Premium
The role of dynamic capabilities in circular economy implementation and performance of companies
Author(s) -
Khan Owais,
Daddi Tiberio,
Iraldo Fabio
Publication year - 2020
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.2020
Subject(s) - operationalization , structural equation modeling , dynamic capabilities , business , partial least squares regression , sample (material) , circular economy , industrial organization , component (thermodynamics) , process management , knowledge management , computer science , ecology , philosophy , chemistry , physics , epistemology , chromatography , machine learning , thermodynamics , biology
Abstract Although most companies perceive that they might not be able to implement a circular economy (CE), some scholars perceive that companies may do so by developing dynamic capabilities (DCs). To empirically investigate the role of DCs in CE implementation, we analyzed a sample of 220 companies in Italy through partial least squares structural equation modeling (PLS‐SEM). Our PLS‐SEM analysis demonstrates that DCs and their underlying organizational activities significantly facilitate CE implementation, which consequently improves the overall performance of companies. Moreover, a circular dynamic environment (CDE) may stimulate companies towards CE implementation. This paper contributes to the literature in the following manner. First, this paper highlights how companies can identify and pursue CE opportunities. Second, this paper contributes to the debate on the role of a dynamic environment and how DCs leads to performance. Third, this paper presents the measurement scales of DCs and shows how to operationalize a hierarchical component model (HCM) in PLS‐SEM.