The role of circular economy principles and sustainable-oriented innovation to enhance social, economic and environmental performance: Evidence from Mexican SMEs


The UN's sustainable development goals underscore engaging supply-chain stakeholders with environmentally friendly practices. Small- and medium-size enterprises (SMEs) are key participants in several supply chains, but their operations often produce a significant environmental impact. Their transition to sustainable practices is challenging because they operate with constrained resources, which are mostly invested in pressing activities. Therefore, evidence is needed that shows the benefits of investing limited resources in sustainable activities to support decision-making in SMEs. Research has neglected to connect circular economy and sustainable-oriented innovation whilst accounting for external factors affecting the implementation of sustainable processes and technology within SMEs in developing countries. This paper fills that gap by analyzing the impact of external factors on the implementation of circular economy and technology, and their influence on sustainable-oriented innovation and sustainable performance. Responses from 165 Mexican SMEs have been collected and analyzed using structural equation modeling to test direct and indirect effects between constructs. Findings reveal that while both governmental support and customer pressure facilitate the adoption of circular economy, only governmental support contributes directly to technology implementation. They also highlight the value of circular economy to support the adoption of sustainable-oriented innovation and to mediate the relationship between technology implementation and sustainable-oriented innovation. The overarching finding is that circular economy promoting sustainability-oriented innovation has a positive impact on financial, environmental, and social performance. This is a key implication to inform managers in SMEs on the potential benefits of investing in sustainable solutions.

Publication DOI:
Divisions: College of Business and Social Sciences > Aston Business School
College of Business and Social Sciences > Aston Business School > Operations & Information Management
College of Business and Social Sciences > Aston Business School > Aston India Foundation for Applied Research
Additional Information: © 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY licence
Publication ISSN: 0925-5273
Last Modified: 22 Apr 2024 07:29
Date Deposited: 04 Apr 2022 08:33
Full Text Link:
Related URLs: https://linking ... 925527322000883 (Publisher URL)
PURE Output Type: Article
Published Date: 2022-06-01
Published Online Date: 2022-03-31
Accepted Date: 2022-03-27
Authors: Rodríguez-espíndola, Oscar (ORCID Profile 0000-0002-4889-1565)
Cuevas-romo, Ana
Chowdhury, Soumyadeb
Díaz-acevedo, Natalie
Albores, Pavel (ORCID Profile 0000-0001-7509-9381)
Despoudi, Stella (ORCID Profile 0000-0002-8377-6407)
Malesios, Chrisovalantis
Dey, Prasanta (ORCID Profile 0000-0002-9984-5374)



Version: Published Version

License: Creative Commons Attribution

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