How does it pay to be circular in production processes? Eco‐innovativeness and green jobs as moderators of a cost‐efficiency advantage in European small and medium enterprises

Abstract

This study investigates whether circularity in production processes generates a reduction of firms' production costs and the conditions that determine the intensity of this reduction. It explores the role of two moderators for this cost‐efficiency advantage to emerge, namely, eco‐innovativeness (investments dedicated to the adequate implementation of circular practices in current production processes) and green jobs (human resources dedicated to circular practices). Using data on 13,117 small and medium enterprises (SMEs) from the Flash Eurobarometer 2017, a cluster analysis revealed that there is a gradual path towards Circular Economy among European SMEs, with the implementation of increasingly more circular practices. Four ordered probit models confirmed that a higher level of circularity in processes achieved by European SMEs is related to a reduction in their production costs. Moreover, eco‐innovativeness positively moderates this relation. In contrast, the relative share of green jobs in SMEs' workforce mitigates the impact of circularity on production costs. In practice, by engaging in circularity, SMEs can contribute to the United Nations goals for Sustainable Development while reducing production costs; although the level of this reduction depends on how circularity is implemented.

Integration of the Circular Economy Paradigm in Companies from the Northwest of the Iberian Peninsula

“…Regarding the concepts most frequently associated with CE, we would like to stress how, among the five most mentioned words, we found the 3 R's (reduce, reuse, recycle), the three starting CE principles. CE perception comprises preemptive practical actions (resources optimization, waste reduction) and corrective actions (recycling, repair, and reuse)-which is in line with previous studies [39,40]. According to Darmandieu et al [40], companies initially go for a combination of preemptive and corrective actions, so as to enhance resource efficiency, and only at a later stage do they progress to more expensive practices, demanding more considerable investments.…”

“…CE perception comprises preemptive practical actions (resources optimization, waste reduction) and corrective actions (recycling, repair, and reuse)-which is in line with previous studies [39,40]. According to Darmandieu et al [40], companies initially go for a combination of preemptive and corrective actions, so as to enhance resource efficiency, and only at a later stage do they progress to more expensive practices, demanding more considerable investments. Maybe this mindset explains why concepts such as "innovation", "eco-design", and other practical preemptive efforts that call for an early investment are quoted to a lesser degree.…”

“…Socioeconomic reasons include production costs reduction, material and energetic resources reduction, the creation of new business models, job creation, etc. Darmandieu et al [40] concluded that circularity in production processes generates a reduction of firms' production costs. Cutting down costs is a great motivation for companies to implement circular practices [44,45].…”

The potential contribution of end-of-life fishing nets, lines and ropes to a circular economy: the Namibian perspective

“…Transitioning from LE to CE presents many benefits including resource efficiency, waste reduction, creation of employment opportunities, reducing business production costs, economic opportunities, and business models. Thus, implementing a CE is a catalyst in accelerating economic growth (Naustdalslid, 2014;Darmandieu et al, 2021;Eimontas et al, 2023;Longfor et al, 2023), with numerus opportunities. Instead of disposing of resources in landfills as the final waste management alternative, the CE model emphasizes recycling and reusing materials, a practice beneficial to the environment and can lead to sustainability (Deshpande et al, 2020a).…”

“…Former fishermen were reported to have created employment opportunities through selling old fishing nets to farmers (NBC, 19 September 2023). CE promotes sustainable and responsible business practices that benefit both the environment and the economy (Nilsen, 2020;Darmandieu et al, 2021). Local manufacturing firms can respond more quickly to changes in demand and supply and increase local competitiveness and market conditions adaptability.…”