The Effect of Phases of the Adoption of the Circular Economy on Firm Performance: Evidence from 28 EU Countries

Abstract

Although a substantial body of literature has analysed the potential benefits of the circular economy, empirical evidence on the relationship between circular economy-related activities and firm performance is scarce. Rather than analysing only the effect of the circular economy on firm performance, we empirically examine the effects of the different phases of the adoption process of the circular economy on firm performance. Therefore, in this paper, a multiphase framework of circular economy adoption is developed. Employing a propensity-score-matching model on the sample of more than 4000 European SMEs, we show that the adoption of circular economy activities improves firm performance as measured by productivity. In addition, our findings reveal that the impact of circular economy activities on firm performance is dependent on the different phases of the adoption process. Taken together, this study enriches current research on the circular economy by contributing to a more nuanced understanding on the relationship between the different phases of the adoption process and firm performance.

Circular Economy Performance Measurement in Manufacturing Firms: A Systematic Literature Review with Insights for Small and Medium Enterprises and New Adopters

“…Availability of resources as time, staff, and economic resources [37,38] Awareness. Awareness over a specific aspect of interest and over the firm's impact on it [35,[39][40][41] Competence. Adequate competences to tackle the specific aspect of interest [30][31][32]35] Maturity Level.…”

“…Awareness over a specific aspect of interest and over the firm's impact on it [35,[39][40][41] Competence. Adequate competences to tackle the specific aspect of interest [30][31][32]35] Maturity Level. Maturity level in terms of transition towards the specific aspect of interest [27,32,35] Such a categorization is relevant for properly understanding the needs of the different types of firms, and, as for the measurement of performance, reasoning on their specific characteristics [42,43].…”

“…CE adopters can be defined as firms born in a linear economy, making efforts to implement CE in their existing business models [32]. NAs can be defined as firms at the first stages of the circular transition [33,34] and at the initial stage of the adoption process [35]. NAs can face specific problems in relation to aspects of strategy, organizational structure, and performance management [21].…”

Economic Factors and Performance Measurement of Regional Governments in Sumatra and Java

“…The lower the capacity and ability of financial management that is not mark good in regional development will create a negative effect, namely the lower public services Another recent study by Moric & Šakovi (2020) which measures between performance and economy in 24 European countries, the result is that economic activity is related to performance, in accordance with the process of adopting activities related to progress at the economic level so that it is getting better, namely productivity. He et.al (2020) in China who discussed performance explained that economic factors influence performance such as tax burden and financial infrastructure.…”

How Circular Are the European Economies? A Taxonomic Analysis Based on the INEC (Index of National Economies’ Circularity)

“…Related studies focused mainly on: the essence and origin of the concept of CE [10][11][12][13]; the barriers to and conditions of its implementation [4,[14][15][16][17][18][19]; planning issues, including the formulation of a CE development strategy at various levels of management [4,11,14,18,[20][21][22][23][24]; promoting good practices and models of CE implementation [13,14,23,25,26]; and comparing the circular economy with other social and economic concepts [12,13,27,28]. Particular attention was also devoted to issues of monitoring and evaluating the effects of a circular economy [14,[29][30][31][32][33][34][35][36][37][38][39][40].…”