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

Ilija Moric, Jelena Šaković Jovanović, Rajka Đoković, Sanja Peković and Đurđica Perović
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Ilija Moric: Faculty of Tourism and Hotel Management, University of Montenegro, Old Town 320, 85330 Kotor, Montenegro
Jelena Šaković Jovanović: Faculty of Mechanical Engineering, University of Montenegro, Cetinjska 2, 81000 Podgorica, Montenegro
Rajka Đoković: Faculty of Law, University of Montenegro, The street of July 13th 2, 81000 Podgorica, Montenegro
Sanja Peković: Faculty of Tourism and Hotel Management, University of Montenegro, Old Town 320, 85330 Kotor, Montenegro
Đurđica Perović: Faculty of Tourism and Hotel Management, University of Montenegro, Old Town 320, 85330 Kotor, Montenegro

Sustainability, 2020, vol. 12, issue 6, 1-12

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.

Keywords: circular economy; firm performance; multiphase adoption approach (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:6:p:2557-:d:336359

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