Improving Circular Supply Chain Performance through Green Innovations: The Moderating Role of Economic Policy Uncertainty

Abstract

The sudden outbreak and long-term trend of COVID-19 have brought huge attacks and uncertainty to the global economy, forcing countries to introduce various policies frequently to stimulate economic recovery. To realize sustainable development, firms established an environment-friendly economic development model by building a circular supply chain and implementing a green innovation strategy, which is expected to save resources and protect the environment by recycling resources. Based on this background, this study aims to determine the relationship between the uncertainty of economic policy, green innovation strategy, and circular supply chain performance. It divides green innovation strategies into green product innovation, green process innovation, green service innovation, and green logistics innovation to explore their different impacts on the performance of the circular supply chain. Simultaneously, the moderating effect of uncertainty of economic policy between green innovation and the performance of the circular supply chain is explored. Using survey data collected from 308 manufacturing firms in China, we empirically test the theoretical model and proposed hypotheses through the structural equation modeling approach. Our findings demonstrate that green product innovation, green process innovation, green logistics innovation, and green service innovation have a positive impact on the performance of the circular supply chain. Moreover, we also find that, contrary to our expectations, economic policy uncertainty plays a positive role in moderating the relationship between green innovation and circular supply chain performance. We believe that this paper has a clear contribution to the research on green innovation and circular supply chain management. This study provides a new perspective for the research on the integration of green innovation and circular supply chain, deepens firms’ understanding of green innovation strategy and circular supply chain, and provides important implications and guidance for manufacturing firms to better manage green innovation and circular supply chain practice as well as the risk of economic policy uncertainty.

The Path from Green Innovation to Supply Chain Resilience: Do Structural and Dynamic Supply Chain Complexity Matter?

“…This aligns with the resource-based view (RBV), which emphasizes the importance of internal resources in gaining a competitive advantage. In the face of policy uncertainties, Liu and Wang's research [35] demonstrates the role of green innovation in fostering circularity. Similarly, Nikseresht et al [149] and Hongquan and Abdullah [13] have demonstrated the beneficial effects of green innovation on sustainable logistics and green supply chain management (GSCM) practices, such as green procurement.…”

“…The research by Hongquan and Abdullah [13] This research contributes to the ongoing conversation surrounding green supply chain management (GSCM) by examining the interplay between green innovation strategies, logistics practices, and the complexity of supply chain operations. Drawing upon the findings of Liu and Wang [35] regarding the impact of green innovation on enhancing the performance of circular supply chains in times of economic uncertainty, this study aims to investigate the ways in which these strategies contribute to the reinforcement of resilience. This study emphasizes the value of teamwork in addressing supply chain challenges and incorporates research on eco-technological innovation by Nureen et al [18].…”

The adoption of I4.0 technologies for a sustainable and circular supply chain: an industry‐based SEM analysis from the textile sector

“…At the same time, they enable improved surveillance and tracking tools that enable organizations to operate efficiently and proactively via sustainability (Xu et al, 2023). As a result, companies recently tend to concentrate on green metrics strategies, which minimized pollution procedures, energy consumption approaches, and resource and costs saving plans (Liu & Wang, 2022). These tools additionally increase individual and social awareness and create a more secure workplace in the industrial environment (Kabir & Aminul Islam, 2021).…”