulation, utilization and reclaiming of products and related raw
materials (Del Giudice et al., 2020). CE is the process of converting environmental resources
into varied usable products and services (Lloret, 2016), which are eventually circulated among
consumers, firms and markets (Lim, 2017). The evolution of CE shows its multidisciplinary
background; wherein approaches from a variety of disciplines, such as engineering, economics
and ecology have contributed to its development (Pizzi et al., 2020). Due to the often
convoluted, vigorous and dynamic nature of sustainable businesses (Patwa et al., 2020), CE
needs innovations that enable delivery of environmentally friendly products and services –
which is conceived as eco-innovation (Hopkinson et al., 2018).

2.2 Eco-innovation
Eco-innovations are technological advancements especially focussed towards sustainability
(Greco et al., 2020); with such advancements inviting lots of attention over the last decade
(Gligor et al., 2019; Li et al., 2020). Eco-innovations comprise of two main aspects: (1) the
impact of an innovation on the environment, whether positive/negative and (2) the intent with
which the innovator has initiated an innovation (product/service), keeping in mind its
environmental effect (Barbieri & Santos, 2020). Innovations that do not consider
environmental aspects are not classed as eco-innovation (García-Sánchez et al., 2020). For
example, if an automobile company increases the fuel efficiency of motor bikes, by improving
the engine’s performances, with no concern towards the environmental side effects of the
change, it is not an eco-innovation (Su et al., 2020).
Eco-innovation is a way of converting the standard rectilinear system of manufacturing
and ingestion into a CE (Milios et al., 2019), with institutions and organizations promoting CE
models that harness fundamental and universal eco-innovation to enable the global flow of raw
materials (Patwa et al., 2020). Models of CE seek to achieve an economic balance between
materials usage and energy consumption by adapting the 3Rs (reduce, reuse and recycle)
(Ripanti & Tjahjono, 2019). Re-manufacturing is accepted as one of the efficient methods to
overcome closed-loop material use procedures (Lu et al., 2019). Principally, the approach of a
CE aims to create new resources, whilst at the same time delivering business value (Türkeli et
al., 2018); wherein eco-innovation is categorised as the major driving force of a CE, which
addresses environmental concerns (Saavedra et al., 2018).

2.3 Green Supply Chain Management

Green supply chain management (GSCM) extends sustainable development (Lahane et al.,
2020) and eco-innovation is one of the major elements that contributes towards GSCM (Fehrer
& Wieland, 2021). GSCM comprises of five essential elements: 1) sustainable purchasing, 2)
eco-innovation, 3) internal environment management, 4) recovery of investment and 5)
customer support for sustainability concerns (Liu et al., 2017; Lieder and Rashid, 2016). Eco-
innovation amalgamates ecological deliberations into products and manufacturing procedures
to achieve GSCM, which eventually fulfils the ecological demands of the end users
(stakeholders, consumers, manufacturing organizations) (Confente et al., 2020). GSCM
extends the practical implication of eco-innovation (Farooque et al., 2019).

2.4 Institutional theory

Institutional theory focuses on the social structures that exist in an organizational context (Liu
et al., 2018). The theory puts emphasis on the procedures (directions, standards and practices),
which are governed by already established social behaviour norms and policies (Jain et al.,
2020). Institutional theory provides an understanding of the impacts of these procedures, in
order to create models that identify the external factors needed to implement CE in
manufacturing organizations (Bag et al., 2021a). The theory is used to understand how
environmental initiatives in organizations deliver economic and environmental performance
that considers both short-term and long-term perspectives (Dubey et al., 2019a, 2019b). For
example, institutional theory explains how social acceptability of sustainable practices is key
to achieving sustainability-related goals in organizations (Del Giudice et al., 2020). The
application of the theory enables the achievement of eco-sustainability and eco-innovation
outcomes (Mazzoni, 2020). It provides a lens through which to see opportunities for eco-
innovation practices that enhance sustainable development (Li et al., 2020).

2.5 Dynamic Capability View theory

Dynamic Capability View theory (DCV) focuses on the responses to environmental
turbulences through transforming operational practices in organizations (Lloret, 2016). DCV
accepts the premise of the resource based view of the firm, which focusses on utilisation of
combinations of different types of resources (Peeri, 2020). It provides direction for managers
to effectively restructure and realign the organization’s resources to achieve operational
excellence, whilst, at the same time, responding to environmental pressures (Dubey et al.,
2018). The DCV emphasizes the renewal of resources, through novel combinations, for
effective operations management (Kock, 2017). DCV enables manufacturers to minimise
unwanted environmental disturbances originating from the digitalization of products and
services (Jain et al., 2020).

2.6 Theoretical framework

Our model, shown in figure 1, draws from Institutional theory and DCV theories. We express
potential coercive, normative mimetic pressures as latent variables, having an effect on eco-
innovation. Then eco-innovation is linked to GSCM and CE capability. Finally, both GSCM
practices and CE capability feeds into a firm’s performance, with big data driven supply chains
acting as a moderating variable. The control variables are firm size and industry, as in previous
research of a similar nature, found both to have a significant effect on firm performance (Dubey
et al., 2018).

Figure 1. Theoretical framework

3. Hypothesis development

In this section, we build on the theoretical framework, shown in figure 1, to derive the
hypotheses (H1 – H9a).
3.1 Coercive pressures and eco-innovation

Coercive pressures on organizations, from buyers, government agencies, regulatory norms and
policies, are crucial for the successful introduction and implementation of eco-innovations
(DiMaggio & Powell, 1983). Hellström (2007) highlights the significance of technological
involvement, environment management and eco-innovation for SMEs. The former assists to
address administration, cooperation and information exchange concerns relating to
environmental issues (York & Rosa, 2003; Lee et al., 2020; 2021). Whereas the latter extends
knowledge of the technological requirements needed for eco-innovation (Foster, 2012).
Pertinently, the introduction of eco-innovations, whilst giving due consideration to coercive
pressures and environmental laws, enhances the competitive positions of the SMEs (Li et al.,
2020; Liu et al., 2018). Some eco-innovations might not be economically benign, though
addressing appropriate regulations and policies can result in a smooth route to acceptability
(Prieto-Sandoval et al., 2018a, 2018b). Hence, we hypothesise:
H1: Coercive pressures have a significant and positive impact on eco-innovation in SMEs

3.2 Normative pressures and eco-innovation

Normative pressures are holistic struggles of an organization to achieve effective eco-

innovation (DiMaggio & Powell, 1983). The supply of goods and services essentially
contributes towards effective functioning of eco-innovations in SMEs (Jain et al., 2020). The
depletion of non-renewable sources of energy due to enhanced consumption activities (Greco
et al., 2020), followed by extreme industrialization across the globe, highlight the need for
advanced eco-innovation (Del Giudice et al., 2020). The deployment of eco-innovations is only
possible with effectively integrated technological capacities and environmental management
(Foster, 2012). The availability of effective supply services is one of the most influencing
factors for the implementation of eco-innovations (Lee et al., 2020). Studies have considered
supply management as part of strategic initiatives to avail the benefits of eco-innovations
(Kock, 2017). Given the multidimensional nature of innovations, it is worthwhile to understand
the association between the supply side, in the form of normative pressures to act, and eco-
innovations (York et al., 2010). Therefore, we hypothesise:
H2: Normative pressures have a significant and positive impact on eco-innovation in SMEs
3.3 Mimetic pressures and eco-innovation

Mimetic pressures arise due to the imitation of practices among organizations; here the
practices relating to eco-innovation (DiMaggio & Powell, 1983). Demand for similar eco-
innovations is one of the root causes of mimetic pressures (Lee et al., 2020). In other words,
the demand side plays a significant role in the building and dissemination of innovation
(Costantini et al., 2015; Lim, 2017). On-time availability of demand-related requirements
reduces production uncertainties of technology and markets (Demirel & Kesidou, 2019) and it
further allows goodwill to build among suppliers seeking to pursue investments in eco-
innovations (Cai & Zhou, 2014). The fulfilment of production demands is a crucial way in
which to keep businesses moving forward, especially in the current era of cut-throat
competition (Li et al., 2020, 2021). Su et al. (2020) evidences that the rise in demand for
environmentally friendly products, while achieving technological sustainability, is the
motivation to adopt eco-innovations in SMEs (Hojnik & Ruzzier, 2016). Thus, we hypothesise:
H3: Mimetic pressures have a significant and positive impact on eco-innovation in SMEs

3.4 Eco-innovation and green supply chain management practices (GSCM)

Technology-orientated activities and industrialization are posing severe environmental

challenges for SMEs, especially in terms of managing supply chains (Chin et al., 2015).
Harmful emissions and toxic packaging material create an advanced level of industrial
pollution (Sezen & Cankaya, 2013). GSCM is considered to be an effective approach to reduce
these and other environmental hazards (Costantini et al., 2017; Liu et al., 2018). This
environmental innovation combines aspects of the environment and regular supply chain
activities into an eco-innovation (Dewick & Foster, 2018), which is based on sustainability
(Lee et al., 2020). GSCM includes green procurement, green manufacturing and green
distribution (Hojnik & Ruzzier, 2016). Kock (2017) explains that from the perspective of
sustainability, both eco-innovations and GSCM practices can deliver positive outcomes (Li et
al., 2020). We hypothesise:
H4: Eco-innovation has a significant and positive impact on GSCM practices in SMEs

3.5 Eco-innovation and Circular Economy (CE) adoption

CE adoption highlights the importance of environmental issues across the globe (Adams et al.,
2017). CE revolves around the notions of environmentally friendly ecosystems (Kock, 2017),
instead of following a linear economy philosophy (Costantini et al., 2015). Eco-innovation
and CE share a positive association as they have similar issues, such as green and sustainable
innovation (Foster, 2012), corporate social responsibility (Hojnik & Ruzzier, 2016), and
technologically equipped business models (Lim, 2017; Smol et al., 2017). Deza & Sánchez
(2018) argued that CE promises sustainable development but does not necessarily lead to an
increase in economic growth. Eco-innovation, be it organizational/non-organizational or
institutional/non-institutional, can be accompanied by different levels of technology (Roos
Lindgreen et al., 2020). However, Lahane et al. (2020) confirms that CE can deliver good
results when coupled with eco-innovations in SMEs. Hence, we hypothesise:
H5: Eco-innovation has a significant and positive impact on CE adoption in SMEs

3.6 GSCM practices and CE adoption

GSCM and CE adoption delivers sustainable growth and development (Jia et al., 2020). GSCM
and CE are designed to provide a targeted improvement from the perspectives of the
environment and the economy (Liu et al., 2018); however, the approach of each is different
(Hellström, 2007). GSCM is focussed on providing environmentally friendly activities and to
some extent, it contributes towards economic upliftment (Costantini et al., 2015). CE caters for
economic development, while considering the environment and the optimum utilization of
available resources in SMEs (Liu et al., 2018). GSCM can extend the positive acceptance for
CE adoption (Kock, 2017). CE adoption facilitates eco-industrial activities, which synergises
with GSCM practices, thereby, delivering sustainable manufacturing practices in SMEs (Su et
al., 2020). Therefore, we hypothesise:
H6: GSCM practices have a significant and positive relationship on CE adoption in SMEs

3.7 GSCM practices, firm performance and CE supply chains

GSCM denotes sustainability-oriented supply chain management (Smol et al., 2017) and the
concept of GSCM has a close connection with SMEs’ performance (Foster, 2012). It is
important to establish CE supply chains (Adams et al., 2017) and it is the sustainable aspect of
SMEs’ performance that assures environment friendly GSCM practices (Hojnik & Ruzzier,
2016). GSCM allows SMEs to minimise the usage of non-renewable resources and establish
more eco-friendly measures, in order to operate manufacturing processes (Genovese et al.,
2017). Deza and Sánchez (2019) opines that a clear and positive relationship between GSCM
and firm performance can deliver the best possible outputs. This association can remove several
barriers to achieving operational excellence in SMEs (Barbieri & Santos, 2020). Thus, we
hypothesise:
H7: GSCM practices have a significant and positive relationship with firm performance for
CE supply chain in SMEs

3.8 CE adoption, CE supply chains and firm performance

Human beings are using up more and more natural resources for their survival (Frigon et al.,
2020). Globally, an increase in population, as well as income-related rises, are contributing to
this phenomenon (Demirel & Kesidou, 2019) and, hence, the amounts of various material
resources are reducing and some might disappear completely in future (Liu et al., 2018). The
concept of CE and its adoption provides an opportunity for firms to lessen their use of primary
non-renewable resources (Kock, 2017), thereafter extending the possibilities of using more
environmentally friendly materials (Geissdoerfer et al., 2017). CE adoption facilitates different
CE models, which can support SMEs to minimise waste and to practice appropriate utilization
of resources (Deza & Sánchez, 2019). It is important to understand that increased needs and
wants of consumers is putting extreme pressure on the environment (Foster, 2012). However,
the CE can enable firms to realise the importance of green recovery (Barbieri & Santos, 2020).
Subsequently, we hypothesise:
H8: CE adoption has a significant and positive relationship with firm performance for CE
supply chain in SMEs

3.9a Big data driven supply chains (BDSCs), GSCM practices and firm performance

Climatic changes are critical factors for SMEs to consider (Roos Lindgreen et al., 2020) and,
in this respect; BDSCs are delivering good results across the globe (Farooque et al., 2019).
Adams et al. (2017) highlights that GSCM practices are important facilitators of CE supply
chain performance and existing literature confirms an indispensable role of BDSCs in
developing GSCM and leading to enhanced SME’s performance (Costantini et al., 2015).
BDSCs provide a proactive approach to create sustainable business practices, while
overcoming hurdles related to time-constrains and cost-pressures (Dewick & Foster, 2018).
The recycle and reuse methods of CE and BDSCs extend an environmentally friendly approach
for organizations in relation to their business operations (Greco et al., 2020). Big data
technologies can help SMEs to predict events and avert risks in supply chain (Bag et al., 2021a).
Del Giudice et al. (2020) indicated that BDSCs act as a moderating role of the relationship
between CE HR management and firm performance. Hence, we hypothesise:
H9a: The higher/lower is the strength of BDSCs, the higher/lower is the effect of GSCM
practices on firm performance

3.9b BDSCs, CE capability and form performance

CE adoption is gaining increased credibility due to its potential contribution to sustainability
(García-Sánchez et al., 2020). CE couples economic growth and development with reducing
resource wastage and enhancing environmental benefits in SMEs (Cai & Zeng, 2017). Frigon
et al. (2020) state that technologically equipped supply chains (BDSCs) is a route towards more
sustainable CEs (Barbieri and Santos, 2020), thereby allowing better firm performance
(Costantini et al., 2015). BDSCs enable resource efficiency by technological involvement
towards CE adoption and CE based supply chains (Liu et al., 2018). Due to BDSCs, firms can
make quick and informed collaborative decisions for CE capability development (Dewick &
Foster, 2018). It is the strong enabler of real time product information related to manufacturing,
refurbishing and recycling activities (Jia et al., 2020), which facilitates improved firm
performance (Su et al., 2020). Del Giudice et al. (2020) indicated that BDSCs act as a
moderating role of the relationship between CE HR management and firm performance.
Therefore, we hypothesise:
H9b: The higher/lower is the strength of BDSCs, the higher/lower is the effect of CE
adoption on firm performance

4. Methodology
In this section we explain the process whereby we operationalised the study’s constructs, our
sampling strategy and method for data collection, how we dealt with the potential issue of non-
respondent bias, the techniques used to explain the selection and operationalization of
constructs, the formulation of our sampling strategy and approach to data collection.

4.1 Operationalisation of constructs

Measurement items for our constructs are taken from already established scales. The three
antecedents of eco-innovation: coercive (six items); normative (four items) and mimetic
pressures (three items) are adapted from Zeng et al. (2017); Prieto-Sandoval et al. (2018a); and
Dubey et al. (2019). Our eco-innovation construct (eight items) is adapted from Prieto-
Sandoval et al. (2018a). Green supply chain management practices (five items) are adapted
from Liu et al. (2018) and circular economy capabilities (seven items) from Zeng et al. (2017).
We adapted the instrument developed by Maroufkhani et al. (2020) (five items), and also items
included from Jain et al. (2020) to measure firm performance (nine items). Finally, big data
driven supply chains (four items) are measured using the items from Del Giudice et al. (2020).
We provide the full measurement instrument in the Appendix.

4.2 Sampling strategy and data collection

Cross-sectional data collected via a survey are used to examine the research hypotheses. A
typical five-point Likert scale is utilised to measure level of agreement with the statements (5
being Strongly Agree and 1 being Strongly Disagree). The questionnaire was developed in two
parts. The first part consists of questions related to name, age, domain of work, role in
company, experience, number of employees in company etc. The second part of the
questionnaire contains items to measure the latent constructs.
We calculated the statistical power and minimum sample requirements in WarpPLS
(version 7.0) software using the inverse-square root method, which gave a minimum sample
size of 271. We used a simple random sampling technique to select SME companies from the
Ezee-Dex database of suppliers in South Africa. An online questionnaire link was sent to 462
potential respondents working in these supplier organisations. After follow-ups, we received
240 completed questionnaires. In South Africa small business development minister Lindiwe
Zulu (RSA, 2018) changed the definition of micro, small and medium sized enterprises in 2019.
Since that date, two metrics are mainly used to assess the size of an enterprise; firstly, the
number of employees and secondly, the total annual turnover. Micro enterprises have up to 10
employees, small enterprises can have between 10 and 50 employees, and medium-sized
enterprises can have between 51 and up to 250 employees. In the manufacturing sector, the
turnover ceiling for a micro level enterprise is R10 million, for small sized enterprise it is R60
million and for medium sized enterprises, R170 million (where R1 = 0.068 USD).
Table 1 presents the demographic profile of respondents. We received the highest
number of responses from senior managers and from individuals working in automotive
component manufacturing companies. 27.50 percent of responses were from those in small
sized enterprises and 72.50 percent from those in medium sized enterprises.

4.3 Non response bias

Data were collected in two phases: 106 responses before follow up (early responses) and 134
responses after follow-up (late responses). Therefore, we checked for non-response bias using
the guidelines laid down by Armstrong & Overton (1977). We compared the first and the last
25% of responses received and found no significant difference between each of the measured
items (observed p value >0.05). We also found no significant difference between the profiles
and the response pattern of both the categories (early and late respondents). Therefore, non-
response bias does not appear to be a significant issue in our data.

Table 1: Demographic profile

Respondents (In Respondents

Particulars Respondents
Number) (In Percentage)

Board member/
President/Vice
26 10.83
President/General
Designation Manager
Senior Manager 140 58.33
Manager 22 9.17
Junior Manager 52 21.67
Above 20 178 74.17
Experience (Years) 10 to 20 52 21.67
Below 10 10 4.17
Automotive
component 129 53.75
manufacturing
Light engineering 68 28.33
Nature of Business
Activities
Casting manufacturers 23 9.58

Electronics
component 20 8.33
manufacturers
Above 20 186 77.50
Age of the Firm 10 to 20 50 20.83
(Years) 5 to 10 4 1.67
Below 5 0 Nil
10 0 Nil
No of employees 10 to 50 66 27.50
<250 174 72.50
 Annual Turnover Micro 0 Nil
(South African Small 66 27.50
Rands - R) Medium 174 72.50

5. Data analysis

Here we provide a justification for the Structured Equation Modelling (SEM) technique used.
We set out how we addressed potential common method bias and tested for endogeneity. We
finish this section by presenting the results of the SEM in the form of the structural model.

5.1 Use of SEM

We utilised Structural equation modelling (SEM), combining two robust statistical techniques:
firstly, exploratory factor analysis and secondly, structural path analysis. Further, the analysis
of endogenous variability, which is an element of our analysis, is appropriate to SEM (Lee et
al., 2011). Kock (2017) confirms the acceptability of SEM, using Partial Least Squares (PLS),
for studies similar to ours in management science-related research. We followed the advice of
Hofstra & Huisingh (2014), who provide detailed guidelines as to which SEM method to use
i.e., PLS SEM vs Covariance-Based (CB) SEM. PLS-SEM is particularly useful for smaller
sample sizes and for where the focus is on theory development, as is the case in our study.

5.2 Common method bias

Common method bias (CMB) can create problems in survey-based research and lead to biased
survey results (Pagoropoulos et al., 2017). Therefore, we took precautions when developing
the instrument. Simple English language was used to avoid any possible misunderstanding of
the questions. A split survey method can eliminate CMB (Peeri et al., 2020), so we collected
data independently using two different surveys. The respondents to both of the surveys had
related profiles and were selected from a defined population from a similar sampling frame.
This procedure mitigates for CMB occurring. In addition, we performed Harman's one-factor
test and found that the single factor explained 46.32% of the total variance, which is lower than
the accepted cut-off figure of 50%. This confirmed that the data did not suffer from CMB.

5.3 Endogeneity test

We used the WarpPLS software to test and control for model endogeneity caused by the
predictor variables coercive pressures, normative pressures and mimetic pressures having an
indirect effect on the dependent variable firm performance for CE supply chain. Therefore, we
created an instrumental variable - see iC in figure 2 – directly linked to firm performance for
CE supply chain, using single stochastic variation sharing technique. The model was drawn
and further testing undertaken. The findings show that the p value (0.17) at the 5% confidence
level is not significant (refer to figure 2) and therefore, we concluded that endogeneity is not a
problem in our model.

Figure 2. Endogeneity test

5.4 Measurement Model

Data pre-processing showed no columns with zero variance; no identical column names; no
rank problems and all columns (indicators) standardized. Model fit was checked and,
furthermore, we assessed internal consistency reliability using composite reliability. All
constructs exceed the recommended 0.70 level (see Table 2). Convergent validity was
measured using AVE. The values for all constructs were satisfactory and greater than the
required value of 0.50 (Hofstra & Huisingh, 2017) except for eco innovation (0.443). However,
Fornell & Larcker state that if AVE is less than 0.5 but composite reliability is higher than 0.6
then convergent validity of the construct is still adequate (Fornell & Larcker, 1981).
 Table 2: Factor loadings, AVE, CA and CR values

Construct Item Factor Loadings

CP1 0.831
CP2 0.780
Coercive Pressures (CP) (AVE= 0.525; CA= CP3 0.751
0.816; CR= 0.868) CP4 0.671
CP5 0.625
CP6 0.668
NP1 0.716
Normative Pressures (NP) (AVE= 0.527; CA= NP2 0.673
0.700; CR= 0.816) NP3 0.734
NP4 0.778
MP1 0.874
Mimetic Pressures (MP) (AVE= 0.612; CA=
MP2 0.816
0.675; CR= 0.823)
MP3 0.638
ECOI1 0.692
ECOI2 0.849
ECOI3 0.816
Eco-Innovation (ECOI) (AVE= 0.443; CA= ECOI4 0.849
0.788; CR= 0.843) ECOI5 0.816
ECOI6 0.345
ECOI7 0.398
ECOI8 0.119
GSCM1 0.814
Green Supply Chain Management Practices GSCM2 0.842
(GSCM) (AVE= 0.707; CA= 0.896; CR= GSCM3 0.846
0.923) GSCM4 0.867
GSCM5 0.833
CIRCI1 0.838
CIRCI2 0.840
CIRCI3 0.789
Circular Economy Capability (CEC) (AVE=
CIRCI4 0.731
0.615; CA= 0.895; CR= 0.918)
CIRCI5 0.741
CIRCI6 0.757
CIRCI7 0.787
FIP1 0.874
FIP2 0.733
Firm Performance (FIP) (AVE= 0.639; CA=
FIP3 0.750
0.956; CR= 0.961)
FIP4 0.716
FIP5 0.729
 FIP6 0.768
FIP7 0.753
FIP8 0.771
FIP9 0.813
FIP10 0.845
FIP11 0.854
FIP12 0.810
FIP13 0.874
FIP14 0.874
BDSC1 0.920
Big Data Driven Supply Chains (BDSC) BDSC2 0.706
(AVE= 0.640; CA= 0.802; CR= 0.873) BDSC3 0.608
BDSC4 0.918

We checked for discriminant validity, with the results provided in Table 3. As shown in the
table, the correlation between latent constructs was smaller than the square root of AVE for
each of the individual constructs, which confirms discriminant validity in our model. We
further conclude from our testing that there is construct validity for the data.

Table 3: Correlations between latent constructs

BDSC*G BDSC*
CR NP MP ECOI GSCM CEC FIP BDSC
SCM CEC
CR 0.73
NP 0.54 0.73
MP 0.52 0.63 0.782
ECOI 0.31 0.28 0.353 0.666
GSCM 0.56 0.51 0.552 0.29 0.841
CEC 0.35 0.3 0.368 0.468 0.67 0.784
FIP 0.57 0.52 0.559 0.306 0.912 0.686 0.799
BDSC 0.22 0.26 0.216 0.407 0.308 0.557 0.366 0.800
BDSC* -
0.05 0.16 0.152 -0.07 0.191 0.206 -0.09 1.000
GSCM 0.008
BDSC* - -
0.04 0.07 0.074 -0.24 -0.007 -0.23 0.72 1.000
CEC 0.229 0.007

We checked model fit indices Average path coefficient (APC), Average R-squared (ARS),
Average adjusted R-squared (AARS), Average block VIF (AVIF), Average full collinearity
VIF (AFVIF) and Goodness of Fit (GoF). As shown in table 4 the values of APC, ARS and
AARS are statistically significant at the 1% confidence level. AVIF and AFVIF are within
acceptable limits and the GoF shows a large value, which indicates that our model is strong.

Table 4: Model fit indices

Test Results
Average path coefficient (APC) 0.315, P<0.001
Average R-squared (ARS) 0.520, P<0.001
Average adjusted R-squared (AARS) 0.516, P<0.001

Average block VIF (AVIF) 1.396, acceptable if <= 5, ideally <= 3.3

Average full collinearity VIF (AFVIF) 3.01, acceptable if <= 5, ideally <= 3.3
0.59, small >= 0.1, medium >= 0.25, large >=
Tenenhaus Goodness of Fit (GoF) 0.36

We also checked the data for possible issues relating to causality. We calculated the following
quality indices: Sympson's paradox ratio, R-squared contribution ratio, Statistical suppression
ratio and Non-linear bivariate causality direction ratio (NLBCDR). As shown in table 5, the
test results were all within acceptable limits.

Table 5: Quality indices

Test Results

Sympson's paradox ratio 1.000, acceptable if >= 0.7, ideally = 1

R-squared contribution ratio 1.000, acceptable if >= 0.9, ideally = 1

Statistical suppression ratio 1.000, acceptable if >= 0.7

Non-linear bivariate causality direction
ratio 0.900, acceptable if >= 0.7

5.5 Structural Model

The final tested model is shown in Figure 4.
 Figure 4. Final Tested model

The results of testing the hypotheses are shown in Table 6. Hypotheses H1 to H9b (except H9a)
are supported. H9a is not supported.

Table 7: Results of hypotheses testing

p- Supported/Not
Hypothesis Effect Of Effect On β
value Supported

H1 Coercive pressures Eco-innovation 0.33 <0.01 Supported

H2 Normative pressures Eco-innovation 0.13 0.02 Supported
H3 Mimetic pressures Eco-innovation 0.32 <0.01 Supported
Green supply chain
H4 Eco-innovation 0.30 <0.01 Supported
management practices
Circular economy
H5 Eco-innovation 0.23 <0.01 Supported
capability
Green supply chain
Circular economy
H6 management 0.76 <0.01 Supported
capability
practices
Green supply chain
Firm performance for
H7 management 0.77 <0.01 Supported
CE supply chain
practices
Circular economy Firm performance for
H8 0.19 <0.01 Supported
capability CE supply chain
 Green supply chain
Big data driven management practices
H9a 0.07 0.13 Not Supported
supply chains and Firm performance
for CE supply chain
CE capability and
Big data driven
H9b Firm performance for 0.05 <0.01 Supported
supply chains
CE supply chain

6. Discussion

Our study provides empirical evidence of some important relationships in the context of the
CE. Firstly, that coercive, normative and mimetic pressures have a significant and positive
relationship with eco-innovation. These findings extend earlier work by Zeng et al. (2017) and
Prieto-Sandoval et al (2018a) by highlighting that regulations and policy, supply side and
demand side factors are three eco-innovation determinants in the context of CE. In the case of
Prieto-Sandoval et al (2018a) it builds on conceptual foundations. Overall, we show that
institutional pressures are influencing eco-innovation – in our empirical context of SMEs in
South African. Restorative eco-innovations aim to take remedial actions against damages done
to the ecology. However, cyclical eco-innovations play an important role in enhancing capacity
of eco-systems and close loops. Regenerative eco-innovations are also important to enhance
eco-systems ability to do value addition for humans and nature (Hofstra & Huisingh, 2014).
Prieto-Sandoval et al (2018a) suggest that a transformative paradigm will be observable
through eco-innovations, which are the tangible results of the CE model. They also highlight
that CE adoption cases have necessitated eco-innovative solutions that ultimately support the
triple bottom line approach (Elkington, 1997). Building on these observations, we provide
evidence that eco-innovation has a significant and positive relationship with GSCM practices
and that eco-innovation has a significant and positive relationship with CE adoption. The latter
finding supports earlier work by Prieto-Sandoval et al. (2018a). Hence, our study contributes
to knowledge by established a new link between eco-innovation and GSCM practices and by
empirically testing and confirming the link between eco-innovation and CE adoption.
Our results support a hypothesis that GSCM practices have a significant and positive
relationship with CE adoption; where such practices comprise of five main dimensions: green
purchasing, eco-design or design for the environment, internal environmental management,
customer cooperation for environmental concerns, and investment recovery (Liu et al., 2018).
CE can be adopted at the micro, meso and macro level. Interestingly, GSCM practices happen
in parallel to CE at different levels such as firm, industrial park, regional/national, and global
levels. Literature has highlighted that GSCM are a key activity to transform towards CE
(Govindan & Hasanagic, 2018). The linkage between GSCM practices and CE has been
identified and theoretical applications suggested by Liu et al. (2018). We make a contribution
to knowledge by empirically testing and validating the link.
Previous studies, for instance Costantini et al. (2015), suggest there is a positive
relationship between GSCM practices and SME performance for CE supply chain and our
findings support this proposition. With regards to CE adoption and firm performance for CE
supply chain, we provide empirical evidence of a new and indirect link, which extends the
knowledge base in relation to the drivers of the CE.
Our findings indicate that BDSCs have a moderating effect on the relationship CE
adoption and firm performance for CE supply chain. Recently, Del Giudice et al. (2020)
showed that BDSCs act as a moderator of the relationship between CE human resource
management and firm performance for a circular economy supply chain. Our findings show
that BDSCs can strengthen/weaken the relationship between CE capability and SME
performance for CE supply chain.
A notable finding is that big data driven supply chains does not have any moderating
effect on the relationship of GSCM practices and firm performance for CE supply chain. This
contradicts some previous studies, but is consistent with others. A recent study by Wang et al
(2020) revealed that big-data analytics (BDA) capability intensifies the relationship between
external corporate social responsibility and green supply chain management. Also, the study of
Del Giudice et al. (2020) highlighted that BDSC works as a moderator of the relationship
between CE human resource management and firm performance for a CE supply chain.
However, the work of Edwin Cheng et al. (2021) revealed that BDA does not have a direct
effect on sustainable performance. Our findings shed light on the complex and nuanced
moderating role of BDSCs. With BDSC seen having a significantly greater role when it comes
to building CE capability for enhancing firm’s performance for CE supply chain than it does
in moderating the relationship between GSCM practices and performance.
In the next sections, we present the theoretical, practical and policy implications based
on the findings of our study.

6.1 Theoretical implications

One of the significant contributions to theory of our research is the testing of a model based on
eco-innovation and firm’s performance for CE supply chain in the context of a developing
country, South Africa, which is experiencing fast growth in technology adoption. We utilise a
lens of institutional theory to extend understanding of the pressures that manufacturing
organizations must deal with in order to achieve high performance levels in terms of their CE
supply chains. CE necessitates innovation in the following areas: the manufacturing processes,
the way customers use products, how companies formulate policies. In this manner eco-
innovation has grown over time in a similar way to CE; mainly driven by environmental factors
and changes in customer demands. Eco-innovations comprise of exploitative, restorative,
cyclical and regenerative types. Exploitative eco-innovations focus less on ecological problems
but aim to conform to legal requirements. Another unique aspect of our research model is its
connection with dynamic capability view theory. Building on existing literature, we contribute
to theory through the inclusion of different types of eco-innovations i.e. business model,
network, organisational structure, process, product, service, market and customer engagement
innovations.

6.2 Practical implications

Research on the application of institutional pressures, eco-innovation, GSCM practices and CE

capabilities and firms’ performance in accordance to circular economy is not new
(Pagoropoulos et al., 2017), yet our findings have valuable and new practical implications.
Firstly, supply chain management professionals need to understand the institutional pressures
that are shaping eco-innovation. The top management of organizations must implement
advanced technologies, which enable managers to track eco-innovation practices on a daily
basis. Secondly, managers need to support eco-innovation as it leads to GSCM practices and
CE. Thirdly, managers can improve firm performance for CE supply chain through GSCM
practices, by considering institutional pressures and issues relating to the resource based view
of the firm. Fourthly, managers can improve firm performance for CE supply chain through
CE adoption; wherein the institutional pressures and resource based view will support such
improvements. Finally, managers need to understand that the more effectively CE capabilities
are developed; the higher is the impact of BDSCs on firm performance for CE supply chain.

6.3 Policy implications

The policy implications of our study are threefold. Firstly, policy makers need to pay attention
to the determinants of eco-innovation i.e., regulations/policies and supplier/customer practices
related to eco-innovation. Focus must be on the use of innovative technologies at every level
to close the industrial loops of a CE i.e., a) the micro level inside local businesses (b) the meso
level at which interconnected industries operate, and (c) the macro level formed by institutions
and regions. Secondly, there needs to be a strengthening of policies related to GSCM practices
e.g., green purchasing, eco-design, internal environmental management and customer
cooperation for environmental concerns, as they act as a catalyst in CE adoption. Thirdly, big
data-related privacy and security aspects need to be considered when developing policies
related to GSCM practices and CE adoption. Data driven supply chains can enhance
traceability of a product and are an important enabler of environmental impact assessment. It
is clear that eco-innovation and GSCM can play a critical role in CE adoption in SMEs; hence,
policy makers need to consider all these aspects when developing comprehensive frameworks
for CE adoption in SMEs.
There are also policy implications specific to our empirical focus on South Africa. The
growing population in South Africa has put lot of stresses on waste management systems. The
current waste management services operated by municipalities are under pressure to collect
and dispose wastes in landfills. 75% of waste generated in this country goes to the landfill, and
many valuable resources are lost through such a disposal process. To overcome this problem,
the South African Government have adopted CE as part of its sustainable development program
to reduce wastes and improve circularity. In the industrial waste management plan four waste
stream such as tyres, paper/packaging, lighting/electrical and electronic waste have been given
more attention (Tahulela & Ballard, 2020).

7. Conclusions, limitations and areas for further study

In this final section of our paper, we draw our main conclusions, highlight limitations of the
study and indicate areas for further study.
To conclude, we respond to calls of previous researchers for empirically testing of the
links of GSCM practices and CE in SMEs. Based on a review of the literature, we developed
a theoretical model linking the antecedents of eco-innovation, GSCM, CE capabilities and
SME firm performance. To test the model, we used a measurement instrument involving 240
data points, with data collected from a survey of individuals working in SMEs in South Africa.
The tested model indicated that eco-innovation explains 37% of variance; while GSCM
practices explained 9%; followed by CE adoption explaining 75%. Lastly, the endogenous
variable i.e., firm performance for CE supply chains explained 86% of the variance.
 To account for the potential differences between firms, we considered firm size as a
control variable, as larger size firms have higher resource sets and enhanced ability to develop
eco-innovation than smaller size firms. We also controlled for industry sector, using dummy
variables to distinguish different industries (automotive parts manufacturers, light engineering,
casting manufacturers and electronics parts manufacturers). Our results show that the control
variables i.e., firm size and industry does not have a significant effect on the endogenous
variable: firm performance for CE supply chains.
Based on available CE literature we anticipated that eco-innovation has a stronger
impact on CE adoption than on GSCM practices. However, our findings indicate that the effect
of eco-innovation on GSCM practices is stronger than its impact on CE adoption for South
African SMEs. Another noteworthy finding is the identification of the moderating effect of big
data driven supply chains on circular economy capability and SMEs firm performance.
The uniqueness in our study is that we have empirically tested conceptual models
proposed by previous researchers, for instance the antecedents of eco-innovation and the link
between GSCM and CE. We have identified hereto-unspecified relationships between eco-
innovation and GSCM in SMEs and developed a model of CE and its antecedents.
Like every research project, our study suffers from some limitations, such as the use of
cross-sectional data and data collection from a developing country. A longitudinal study would
address this first limitation, by testing of the relationships shown in our theoretical model for
causality, which will increase its validity. In terms of the second limitation, testing our model
in different country contexts and, indeed, different industry sectors, would enhance the
generalisability of the findings. Finally, further work could help explain some of the nuances
we found, such as the moderating role of BDSC, which, in our model, is significant in some
relationships and not in others
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Appendix

Operationalization of constructs

Constructs Code Measurement Items Adapted from

Regulation and policy determinants influence and

CP1 motivate consumers' and suppliers’ environmental
practices
Policy makers propose instruments to decrease
resource demand, such as repairing or renovating
CP2 products (including electronics) instead of
purchasing new ones, and encouraging a sharing
economy Zeng et al.
Coercive Regulation and policy determents support the (2017); Prieto-
Pressures (CP) CP3 development of innovative solutions for waste Sandoval et al.
collection (2018a)
Regulation and policy determents support
CP4
economic incentives for cleaner production

CP5 Policy makers tend to promote economic aspects

Successful economic incentives may drive

CP6
environmental and public health improvements

The extent to which your firm’s suppliers are

NP1
involved in eco-innovation

The extent to which your firm’s customers are

NP2
involved in eco-innovation Prieto-Sandoval
Normative The extent to which industry associations’ (such et al. (2018a);
Pressures (NP) as CII or FICCI) promotion of environmental Dubey et al.
NP3 (2019a)
management influences your firm to consider eco-
innovation
Emerging environmental education programs in
NP4 schools and universities in your country are
increasing people's interest in the value of nature
Our competitors who have adopted eco-innovation
MP1
have greatly benefitted
Our competitors who have adopted eco-innovation
MP2 are favourably perceived by the others in the same Zeng et al.
Mimetic
industry (2017); Dubey et
Pressures (MP)
al. (2019a)
Our competitors who have adopted eco-innovation
MP3 are favourably perceived by their suppliers and
customers
 Business model innovations, which are related to
ECOI1
the way that companies create and capture value

Network innovations, which are created by

ECOI2
working in symbiosis with other companies

Organizational structure innovations in the

development of new organizational and
ECOI3
management practices to support environmental
strategy
Process innovations, which are associated with the
ECOI4 way that companies make their products or offer
services
Eco-
Product innovations, which are related to the Prieto-Sandoval
Innovation ECOI5
quality and functionality of the products et al. (2018a)
(ECOI)

Service innovations in the CE context tend to be

developed to increase the use of a product by
decreasing its ownership; this means that a
ECOI6
product can be used many times by different
people, rather than being used by a single owner
for a brief period

Market innovations, which are created through

ECOI7 communication channels with the customer, brand
values and the positioning of the product
Customer engagement innovations, which focus
ECOI8 on customer experiences, and meeting their needs
or desires

GSCM1 We focus on green purchasing

Green Supply We practice eco-design or design for the
Chain GSCM2
environment
Management GSCM3 We focus on internal environmental management Liu et al. (2018)
Practices
(GSCM) We consider customer cooperation for
GSCM4
environmental concerns
GSCM5 We emphasis on investment recovery
This country facilitates sustainable development
through its implementation at the implementation
CEC1
Circular at the micro
Economy (enterprises and consumers) Zeng et al.
Capability Company is dedicated to reducing the (2017)
CEC2
(CEC) consumption of raw materials and energy
Company initiatively enhances the energy
CEC3
efficiency of production equipment
 CEC4 Product packaging materials are used repeatedly
Waste produced in the manufacturing process is
CEC5
recycled
CEC6 Waste products from consumers is recycled
Waste and garbage are used after reprocessing to
CEC7
manufacture new products
FIP1 Improvement in customer retention
FIP2 Improvement in sale growths
FIP3 Improvement in profitability Maroufkhani et
Introducing new products or services to the market al. (2020)
FIP4
quickly
Improvement in success rate of new products and
FIP5
services
Our organization has decreased of cost for
FIP6
materials purchasing
Our organization has decreased cost for energy
FIP7
consumption
Firm Our organization has not decreased fee for waste
FIP8
Performance treatment
(FIP) Our organization has decreased fee for waste
FIP9
discharge
Our organization has decreased fine for
FIP10
environmental accidents Jain et al. (2020)
Our organization has reduced air emission in the
FIP11
last 3 years
Our organization has reduced waste water in the
FIP12 last
3 years
Our organization has reduced solid waste in the
FIP13
last 3 years
Our organization has reduced consumption of
FIP14 hazardous/harmful/toxic materials in the last 3
years
The firm builds consistent, interoperable, cross
functional department database to enable
BDSC1
concurrent engineering, rapid experimentation and
simulation and co-creation
Big Data
Driven Supply The firm aggregates customer data and makes Del Giudice et al.
Chains them widely available to enhance service level, (2020)
BDSC2
(BDSC) capture cross and up-selling opportunities and
enable design to value
The firm implements advanced demand
BDSC3 forecasting and supply chain planning across
suppliers
 The firm model production virtuality to create
BDSC4 process transparency, develop dashboards and
visualise bottlenecks