Industry 4.0 and circular economy for emerging markets: evidence from small and medium-sized enterprises (SMEs) in the Indian food sector

Abstract

The linear economic business model was deemed unsustainable, necessitating the emergence of the circular economy (CE) business model. Due to resource scarcity, increasing population, and high food waste levels, the food sector has been facing significant sustainability challenges. Small and medium-sized enterprises (SMEs), particularly those in the food sector, are making efforts to become more sustainable and to adopt new business models such as the CE, but adoption rates remain low. Industry 4.0 and its associated technological applications have the potential to enable CE implementation and boost business competitiveness. In the context of emerging economies facing significant resource scarcity constraints and limited technology availability, CE principles need to be adapted. CE could create a new job economy in emerging economies, bringing scale and a competitive advantage. This study explores the enablers of and barriers to Industry 4.0 adoption for CE implementation in fruit and vegetable SMEs in India from a resource-based perspective. The purpose is to develop an evidence-based framework to help inform theory and practice about CE implementation by SMEs in emerging economies. Fifteen semi-structured interviews were conducted with experts in food SMEs. The interview transcripts were first subjected to thematic analysis. The analysis was then complemented with sentiment and emotion analyses. Subsequently, hierarchical cluster analysis, k-means analysis, and linear projection analysis were performed. Among others, the findings suggest that Industry 4.0 plays a key role in implementing CE in SMEs in emerging economies such as India. However, there are specific enablers and barriers that need to be considered by SMEs to develop the resources and capabilities needed for CE competitive advantage.

1 Introduction

The current economic system, which is based on a linear supply chain operating model, is certainly unsustainable (Despoudi, 2019). Due to the need for organisations to become more sustainable by preventing depletion of resources, closing energy and material loops, and facilitating sustainable development, the concept and model of the circular economy (CE) has recently emerged in supply chains (Patwa et al., 2021). The CE concept states that an industrial system is restorative or regenerative by intention and design, and that it replaces the ‘end-of-life’ concept with restoration, leading to zero waste (Yamoah et al., 2022). The implementation of CE in food supply chains (FSCs) is even more critical due to the sustainability pressures faced by the latter. According to the Food and Agriculture Organisation (FAO, 2019), these sustainability pressures are related to the availability of fewer natural resources, limited agricultural land, population growth, global food insecurity, climatic change, dietary changes, governance of the FSC system, and food waste. CE principles can be applied to prevent food waste in the first place, recover resources from food waste, recycle the materials used for food packaging, and increase food availability (Despoudi, 2020). Many companies are successfully implementing sustainability and CE in their supply chains through improved products/services and processes; however, this is not the case for small and medium-sized enterprises (SMEs) (Dey et al., 2020). SMEs are one of the largest employers worldwide, accounting for more than 90% of all businesses. Emerging economies are critical contributors to national income (GDP), accounting for 40% of total GDP (World Bank, 2021). However, in the context of sustainability practices, SMEs are a major polluter, and only a few of them have environmental management systems and CE practices in place (Johnson & Hörisch, 2022). There has been little research on CE implementation from the SMEs’ perspective (Pereira et al., 2022).

Fruit and vegetable SMEs in India are the second largest producers of perishables in the world (IFP Bureau, 2021). However, the linear nature of their supply chains results in significant waster, amounting to approximately £13 million. The lack of proper sustainability practices has resulted in a variety of issues, such as inadequate infrastructure, packaging, and storage facilities, as well as fragmentation and a lack of transparency (Govindan et al., 2014). Further, in the absence of adequate technology, food SMEs are bound to face deterioration in product shelf life, quality issues, improper adherence to safety standards, and an increase in lead time (Lezoche et al., 2020). CE implementation in India’s food SMEs will address the aforementioned CE issues (Michelini et al., 2017). Due to resource constraints in emerging economies such as India, CE practices must be tailored to their specific context to achieve their full potential. The CE could enable food SMEs to scale up and grow while also creating a new job economy.

One of the critical issues that companies face when implementing CE is the lack of efficient information systems to effectively manage their CE involvement and objectives (Khan et al., 2021; Vacchi et al., 2021). For CE implementation to be successful, effective data management and a strong underlying technological infrastructure are required. Industry 4.0 may enable CE implementation and boost business competitiveness (Khan et al., 2021). The link between the physical and digital worlds can also be achieved through Industry 4.0 applications, which make CE implementation feasible, robust, and transparent for companies (Lezoche et al., 2020). This also allows companies to be more sustainable, as they can recycle, reduce, and reuse at a faster rate (Rajput & Singh, 2021). However, the role of Industry 4.0 applications in CE implementation from the perspective of SMEs in emerging economies has not yet been explored.

According to the resource-based view (RBV) theory, resources and capabilities provide firms with a strategic competitive advantage, allowing them to capitalise on opportunities and avoid threats in their operating business environment, and thus become more competitive (Barney, 1991). The term ‘resources’ refers to physical, human, capital, and organisational resources (Barney, 1991). Industry 4.0 technological applications can be seen as organisational resources that will develop capabilities to support CE implementation. CE implementation could boost the competitiveness of SMEs in emerging countries because the sector can scale up. However, SMEs in emerging countries face unique challenges in terms of technology adoption and CE implementation. Therefore, this study explores the enablers of and barriers to Industry 4.0 adoption for CE implementation in fruit and vegetable SMEs in India from the RBV perspective. This is the first study to explicate Industry 4.0 barriers and enablers in relation to CE implementation at the SME level in an emerging market in the food industry. Interviews were conducted with food experts from Indian SMEs. Their views are used to build a framework for understanding CE implementation in SMEs in developing countries and the role of Industry 4.0. SMEs could utilise the proposed evidence-based framework in other developing countries with similar resource constraints.

The paper is organised as follows: Sect. 2 presents the literature review, Sect. 3 discusses the research methodology, Sect. 4 presents the interview findings, and Sect. 5 discusses the results and findings. Section 6 concludes the paper and provides directions for future research.

2 Literature review

This section presents a review of the existing literature in terms of CE and Industry 4.0. It begins by examining the definition and principles of CE. It then delves into Industry 4.0 and its applications, as well as its relationship with CE, which includes enablers and barriers. The importance of CE to the food sector is outlined, along with the indicators of fruits and vegetables in India.

2.1 The principles of the circular economy

CE is defined as a system that reinstates the ‘end of life’ theory through sustainability, recycling, and reuse at the macro, micro, and meso levels to attain value, prosperity, environmental protection, and ensure future growth expansion (Henry et al., 2021). CE is primarily based on the main principles known as the 3Rs: reduce, reuse, and recycle (Acerbi & Taisch, 2020; Reh, 2013). The primary goal of the ‘reduction’ principle is to maximise production and consumption efficiency. This is accomplished by producing higher-value products with a lower economic impact, using fewer resources, and avoiding products that can damage the ecosystem (Acerbi & Taisch, 2020). Eco-efficiency can be achieved by encouraging more frugal methods, such as essential packaging, smaller and lighter raw materials, and the promotion of environmentally friendly technologies (Acerbi & Taisch, 2020; Patwa et al., 2021). The ‘reuse’ principle refers to practices in which products are not discarded as waste but are reused for the same purpose for which they were designed (Dora, 2019; Fatimah et al., 2020). Reuse can only be successful if the products are designed to be long-lasting for multiple phases of use (Sumter et al., 2020). This process can be encouraged by providing subsidies and educating customers about the importance of reusing products (Sumter et al., 2020; Vlajic et al., 2018). The ‘recycling’ principle refers to how used products are not discarded as waste but are instead recycled into functional or usable substances. However, it applies only to natural products and cannot be used with fossil fuels (Dora, 2019). The main benefits of recycling include resource conservation, reduced use of landfills and incinerators, better use of domestic resources, and energy savings (Upadhyay et al., 2021).

2.2 Industry 4.0 enablers and barriers for the circular economy

Vaidya et al. (2018) and Pereira and Romero (2017) defined Industry 4.0 as a tool that uses evolving technology and machine improvement to cope with global changes, making production more efficient, improving quality, and resulting in easier maintenance. By implementing Industry 4.0 applications, companies can improve their operational competence, enhance data flow, increase efficiency, and reduce waste (da Xu et al., 2018; Vaidya et al., 2018; Yin et al., 2018).

There are multiple benefits stemming from the Industry 4.0 paradigm, which have also been highlighted in recent research on CE enablers (Sanders et al., 2016; Schmidt et al., 2015; Vaidya et al., 2018). In terms of the energy used for manufacturing processes, Industry 4.0 technologies have the potential to reduce the levels of consumption and input by leveraging clear and scalable manufacturing expertise (Sanders et al., 2016). There are also opportunities to identify and classify materials and products that can be reused and repaired, as well as waste tracking systems for data collection on the amount of waste and its various types, which support more informed decision making (Chauhan et al., 2021; Fatimah et al., 2020). The applications of Industry 4.0 can provide reliable data to management, reduce potential breakdowns, and avoid manufacturing failures (Gunasekaran et al., 2017). Industry 4.0 is designed for self-restoration, which can benefit CE principles and ensure process continuity (Azadegan et al., 2020). It ensures that various data forms are prioritised for managing resources for CE to improve quality across the entire network. Industry 4.0 can be used to integrate equipment and streamline processes for optimal asset and resource utilisation (Oesterreich & Teuteberg, 2016). Lastly, Industry 4.0 applications have continuous learning processes that can leverage the constant stream of data and provide a tailored experience for consumers’ needs, and therefore instantly and simultaneously improve efficiency (Schmidt et al., 2015).

Some of the main issues that CE principles face during implementation are related to disparities and data inconsistencies (Kazancoglu et al., 2021; Khan et al., 2021; Vacchi et al., 2021). The lack of interactive platforms and designs to support circularity are the main reasons for the need to involve advanced technologies (Vacchi et al., 2021). The primary obstacle is that existing materials need to be discarded because they were not developed from the perspective of reuse or recycling due to a lack of technology. Most countries lack the ability to provide high-quality remanufactured products (Henry et al., 2021). The issue of transparency can lead to inadequate data on the product (Henry et al., 2021). This can have an impact on a company’s operations due to a lack of knowledge regarding the type of raw materials used in the final product. This becomes even more problematic when many dealers obtain products from unknown sub-dealers (Khan et al., 2021). The lack of adequate expertise on how to use technology and the kinds of skills that should be adopted are also issues that must be addressed (de Angelis, 2021). Further, some linear technologies are well established in the economy, making the introduction of new circular systems even more difficult (Han et al., 2020).

However, with Industry 4.0, companies can employ CE with the help of three main drivers: knowledge of the location, knowledge of the condition, and knowledge of availability (Dagilienė et al., 2021). Companies can gain an advantage by monitoring the location of assets or data using feedback loops, allowing them to optimise routes, assess storage, and ensure proper maintenance (Spanaki et al., 2021). By obtaining appropriate information about the conditions of their assets, companies can improve their uptime. Lastly, by recognising the capability of a specific asset, companies can ensure optimal resource utilisation, which can also aid in circularity (Mangla et al., 2018). All of the above seemed far-fetched initially, but with the advent of IoT and cloud computing, these drivers can now be easily accomplished (Rajput & Singh, 2021). Thus, a deeper examination of the various Industry 4.0 enablers and barriers can aid in determining the relationship between CE implementation and Industry 4.0 applications (Rajput & Singh, 2021). Table 1 shows the enablers and barriers of Industry 4.0 for CE implementation.

Table 1 Summary of Industry 4.0 enablers and barriers in relation to CE

Industry 4.0 technologies have been found to enable CE implementation through improved energy efficiency and waste management systems, enhanced process reliability and uptime, increased resilience, improved quality, improved infrastructure, and self-optimisation. However, companies appear to face challenges when using Industry 4.0 technologies to aid in CE implementation. The analysis of the literature revealed the following barriers to Industry 4.0 implementation for CE: interconnectedness and collaboration issues, data safety and security issues, high investment costs, and infrastructure and incompatibility issues. The present study takes into account all of the identified enablers and barriers and examines their presence at the SME level in emerging countries.

2.3 The circular food supply chain

With growing environmental concerns, it is almost mandatory to apply CE principles to the food supply chain to extend the lifespan of resources and ensure their recycling and reprocessing (Hamam et al., 2021). Prior to the emergence of the CE concept, food waste was commonly disposed of in large quantities. However, since this concept has been introduced, recovered resources have been effectively reused rather than discarded (Batista et al., 2021; Despoudi, 2019). CE not only reduces material costs but also boosts economic growth and operational efficiency. Food waste or loss occurs at various points along the supply chain, and can be divided into upstream and downstream steams (Despoudi, 2019). Losses in emerging countries are referred to as upstream losses, while losses in developed countries are referred to as downstream losses. The loss in upstream food can be further subdivided into production, handling, storage, and distribution losses. Downstream losses include those experienced by retailers, consumers, and post-consumer food (Despoudi, 2020). Food loss is recognised as consumable foods that are abandoned or disposed of and identified as losses or residues (Despoudi, 2019; Irani et al., 2018). To be sustainable in the future, significant efforts must be made to avoid this waste. Therefore, by introducing CE, wasteful products can be converted into raw materials that can be used to produce other products, significantly reducing waste (Dora, 2019; Irani & Sharif, 2018).

The circular food supply chain reduces purchase costs by reusing products that would otherwise be discarded (Genovese et al., 2014). Here, basic raw materials are replaced with recycled goods. If the goods are reprocessed, the overall emission levels will also be significantly reduced. The circular food supply chain process tracks the activities that cause emissions and seeks new ways to reduce them by tracking their performance (Reh, 2013). It encourages cooperation among suppliers to reduce emissions at various supply chain stages (Genovese et al., 2014). Reverse logistics is the process of converting waste products into usable products so that producers can take them back and reuse them. This is used not only to recycle general food waste but also to recover unutilised packaging material.

2.4 The need for circular economy implementation in the Indian fruit and vegetable supply chain

India is the world’s second largest producer of fruits and vegetables, trailing only China (IFP Bureau, 2021). SMEs in India produce an assortment of fruits and vegetables, such as onions, potatoes, brinjals, lemons, apples, bananas, mangos, papayas, and oranges (IFP Bureau, 2021). In terms of fruit and vegetable exports, India accounts for only 1% of the global market. The United Kingdom, United Arab Emirates, Pakistan, Nepal, Bangladesh, and the Netherlands are among the important countries to which they are exported. However, fruits, and vegetables are also imported from a variety of countries, including the United States, Iraq, and Pakistan. The main reason India is forced to import is due to post-harvest loss, which accounts for up to 30% to 40% of total fruit and vegetable losses (IFP Bureau, 2021).

Despite having a diverse range of fruits and vegetables, India wastes almost Rs13.30 million in fresh produce each year (IFP Bureau, 2021). Rural infrastructure is relatively poor due to difficulties in setting up warehouses and storage, resulting in a 40% loss (IFP Bureau, 2021). Fragmentation issues arise because of the presence of a large number of middlemen, forcing farmers to reduce their share. Other factors, such as poor packaging, contribute significantly to fruit and vegetable waste. SMEs are struggling to adapt to the high cost of packing the product, resulting in poor and insufficient packing. A lack of cold storage facilities across the country, as well as financial issues such as price fluctuations, farmers’ low-income levels, and a lack of transparency, are all causes of waste (Kazancoglu et al., 2021). Further, approximately 25% of food losses are attributed to improper handling. This is becoming one of the main causes of the rise in the level of hunger. India ranks 103rd out of 199 countries in the Global Hunger Index (GHI). The cumulative loss of fresh produce ranges from 4.58 to 15.88% (FAO, 2019). This can be prevented by introducing the CE concept, which takes responsibility for reducing food waste and implementing recycling measures.

Some of the main threats to the fruit and vegetable sector are related to product shelf life, supply lead time, and deterioration rate (Lezoche et al., 2020). Improper management of perishables eventually results in safety, condition, quantity, and depletion issues. Therefore, introducing advanced Industry 4.0 technologies could help prevent these problems (Lezoche et al., 2020). The implementation of a more digitalised supply chain in the fruit and vegetable sector will allow for a more flexible, robust, and resilient process (Lezoche et al., 2020). Industry 4.0 can help with data management, forecasting, and product tracking, allowing businesses to place more accurate orders, have greater visibility, and reduce the risk of overstock (Rogerson & Parry, 2020). Industry 4.0 also aids in the integration of older technologies. This will allow companies to evaluate historical data and information flows, helping them adapt to changing market conditions (Lezoche et al., 2020). Most small-scale companies in the Indian fruit and vegetable sector use traditional methods due to financial instability and a lack of knowledge of advanced technologies (IFP Bureau, 2021). Consequently, by adopting Industry 4.0 applications, the Indian fruit and vegetable sector may benefit by shortening the production cycle and the time it takes for the product to reach the market, thereby increasing efficiency, control, and cost savings (Corallo et al., 2018; Miranda et al., 2019).

2.5 Resource-based view of the circular economy

The RBV of a firm describes an organisation as a bundle of resources, and the best utilisation of those resources can lead to competitive strategies (Barney, 1991). To adapt to changing circumstances, companies need to reconfigure their resource bundles. However, this may not always be possible, because their existing resources and capabilities limit new resource investment directions. CE implementation can help build and complement a company’s resources and capabilities, thereby providing a sustainable advantage. This is because a company’s resources can be reconfigured by combining them, adding new ones, and substituting old ones. To this end, new resources and capabilities are needed to collect or source otherwise-wasted materials and resources and convert them into new added-value resources/materials or design processes that can extend product life.

However, there are several challenges in CE implementation that could be overcome by investing in Industry 4.0 applications (Kazancoglu et al., 2021; Khan et al., 2021; Vacchi et al., 2021). CE adoption levels remain low, and the role of Industry 4.0 applications in CE implementation has not yet been explored at the SME level in emerging countries. SMEs in emerging economies face resource constraints, and competitive advantages may emerge as a result of CE requirements, such as resource reconfiguration. A firm’s resources can be classified as either tangible or intangible. Examples of tangible resources are assets and machines, whereas intellectual capital, organisational knowledge, and staff skills are examples of intangible resources (Barreto, 2010; Teece & Pisano, 1994). Organisational capabilities can be developed based on these resources, including collaborative capability, financial capability, automation capability, predictive capability, self-learning capability, and agile capability (Mikalef & Pateli, 2017; Mikalef et al., 2019).

The collaborative capability of a firm can be developed through Industry 4.0 applications. The high visibility of crucial information allocations generates high trust, which can improve decision making and coordination processes (Williams et al., 2013). Information technology, such as cloud and blockchain, enables large amounts of critical information, such as transaction information and customer information, to be instantly shared, communicated, and secured, resulting in an intimate cooperation relationship (Giannakis et al., 2019). Financial capability is a key capability that is required for Industry 4.0 technologies, as investments in new equipment and updates to existing ones are essential for success. Predictive capability is an essential advantage gained from implementing Industry 4.0, as it can pinpoint future demand and supply changes (Gunasekaran et al., 2017; Hazen et al., 2016; Ilie-Zudor et al., 2015). When Industry 4.0 takes full advantage of its inimitable information and knowledge resources, as well as advanced data analysis technology, to predict unexpected demands and events, it will produce a superior resilient advantage in operation (Sheffi & Rice, 2005). IT automation, AI, and other subjects from Industry 4.0 enable self-learning with the lowest possible human costs (Oesterreich & Teuteberg, 2016). Innovative activities centred on the concept of Industry 4.0 will require new ways of updating product systems on a continuous basis. With advanced self-learning capability, human labour is maximised, and products are manufactured 24 h a day (Oesterreich & Teuteberg, 2016).

Companies will be more flexible and adaptable to volatile environments as a result of the agile capability brought about by Industry 4.0. Authentic market information is gathered throughout the supply chain, and supplier performance improves through greater end-to-end engineering integration (Wong et al., 2015). Real-time assessment capability, which increases information transparency between different partners, is one way that enterprises can gain a competitive advantage through Industry 4.0. As a result, trust is built for long-term cooperation (Delbufalo, 2012). One of the greatest benefits of Industry 4.0 is its automation capability, that is, real-time assessment/sharing capability, which is identified as a magnificent enabler in this study. Massive amounts of data are required and exchanged with a large number of SC players. Therefore, transparency and visibility are guaranteed throughout the operational and management processes (Spanaki et al., 2018). Based on the barriers and enablers of Industry 4.0 in CE implementation for Indian fruit and vegetable SMEs, this study identifies tangible and intangible resources, as well as capabilities. Relative enablers are considered competitive advantages, while barriers are considered competitive disadvantages. Hence, the aim of this study is to explore the enablers and barriers of Industry 4.0 adoption for CE implementation in fruit and vegetable SMEs in India from an RBV perspective, and then propose a framework for CE implementation for SMEs in emerging economies based on the insights.

2.6 Research gap

Industry 4.0 has played a crucial role in improving existing technology and has the potential to support CE principles (Khan et al., 2021). The enablers of Industry 4.0 with regard to CE are improved energy efficiency and waste management systems, enhanced reliability and uptime, enhanced resilience, improved quality, improved infrastructure, and self-optimisation (Chauhan et al., 2021; Fatimah et al., 2020; Kazancoglu et al., 2021; Khan et al., 2021; Rajput & Singh, 2021; Vacchi et al., 2021). The barriers to Industry 4.0 relating to CE are interconnectedness and collaboration issues, data safety and security issues, high investment costs, and infrastructure and incompatibility issues (Almada-Lobo, 2016; Rajput & Singh, 2021). Various studies have investigated the principles, enablers, and barriers to CE and Industry 4.0 applications. However, the enablers and barriers of Industry 4.0 as a resource from the RBV point of view that will bring competitive advantage through CE in emerging market SMEs remain unexplored. The aim of this study is to address this research gap through interviews with food SME experts in the Indian fruit and vegetable sector, as well as to answer the following research question:

• What are the enablers and barriers of Industry 4.0 that could facilitate CE principle implementation in SMEs in emerging economies, particularly in the Indian fruit and vegetable supply chain, from the RBV perspective?

3 Research methodology

Given the exploratory nature of this study, a field study approach was used to identify Industry 4.0 enablers and barriers to CE implementation in the emerging market of fruit and vegetable SMEs. This allows for an in-depth exploratory investigation of the phenomenon under study, which leads to theory development (Ketokivi & Choi, 2014; Yin, 2009). The aim of this study was to add to the existing literature and further elaborate on the theory of CE in SMEs in emerging economies by focusing on Industry 4.0 as an enabler of CE implementation. The study is multifaceted, drawing on evidence from existing academic research while combining the explicit and tacit knowledge of experienced field professionals (Bryman & Bell, 2011) to represent the perspectives of the Indian food industry context. The approach falls under elicitation studies (Edgar & Manz, 2017), employing an exploratory qualitative field research design.

The aim of the study’s data collection was to capture knowledge from experts in the field (Suri, 2011); thus, purposeful sampling was used (Coyne, 1997; Patton, 2002; Suri, 2011). Industry professionals from the Indian food industry were identified based on their experience in the field, as well as their expertise in the vegetable and fruit industry (Table 2). Qualitative interviews engage investigators and respondents in a variety of dialogues and discussions in which the topic is documented and examined (Bryman & Bell, 2011; Patton, 2002). This is useful for learning about another person’s understanding, opinions, objectives, stance, and difficulties. For the purposes of this study, semi-structured interviews were carried out with 15 senior professionals from food SMEs in India. Semi-structured interviews involve prepared questions guided by identified themes that are consistently and systematically interposed with probes designed to elicit more detailed responses. The focus is on the interview guide, which incorporates a series of broad themes to be covered during the interview to help direct the conversation towards the topics and issues that the interviewers want to learn more about (Hennink et al., 2017). Hence, this was the most suitable option for investigating the enablers and barriers of Industry 4.0 for CE in countries such as India. It enables researchers to obtain detailed information, good response levels, and an in-depth understanding of the issue.

Table 2 Information about the participants in this study

Before commencing the interview process, a series of questions were prepared to gather information about the topic. The questions were flexible, allowing the scope of enquiry to be broadened and adjusted according to changing responses to the interview material (Patton, 2002). These questions were designed to improve existing knowledge and provide insights into the interviewees’ perceptions (Patton, 2002). The questions were planned in accordance with the aim of the study, which began with the implementation of CE principles and Industry 4.0 technologies, which served as the foundation for the entire study. Questions concerning the relationship between Industry 4.0 and CE principles were also developed to determine whether Industry 4.0 applications aided or hampered the implementation of CE principles in the context of the study (Rajput & Singh, 2021). Lastly, demographic questions were set up. Overall, the interview guide helped examine the relationship between Industry 4.0 and CE principles implementation, as well as their enablers and barriers, in the Indian fruit and vegetable sector.

As there is no specific list with the names of fruit and vegetable producers in India, the non-probability snowball sampling technique was selected to identify respondents for this study. The researchers’ personal contacts were used as an initial pool of respondents, followed by reaching out to the contacts of the initially interviewed food supply chain SME experts as a second pool of respondents. Respondents included businesses involved in the supply of fruits, vegetables, frozen food, and groceries, which allowed for capturing views from various areas of the sector. Fifteen interviews were conducted with food supply chain SME experts. The number of interviews was decided based on saturation (Guest et al., 2006; Hennink et al., 2017) and the importance of having 20 or fewer participants to improve information exchange (Fontana & Frey, 1994).

The goal of the study was to identify the enablers and barriers of Industry 4.0 for CE implementation. Therefore, conducting interviews specifically on this topic allowed the researchers to achieve the desired results. The interviews were conducted online via Skype. Table 2 provides detailed information about the participants, as well as their experiences and the types of products they dealt with. Interviews were conducted with people in various positions with experience ranging from 5 to 40 years to generate diverse perspectives on the topic. Further, firms that sell single products, as well as those that sell fruit and vegetable assortments, were considered.

The interviews lasted 40 min to an hour, and the respondents agreed to be audio-recorded. Prior to the interviews, each interviewee was given an informed consent form and a confidentiality agreement. During the interview, respondents were encouraged to elaborate on their answers and anything else that they thought was relevant to the topic in order to explore any other issues in depth (Fontana & Frey, 1994). The interview recordings were analysed using thematic analysis with coding (Boyatzis, 1998; Braun & Clarke, 2006). The themes for the data analysis were the CE practices, the Industry 4.0 applications, and the various barriers and enablers of Industry 4.0 identified through the literature review. As soon as the data were collected, two researchers coded each interview, first to identify whether additional interviews were required, and second to send the transcripts to the interviewees for review.

To ensure reliability and validity, the researchers provided background information on all the participants who agreed to be interviewed. Prior to the commencement of the interviews, the researchers provided 24 h’ notice in accordance with the requirements for participation shared with the participants for consent prior to participation in this study. This increased trust because they had the option to withdraw at any time if they felt uncomfortable. During the interviews, the researcher’s questions were strictly about the study; no other information was gathered. As a result, the validity and reliability of the research were ensured.

The data analysis was complemented with a sentiment and emotion analysis of the interview transcripts to identify the sentiments and emotions of the interviewees regarding CE practices, Industry 4.0 applications, and the various barriers and enablers of Industry 4.0. The analyses were carried out using IBM Watson Natural Language Understanding (NLU) cloud native software, which uses deep learning to extract sentiment, emotion, and other text-based metadata. The IBM Watson NLU sentiment analysis identifies attitudes, opinions, or feelings in text. The NLU analyses sentiments based not only on the polarity of individual words but also on the text’s sequence. The results are displayed through sentiment labels of positive (score 0 to 1), neutral (score 0), and negative (score − 1 to 0). By contrast, emotion analysis allows for going beyond polarity to detect emotions, such as joy, sadness, fear, disgust, and anger, which ensures more granularity. Subsequently, hierarchical cluster analysis, k-means cluster analysis, and linear projection analysis were performed to identify the group of SMEs that shared the same features in terms of CE principles and Industry 4.0 applications. Figure 1 depicts the flowchart of the approach followed in this study.

Fig. 1

Flowchart of the approaches to data analysis

4 Research findings and analysis

This study sought to understand the enablers and barriers of Industry 4.0 for CE principles implementation by SMEs in an emerging market in the food sector, namely fruit and vegetable SMEs in India. Hence, the interviewees were asked questions about the following aspects: CE practice implementation, Industry 4.0 practice implementation, and Industry 4 barriers and enablers in CE implementation.

4.1 Circular economy practices in the Indian fruit and vegetable sector

According to the literature, CE principles are divided into three main categories: reduce, reuse, and recycle. When asked about the application of these principles, all of the interviewees stated that they engaged in the CE practices of recycling, reducing, and reusing products. In terms of reducing waste and resource practices, the interviewees stated that they used water efficiency methods, such as rainwater wastewater, temperature control warehouses, collaborations with wholesalers, and recyclable packaging. A few of the interviewees stated:

Along with these, we have contracted check dams to harvest rainwater, which increases groundwater level and acts as a useful water resource for our produce in times of need. (I3)

Sometimes we cannot sell all our products in the local markets; therefore, we established collaborations with wholesalers who can immediately collect our produce and sell it somewhere else. Some buyers require that we package our fruit, and in collaboration with them we developed recyclable packaging (I9)

Regarding reusing products, the interviewees reported that they reused fruits and vegetables in a variety of ways, including creating value-added products, such as marmalade juice, using the exterior of the fruit as food packaging, animal feed, organic fertiliser, and plant-growing enhancement ingredients. Some of the interviewees mentioned:

Coconuts are sold for retail or any other purpose; the outer unused shells are taken back by the company and are being reused for growing plants and used as containers. We also have leaf extracts that can be used instead of chemical pesticides and insecticides. This helps to avoid insects. (I6)

Fruits like mangoes that are damaged while being transported are used for juices, in which we remove the damaged part of fruit and use the rest effectively. At times, we also send these fruits to companies that also make jams. Vegetables like tomatoes that are damaged are reused in such a way that we carefully extract the flawed portion and use the rest for making salads or for juices. (I11)

The majority of the participants engaged in recycling practices, converting their food waste into natural compost or using it to generate biogas. This helped them in multiple ways, including environmental security and pollution reduction. A few instances of recycling that the participants mentioned were as follows:

In our farming company, we have a huge recycling plant that is used for converting coconuts and other unused food products into manure, which we use for our own crops and sell to other farmers who are in need of organic fertilisers. We also have leaf extracts that can be used instead of chemical pesticides and insecticides. This helps to avoid insects. (I5)

We generate lots of renewable energy in the form of biogas which avoids wastage and if there are products which are further leftover, those are used as manure which goes back to the field thereby completing the cycle. (I12)

The products we mainly use are perishables like fruits and vegetables that don’t last for 3 to 4 days, which causes more wastage than other fields of business. So, we take steps to convert the wastage into manure, which we use for the fruits and vegetables that we grow in our own warehouse. (I14)

Table 3 provides a comprehensive overview of the various CE principles applied by the participants. According to the table, 7 of the 15 participants used reduction, 8 reused, all incorporated recycling, and only 2 used all 3 CE principles. This demonstrates that participants understand CE principles, which can aid in the implementation of CE principles in the Indian fruit and vegetable sector.

Table 3 CE principles implemented by the interviewees

Sentiment analysis further identified the sentiments of the interviewees regarding the concept of CE and its principles. The interviews revealed a generally positive sentiment, although the tendency was towards neutrality. For example, interviewees indicated that CE offered several benefits, such as minimal wastage, reuse of resources, extension of the lifecycle of products, business sustainability, renewable energy, and pollution reduction. In this respect, the interviewees adopted a positive vocabulary in characterising their perceptions of the CE concept and its principles. This highlights that the interviewees had a positive attitude towards CE implementation in the fruit and vegetable sector, even though they did not all adopt all CE principles in practice. The tendency towards a neutral sentiment is relevant, however, and this can be explained by the fact that these interviews were characterised by a greater emphasis on definitions and descriptions, which lowered the level of sentimentality displayed.

4.2 Industry 4.0 applications in the Indian fruit and vegetable sector

As previously stated in the literature review, Industry 4.0 applications include IoT, cloud computing, big data, augmented reality, and cyber-physical systems and security. Nine of the 15 participants employed Industry 4.0 applications in their firms, particularly cloud computing and IoT, because they felt these applications improved the level of control, they had over their firms. The majority of the interviewees stated that a common cloud computing issue they faced was poor purchase plans. However, some of the candidates also mentioned the following:

We do use cloud technologies to control purchase because we have many vendors across different cities, and in the earlier days, we had issues regarding demand and supply. There was demand, and we were ready to supply, but there was no link between them. (I1)

Thus, with the introduction of cloud computing, their efficiency in handling data increased, allowing them to save money by keeping better track of their orders and increasing their mobility. Cloud technologies provide high levels of authentication, supervision, and encryption; they assist in keeping their data secured while scaling up their operations. As a result, it helped ensure scalability and security. The interviews highlighted these benefits, as shown in the following excerpts:

We implemented a cloud-based technology where an online platform was set up to feed the demand, which helps our company get orders in real time. These orders are processed in such a way that we avoid wastage. (I3)

While sending and receiving orders, we use cloud computing, which helps us to keep track of the orders and store them safely. We are using cloud computing so that it can be accessed from different places and at any time. (I8)

Other than cloud computing, applications such as IoT can be used for fine-tuning operations, better control, and an improved ordering system. One of the interviewees mentioned:

As of now, we are using the internet of Things (IoT) for LAN [local area network] and WAN [wide area network] to connect all our business operations from the field to the store. We manage to send notifications on our customers’ mobile phones through IoT applications when their orders are ready for collection. We have buyers from other cities, and we can better understand the demand. (I11)

Further, some of the participants took the initiative to introduce more Industry 4.0 applications in the future. However, 6 of the 15 interviewees did not install any applications or new technologies, as they felt that India’s fruit and vegetable sector was traditional. They did, however, recognise the enormous potential for these technologies to be introduced in the future. Participants indicated that:

Indian agriculture is still very traditional, at least the banana and coconut cultivation are still being traditional, so we don’t have much application of Industry 4.0 as of now. But in the near future, we are looking forward to using applications like big data, which could help in computing data, analysing past trends, forecasting, and understanding relationships between other external factors. (I5)

We are also planning to install cloud computing when we start expanding our retail branches to more locations in the near future. We are just moving forward with Industry 4.0 technology with respect to processing and reaching out to the customer. (I6)

Participants who had not yet implemented these technologies were not opposed to novel technologies or machinery inventions. They employed several types of machinery for chopping their vegetables and irrigating crops. A related example from the participants is as follows:

We use solar pumping motors for supplying water on the farm during sowing; then we use precision drip irrigation to irrigate the crops and the trees. (I10)

Based on the above analysis, it can be concluded that some companies in the Indian fruit and vegetable sector have adopted Industry 4.0 applications. In total, 9 of the 15 participants used at least one Industry 4.0 application. Cloud computing and IoT were predominantly used compared to other applications. Table 4 summarises the Industry 4.0 applications used by each interviewee. As shown in the table, 7 of the 15 are using cloud computing applications, 5 are using IoT applications, and 3 are using both.

Table 4 Usage of Industry 4 applications per interviewee

A sentiment analysis regarding the use of Industry 4.0 applications revealed a positive sentiment among participants across all applications. This result highlights that the interviewees held a positive attitude towards the use of Industry 4.0 applications in the fruit and vegetable sector, with an average score of 0.54 positive sentiment. Figure 2 shows the average emotion scores with regard to the Industry 4.0 applications discussed by the interviewees. The results show that the positive sentiments were driven by the perceived benefits brought about specifically by “cloud computing” (average score of 46.09% joy) and “cloud-based technology” (average score of 70.06% joy), “online platforms” (average score of 70.06% joy), “new technology” (average score of 63.52% joy), “dig data” (average score of 65.32% joy), and “IoT” (average score of 55.87% joy), and solar pumping motors, with an average score of 57% joy). Even though not all respondents had implemented all these applications, the results showcase their awareness of the benefits that come with their adoption, which is indicative of them being very likely to adopt these in the future.

Fig. 2

Participants’ average emotion scores on Industry 4.0 applications

The interview transcripts were further subjected to cluster analysis to identify patterns in the full dataset of CE principles implemented by the various SMEs in India’s fruit and vegetable sector, as well as the use of Industry 4.0 applications. In stage 1, we computed the number of clusters using hierarchical clustering. We used the cosine distance metric to obtain hierarchical clustering based on average linkage to compute the mean distance between the elements in any two clusters. The outputs are illustrated in Fig. 3, a visualisation of the formation of clusters, and Fig. 4 (hierarchical clustering), a dendrogram that reveals the existence of four clusters.

Fig. 3

Distance map—cluster with ordered leaves

Fig. 4

Hierarchical clustering

We then used k-means cluster analysis in stage 2 to optimise the group resolution for each cluster. The scatter plot of the k-means cluster in Fig. 5 considers the silhouette width, which was implemented for computing the optimal number of clusters in the k-means cluster analysis. It takes into account how perfectly the ‘elements’ are clustered, and it also measures the average distance between the clusters. It is worth noting that the number of clusters remains constant, at four.

Fig. 5

Scatter plot of the k-means cluster

The visual analysis in Fig. 5 identifies, therefore, four clusters to which the following ‘elements’ (three CE principles and two Industry 4.0 applications) belong:

• Cluster 1 of objects I4, I6, I10, and I13. This cluster shows SMEs that implemented the ‘recycle’ and ‘reuse’ CE principles but did not implement the ‘reduce’ principle and did not use IoT applications.

• Cluster 2 of objects I3, I9, I11, I12, and I15. This cluster shows SMEs that implemented only the ‘reduce’ and ‘recycle’ CE principles.

• Cluster 3 of objects I1, I8, and I14. This cluster shows SMEs that implemented the ‘recycle’ CE principle and used ‘cloud computing’ but did not use ‘IoT’ applications.

• Cluster 4 of objects I2, I5, and I7. This cluster shows SMEs that implemented the ‘recycle’ CE principle but did not implement the ‘reuse’ principles and did not use either ‘cloud computing’ or ‘IoT’ applications.

The identified clusters reveal interesting insights. The clusters group SMEs that share common characteristics in terms of implementing CE principles and using Industry 4.0 applications. Various combinations of CE principles and Industry 4.0 applications can be noted (also depicted in Figs. 6, 7); however, there is no cluster of SMEs that implements all three CE principles or both Industry 4.0 applications. This highlights the still-emerging nature of CE principles and Industry 4.0 applications in practice, supporting previous insights obtained from the thematic analysis. This outcome is also indicative of the work that needs to be done to remove barriers to their implementation.

Fig. 6

Linear projection of interviewees based on different combinations of implemented CE principles and the usage of Industry 4.0 applications

Fig. 7

Linear projection of interviewees based on implemented CE principles and usage of Industry 4.0 applications

4.3 Enablers and barriers of Industry 4.0 applications for circular economy principles implementation in the Indian fruit and vegetable sector

The impact of Industry 4.0 applications on the implementation of CE principles has its own set of enablers and barriers. The literature review analysis indicated the following enablers of Industry 4.0 for CE implementation: improved energy efficiency and waste management, enhanced process reliability and uptime, increased resilience, improved quality, improved infrastructure, and self-optimisation. The interviewees were asked their opinions about each of the enablers.

Industry 4.0 provides a wide range of applications that ensure that operating systems are continuously improved and updated. High levels of collaboration and constant product tracking can help companies save energy and reduce waste. This will ultimately help reduce overall costs and be more profitable, as products are optimally utilised. Some of the interviewees mentioned:

The one enabler that comes to the top of my mind is energy and waste recovery. As I said earlier, wastage could be reused to produce organic manure, as organic farming is becoming very popular nowadays. I feel it is even starting to attract more youngsters to the agricultural sector. So, energy and waste recovery would be one enabler, as we have the chance though the use of technology to reuse and recycle the product. (I4)

Through the application of Industry 4.0, process reliability and uptime can be improved. Companies can now benefit from using machines and moving to automation, which is more consistent and faster than using labour. Some of the interviewees mentioned:

The technological applications that we use for demand planning help us control our wastage levels and plan our orders more efficiently. Since we started using online systems to inform our customers about their orders, we were able to schedule more deliveries at a shorter time as the order processing time was improved. (I11)

Industry 4.0 applications are dynamic and can instantly adapt to changes, which helps companies adapt. Subsequently, these applications can also predict machine failures before they occur, which helps companies make decisions based on them. These qualities improve the overall resilience of companies. One of the interviewees mentioned:

With the help of these efficient data processors, more accurate decisions can be made, thereby increasing flexibility as companies can cope up with changes easily. Especially in the vegetable sector in India, the demand and supply of vegetables are highly uncertain. (I3)

Industry 4.0 enhances a product’s perceived quality, which allows companies to increase customer satisfaction. Companies now benefit from improving the quality of products by being cost-efficient, environmentally friendly, and productive. Some of the participants said:

With the use of technology, we can track and process our customer orders more efficiently and effectively with reduced errors. This is very important for fruit and vegetables because they have limited shelf life and in case of errors they may be wasted. (I12)

Due to improved infrastructure, companies can cater to the specific needs of their customers and make the best use of the space available to them. The interviewees also reported that by improving the current infrastructure, they would be able to accommodate new systems and concepts. One of the interviewees indicated that:

According to our natural farm, I think the biggest enabler would be infrastructure. For example, it would help to improve the production, help us to manage the water efficiently, it would help us to provide minimal labour at maximum yield and can be used for saving energy. (I1)

This will, in turn, increase the performance of the production process by making it more dynamic and responsive. Having level processors allows companies to store and retrieve data independently without human interference, which frees up time to focus more on their core values and future opportunities, as these self-organised machines take care of recurring activities. One of the interviewees stated:

Another important benefit is self-optimisation, as these technologies can cope with change and learn at the same time. So, don’t have the burden of changing the systems and mainframes from time to time. Along with that, since these technologies can self-organise itself, the responsibility of reprogramming the data or devices will come down. (I9)

Regarding the interviewees’ sentiments on the enablers of CE principle implementation with the greatest impact, the sentiment analysis revealed a positive sentiment, with an average score of 0.39 positive sentiment across all interviews (with joy as the predominant emotion, with an average score of 38.11%). A further breakdown of scores at the construct level (see Fig. 8), considering the predominant emotions associated with each of the main enablers, revealed that the interviewees were most content with the benefits of cultural enablers (average of 54.02% joy) and regulatory enablers (average of 40.81% joy). The emotions were mixed with regard to financial enablers (average of 27.16% joy and 22.48% sadness) and internal enablers (average of 26.18% joy and 12.91% sadness). Interestingly, the analysis also revealed the presence of fear, with an average score of 13.78% associated with regulatory enablers and 12.32% associated with cultural enablers, which can be explained by the fact that they are the most difficult to deal with because they require structural changes, although they have the greatest potential to make a significant positive difference in practice.

Fig. 8

Participants’ average emotion scores on enablers of CE implementation

Although Industry 4.0 applications appear to enable CE implementation, certain barriers must be addressed. Based on the literature review analysis, these are related to interconnectedness and collaboration issues, data safety and security issues, high investment costs, infrastructure, and incompatibility issues.

According to the interviewees, interconnectedness and collaboration issues are major barriers because of the lack of standardised software across the sector. This presents a disadvantage for a company that has installed cutting-edge technology because it will be unable to connect with other similar companies, leading to difficulties in placing orders and selling products on the market. The participants felt that:

We could not share the data or information with other companies as they did not have the standardised medium for the data to be sent. Since there was no standardisation, we could not measure the abnormalities, which cost us a lot. Similarly, this reduced the collaboration, as we were not able to connect with other companies. (I8)

According to the interviewees, there are several issues with data safety and security because people can now afford to access this at any time, and a lack of knowledge will make people prone to injuries if they are not trained in how to use these technologies. According to some of the participants, external factors, such as animals, rainfall, and scarcity in India, have an impact on the safety of these applications. They said that:

When it comes to safety and security, people will need to be trained, and at the moment, they are not trained to handle these technologies that use all this data. People will not be afraid to use new machinery if they know how to handle it. Safety and security are non-negotiable. If you have no personnel in charge of the safety and security of the equipment concerns, I think it is never going to work out. (I5)

Companies will have to incur massive investment costs to implement these technologies. They will also have to bear the burden of regularly checking applications to ensure maximum performance, which will incur ongoing maintenance costs. Given that the farming community in India is at the lower end of profitability, most farmers will face affordability issues.

The present barrier is again related to cost, which is the financial barrier. Compared to other countries, the cost of doing business in India is quite high. Even though liberalisation has helped us get more money now, the cost remains high. To invest in new technologies, we need finance. At this stage, the technology in our country is not quite affordable for MSMEs [micro, small, and medium enterprises]. (I14)

Again, the majority of companies lack the basic infrastructure required to accommodate these advanced technologies. Thus, they will have to make significant changes to their current CE implementation efforts, which are not favoured in India due to the country’s minimalistic culture. Another challenge will be for companies to convert all of their applications uniformly in order to facilitate data transfer. The participants felt that this problem would again lead to issues with the network and communication with other companies. One interviewee mentioned:

Most of the systems in our company are still lacking the configurations of the latest technologies, and if we install the brand-new technology in one outlet, it won’t be able to connect with the other outlets as they are still outdated. (I8)

The most common enablers mentioned by the interviewees were enhanced resilience, improved infrastructure, and self-optimisation. These three enablers were said to play a crucial role in implementing CE for Industry 4.0. Similarly, almost all participants mentioned three of the four major investment cost barriers. This indicates that the greatest obstacle to Industry 4.0 in aiding CE is cost or total expenditure. This barrier, however, can be overcome if similar companies pool their resources and co-create or depend on the government to initiate and offer subsidies for the implementation of CE.

According to the sentiment analysis of the barriers to CE principle implementation with the greatest impact, the interviews expectedly revealed a general negative sentiment, with an average score of − 0.53 negative sentiment across all interviews; the dominant emotion was sadness, with an average overall score of 38.02%. A further breakdown of scores at the construct level (see Fig. 9), considering the predominant emotions associated with each of the main barriers, revealed that interviewees expressed the most sadness with financial barriers (61.59% average score) and technical barriers (42.61% average score). The least sadness was displayed regarding technological barriers (30.36% average score). The positive feelings towards technological barriers can be explained by the fact that all interviewees had already adopted some form of technology in their operations; therefore, their perception of this element being a barrier was low. The emotions were mixed with regard to cultural barriers (average of 35.90% joy and 33.46% sadness), market barriers (average of 30.93% joy and 32.70% sadness), and sectoral barriers (average of 33.80% joy and 34.03% sadness). The greatest level of fear was detected in relation to regulatory barriers (average score of 32.83%), followed by financial barriers (average score of 19.33%) and sectoral barriers (average score of 18.64%).

Fig. 9

Participants’ average emotion scores on barriers to CE implementation

5 Discussion

This study aimed to explore the enablers and barriers of Industry 4.0 adoption for CE implementation in fruit and vegetable SMEs in India from the RBV perspective and, based on that, to propose a framework for CE implementation for SMEs in emerging economies. To this end, the adoption of CE principles and Industry 4.0 applications in a specific context was explored. CE consists of three principles: recycling, reusing, and reducing (Reh, 2013). Recycling is not throwing away products after they have been used but rather repurposing them to be functional again. Similarly, reuse is a principle that ensures that products are not disposed of as waste and are instead consumed for the same purpose (Camacho-Otero et al., 2018). By contrast, reduction is the process of increasing production efficiency by optimising resources and avoiding goods that are harmful to society (Kazancoglu et al., 2021). On analysing these principles in relation to the implementation of CE in India, the interview data showed that all participants had incorporated at least one of these principles into their supply chains, proving that traces of these practices already exist in India. Out of these, recycling was the most common principle adopted by the participants.

Industry 4.0 refers to a new industrial revolution that has digitally transformed the supply chain of industries. Industry 4.0 applications include IoT, cloud technology, big data, augmented reality, and cyber-physical systems and security (Almada-Lobo, 2016; Oesterreich & Teuteberg, 2016; Vaidya et al., 2018). According to the findings, Indian SMEs are already embracing a few Industry 4.0 applications, with efforts being made by food SMEs to implement CE and adopt some Industry 4.0 applications. The two most commonly used Industry 4.0 applications are cloud computing and IoT, with forecasting, optimisation, and efficiency enhancement applications needed for CE. This will lead to the improvement of current systems by making them smarter, more unified, and more regulated. This, in turn, will help companies adopt more sustainable practices, leading to the implementation of CE. Figure 10 depicts the process of how Industry 4.0 contributes to CE.

Fig. 10

Source: Developed by the authors

The process of determining how Industry 4.0 impacts the circular economy based on the specific context.

This study aimed to identify the tangible and intangible resources and capabilities needed for CE implementation using Industry 4.0 applications. These were identified as enablers (that will serve as competitive advantages) and barriers (that will serve as competitive disadvantages) of Industry 4.0 for CE implementation. According to RBV theory, the needed capabilities can be delineated by identifying tangible and intangible resources. The findings of this study confirm the competitive advantages identified in the literature review analysis, which are as follows: improved energy and waste management, enhanced process and reliability uptime, enhanced resilience, improved quality, improved infrastructure, and self-optimisation (Fatimah et al., 2020; Kazancoglu et al., 2021; Khan et al., 2021; Vacchi et al., 2021) This study adds to the existing literature by confirming the existence of these enablers or other competitive advantages in Indian fruit and vegetable SMEs. Table 5 summarises the enablers/competitive advantages and barriers/competitive disadvantages of Industry 4 implementation for CE, as well as the respective resources and capabilities required or lacking from the perspective of SMEs, using RBV theory. Industry 4.0 applications have been mentioned as a means to develop specific capabilities, such as collaborative capability, financial capability, automation capability, predictive capability, self-learning capability, and agile capability (Mikalef & Pateli, 2017). Thus, this study confirms that Industry 4.0 technologies, particularly IoT and cloud computing, can assist SMEs in developing these capabilities, and further extends the literature by indicating that this will enable CE implementation.

Table 5 Enablers and barriers of Industry 4 implementation for CE and their respective resources and capabilities.

Industry 4.0 promotes efficient practices that can reduce consumption while maintaining low levels of energy input to provide clear and scalable manufacturing expertise (Papadopoulos et al., 2021; Stock & Seliger, 2016). Such technologies can be programmed to identify products with the potential to be reused, thereby indirectly extending the good’s life. This study confirmed that Industry 4.0 applications could indeed reduce energy consumption and facilitate waste reduction and management, enabling CE implementation at the SME level in India. This can be achieved through the use of both tangible and intangible resources (see Table 5). These tangible resources include tracking and tracing technologies, as well as financial resources. Knowledge and expertise, by contrast, are intangible resources, as is supplier relationship management. Indian SMEs could develop collaborative and financial capabilities based on these two sets of resources.

According to the findings of this study, the cloud computing and IoT applications of Industry 4.0 could also enhance the process reliability and uptime of Indian fruit and vegetable SMEs for CE implementation. For this, tangible resources, such as updated machinery, online ordering systems, and demand and supply systems, are required. The intangible resources required are knowledge, expertise, and cumulative experience. All of these will contribute to the development of automation capabilities (see Table 5). CE could benefit from Industry 4.0 applications because it can enhance business resilience by establishing interconnections that transform the current business model to increase innovation and ensure business continuity (Azadegan et al., 2020). This study found that this is the case for Indian SMEs. It will be possible, however, only when machines are interconnected, proper demand and supply systems are in place, food supply chain visibility is present, and a changing culture is embedded. This would allow Indian SMEs to develop predictive capabilities.

Industry 4.0 applications for CE implementation efforts could help improve quality. This is because all data and resources are tracked and traced, and relevant information about their conditions is shared across the network (Spanaki et al., 2021). This study found that IoT and cloud computing applications can improve product quality in CE implementation when SMEs have tracking and tracing technologies, updated machinery, customer relationship management skills, and a skilled workforce to operate the machinery effectively and efficiently. These technologies will enable the development of self-learning capabilities. Infrastructure improvements are also possible with Industry 4.0 in CE because it streamlines processes and ensures equipment integration (Adeyeri et al., 2015). This study found that at the SME level, this is possible when specific tangible resources, such as updated technical equipment and efficient resource management, as well as intangible ones, such as customer relationship management skills and technological know-how, are in place, resulting in a technological capability for CE implementation. Industry 4.0 technologies for CE implementation can provide a self-optimisation advantage because they can handle sudden changes, adapt to them, and optimise current processes (Ivanov & Dolgui, 2020). Industry 4.0 can indeed bring the advantage of self-optimisation when implementing CE in Indian SMEs (Rajput & Singh, 2021). The resources needed for that are updated and connected technological equipment and data management techniques for building an agile capability.

Although the interviews revealed that Industry 4.0 comes with many enablers, also known as competitive advantages, certain barriers were found to be present in the specific context at the level of CE implementation. The barriers suggested by the literature are related to insufficient network collaborations, a lack of appropriate technological infrastructure, a lack of access to technologies, a lack of technical training for staff, and a lack of funding for new investments (Kazancoglu et al., 2021). This study confirms that these barriers, also known as competitive disadvantages, are present in Indian fruit and vegetable SMEs.

Industry 4.0 technologies are interconnected, and information is shared across the network, enabling the CE principles of reducing, reusing, and recycling (Reh, 2013). Thus, given that authentication requirements and trust complications among shared networks can disrupt the technologies, interconnectedness and collaboration issues may arise (Spanaki et al., 2018). This study found that interconnectedness and collaboration issues are present in the specific context of CE implementation via Industry 4.0. This is due to a lack of resources, specifically a lack of standardised software and insufficient network collaboration, which results in a lack of collaboration capability. Interlinked devices and shared networks could be prone to cyberattacks. During CE implementation using Industry 4.0 applications, data safety and security issues may arise (Spanaki et al., 2021). Indeed, this study found that the aforementioned issues are present at the SME level in India as a result of inappropriate technologies, insufficient data safety and security measures, lack of employee training, and a lack of knowledge about how to handle these new technologies. All of these factors inhibit the development of self-learning capabilities.

The high investment cost of Industry 4.0 adoption for CE, which has been mentioned as a barrier by different researchers (Rajput & Singh, 2021), was confirmed in this study to be a major competitive disadvantage for these technologies for CE implementation. This is due to SMEs’ budget constraints, a lack of other sources of funding for these technologies, a lack of affordable technologies in the country, and insufficient network relationships that will allow these costs to be reduced through resource-sharing activities. As a result, SMEs face a lack of collaboration and financial capabilities. Researchers and companies have indicated that Industry 4.0 infrastructure and compatibility issues are common, which may inhibit CE implementation (Upadhyay et al., 2021). According to the findings of this study, this is due to SMEs lacking adequate infrastructure for these new technologies, a scarcity of new technologies in India, and a lack of technological know-how in the country.

Based on the above analysis, Fig. 11 depicts a conceptual framework that could be used by SMEs in emerging countries seeking to implement CE with Industry 4.0. According to the framework, SMEs must have certain tangible and intangible capabilities that will be acquired through the adoption of Industry 4.0 technologies to achieve this goal. These resources, gained through Industry 4.0 technologies, will enable the development of certain capabilities, giving CE a competitive advantage.

Fig. 11

Source: Developed by the authors

Industry 4.0 resources and SME capabilities for CE competitive advantage in emerging economies.

6 Conclusions

India is the world’s second largest producer of fruits and vegetables, trailing only China (IFP Bureau, 2021). Even though the country is prospering in terms of production and exports, one of the major drawbacks it has been facing in recent times is the wastage of perishable goods. Poor infrastructure, inadequate packaging, improper handling, and a lack of cold storage facilities are some of the major causes of waste (Despoudi, 2019). Thus, incorporating CE principles into the supply chain can help the country reduce waste while improving its sustainability practices.

This study explored the enablers of and barriers to Industry 4.0 adoption for CE implementation in fruit and vegetable SMEs in India from the RBV perspective. The enablers and barriers were considered competitive advantages and disadvantages, respectively. Interviews were conducted with 15 food SME experts from the Indian fruit and vegetable supply chain. This study explored the various CE principles, as well as the enablers and barriers to implementation. It further analysed the different applications of Industry 4.0 and the various enablers and barriers of Industry 4.0 that will impact the implementation of CE principles. The findings show that CE principles could be successfully implemented in India because the country has already been exploring several principles in its supply chain. Industry 4.0 is expected to play a crucial role in assisting the overall CE implementation process.

Based on the findings, a conceptual framework for CE implementation using Industry 4.0 applications for SMEs in India was developed. According to the framework, for SMEs to achieve a CE competitive advantage, they need to have specific tangible and intangible resources, as well as SME capabilities, in place. SMEs that aim to become more sustainable should consider implementing Industry 4.0 applications because they could give them a competitive advantage. Closing the loop of the linear economy and adopting Industry 4.0 will support the implementation of CE.

6.1 Managerial implications

The findings of this study offer insights into the various enablers and barriers to implementing a circular economy using Industry 4.0, which can be used by supply chain managers or SMEs to improve their competitive position in the market, highlighting the importance of adopting a problem-centric thinking approach to decision making (Charles et al., 2022). SMEs must adopt new business models to improve their environmental performance while remaining financially sustainable. Industry 4.0 applications, despite apparent drawbacks, such as high investment costs and infrastructural issues for SMEs, have the potential to bring significant benefits and enable CE implementation. Managers of SMEs should seek to secure a reliable source of finance from investors, the government, or banks, among others. There is a need for increased focus on training and educating people on how to use these new technologies and their benefits. To ensure interconnectivity, SME managers should choose applications based on the company’s needs and equipment. Adopting Industry 4.0 benefits the supply chain in general because it provides much-needed flexibility and improves the overall infrastructure. Therefore, implementing CE with the help of Industry 4.0 will reduce waste and extend the lifetime of resources by reducing, reusing, and recycling, thus bringing the company to a more viable state.

6.2 Limitations and future research

This study provides a broad overview of CE implementation in the Indian fruit and vegetable sector, as well as its relationship with Industry 4.0. However, the study has potential limitations that could serve as a foundation for future research. The first limitation relates to the industry chosen, as this study focused on Indian fruit and vegetable SMEs rather than on the entire fruit and vegetable supply chain. Future studies could examine Industry 4.0 and CE at the overall food supply chain level. As this study focused on SMEs in a specific sector and country, the findings are limited to this context. More studies are also needed to determine whether the identified resources and capabilities exist in SMEs in other sectors and countries. The data for this study were gathered through interviews with 15 food SME experts. In the future, a survey could be deployed to collect more data and broaden the generalisability of the findings.