Abstract
Transitioning from a linear economy to circular economy–based business models can be difficult for small and medium–sized enterprises (SMEs) because of dynamic technological changes and market demands. This transformation is aligned with sustainable development goal 12: responsible production and consumption. In this context, adaptation of digital technologies can be helpful for SMEs to track their resources and energy consumption and optimize logistics and supply chains in new and innovative ways. Also, proper management of these technologies have major implications for organization’s competitiveness. But practices remain limited in SMEs due to lack of technological management and their linkages with other enabling factors to improve competitiveness. Therefore, the present study aims to discuss the enabling factors for digital technologies adaptation in SMEs to facilitate circular economy–based business model and develop a framework. The study utilizes the 183 responses from Indian manufacturing sector using exploratory factor analysis to develop a framework which is further tested by identifying priority order of factors using Bayesian Best–Worst method (B–BWM) approach using a case study. The results indicate that management support and the Internet of Things are the most critical factors for SMEs which facilitates the circular business models and improve market competitiveness, optimize resources and enable product life cycle thinking. Apart from this, study offers managerial implications such as resource efficiency, supply chain visibility, and circular business models, which can guide SMEs to facilitate circular business models and improve competitiveness.
Similar content being viewed by others
Data availability
The data that support the findings of this study are available on request from the corresponding author.
References
Agrawal, R., Wankhede, V. A., Kumar, A., Luthra, S., Majumdar, A., & Kazancoglu, Y. (2021). An exploratory state–of–the–art review of artificial intelligence applications in circular economy using structural topic modeling. Operations Management Research. https://doi.org/10.1007/s12063-021-00212-0
Awan, U., Shamim, S., Khan, Z., Zia, N. U., Shariq, S. M., & Khan, M. N. (2021). Big data analytics capability and decision–making: The role of data–driven insight on circular economy performance. Technological Forecasting and Social Change, 168, 120766. https://doi.org/10.1016/j.techfore.2021.120766
Bag, S., Sahu, A. K., Kilbourn, P., Pisa, N., Dhamija, P., & Sahu, A. K. (2022). Modeling barriers of digital manufacturing in a circular economy for enhancing sustainability. International Journal of Productivity and Performance Management, 71(3), 833–869.
Barbaritano, M., Bravi, L., & Savelli, E. (2019). Sustainability and quality management in the Italian luxury furniture sector: A circular economy perspective. Sustainability, 11(11), 3089. https://doi.org/10.3390/su11113089
Berndtsson, M. (2015). Circular Economy and Sustainable Development. Master’s Thesis, Uppsala University, Upsala, Sweden. http://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-259772. Accessed 30 Mar 2023.
Bhandari, N., Garza–Reyes, J. A., Rocha–Lona, L., Kumar, A., Naz, F., & Joshi, R. (2022). Barriers to sustainable sourcing in the apparel and fashion luxury industry. Sustainable Production and Consumption, 31, 220–235. https://doi.org/10.1016/j.spc.2022.02.007
Chauhan, C., Parida, V., & Dhir, A. (2022). Linking circular economy and digitalisation technologies: A systematic literature review of past achievements and future promises. Technological Forecasting and Social Change, 177, 121508. https://doi.org/10.1016/j.techfore.2022.121508
Çınar, Z. M., Abdussalam Nuhu, A., Zeeshan, Q., Korhan, O., Asmael, M., & Safaei, B. (2020). Machine learning in predictive maintenance towards sustainable smart manufacturing in industry 4.0. Sustainability, 12(19), 8211. https://doi.org/10.3390/su12198211
de Sousa Jabbour, A. B. L., Jabbour, C. J. C., Foropon, C., & Filho, M. G. (2018). When titans meet—Can industry 4.0 revolutionise the environmentally–sustainable manufacturing wave? The role of critical success factors. Technological Forecasting and Social Change, 132, 18–25. https://doi.org/10.1016/j.techfore.2018.01.017
Del Giudice, M., Chierici, R., Mazzucchelli, A., & Fiano, F. (2021). Supply chain management in the era of circular economy: The moderating effect of big data. The International Journal of Logistics Management, 32(2), 337–356.
Dwivedi, A., Moktadir, M. A., Jabbour, C. J. C., & de Carvalho, D. E. (2021). Integrating the circular economy and industry 40 for sustainable development: Implications for responsible footwear production in a big data–driven world. Technological Forecasting and Social Change. https://doi.org/10.1016/j.techfore.2021.121335
Field, A. (2013). Discovering statistics using IBM SPSS statistics. Sage.
Fontana, A., Barni, A., Leone, D., Spirito, M., Tringale, A., Ferraris, M., Reis, J., & Goncalves, G. (2021). Circular economy strategies for equipment lifetime extension: A systematic review. Sustainability, 13(3), 1117. https://doi.org/10.3390/su13031117
Ghadge, A., & Mogale, D. G. (2023). Big data analytics and its applications in supply chain management: a literature review using SCOR model. In M. K. Tiwari, M. R. Kumar, & R. Mitra (Eds.), Applications of emerging technologies and AI/ML algorithms (pp. 57–67). Singapore: Springer Nature.
Ghadge, A., Mogale, D. G., Bourlakis, M., Maiyar, L. M., & Moradlou, H. (2022). Link between Industry 4.0 and green supply chain management: Evidence from the automotive industry. Computers & Industrial Engineering, 169, 108303. https://doi.org/10.1016/j.cie.2022.108303
Haapala, K. R., Zhao, F., Camelio, J., Sutherland, J. W., Skerlos, S. J., Dornfeld, D. A., Jawahir, I. S., Clarens, A. F., & Rickli, J. L. (2013). A review of engineering research in sustainable manufacturing. Journal of Manufacturing Science and Engineering, Transactions of the ASME. https://doi.org/10.1115/1.4024040
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2009). Multivariate data analysis (7th ed.). Prentice-Hall.
Hazen, B. T., Mollenkopf, D. A., & Wang, Y. (2017). Remanufacturing for the circular economy: An examination of consumer switching behavior. Business Strategy and the Environment, 26(4), 451–464. https://doi.org/10.1002/bse.1929
Jabbour, C. J. C., Sarkis, J., de Sousa Jabbour, A. B. L., Renwick, D. W. S., Singh, S. K., Grebinevych, O., Kruglianskas, I., & Godinho Filho, M. (2019). Who is in charge? A review and a research agenda on the ‘human side’of the circular economy. Journal of Cleaner Production, 222, 793–801. https://doi.org/10.1016/j.jclepro.2019.03.038
Jamwal, A., Agrawal, R., & Sharma, M. (2023). Challenges and opportunities for manufacturing SMEs in adopting industry 4.0 technologies for achieving sustainability: Empirical evidence from an emerging economy. Operations Management Research. https://doi.org/10.1007/s12063-023-00428-2
Jamwal, A., Agrawal, R., Sharma, M., & Giallanza, A. (2021). Industry 4.0 technologies for manufacturing sustainability: A systematic review and future research directions. Applied Sciences, 11(12), 5725. https://doi.org/10.3390/app11125725
Kagermann, H., Lukas, W. D., & Wahlster, W. (2011). Industrie 4.0: Mit dem Internet der Dinge auf dem Weg zur 4. industriellen revolution. VDI Nachrichten, 13(1), 2–3.
Khan, S. A. R., Piprani, A. Z., & Yu, Z. (2022). Digital technology and circular economy practices: Future of supply chains. Operations Management Research, 15(3–4), 676–688.
Kim, J. H. (2017). A review of cyber–physical system research relevant to the emerging IT trends: Industry 4.0, IoT, big data, and cloud computing. Journal of Industrial Integration and Management, 2(03), 1750011. https://doi.org/10.1142/S2424862217500117
Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127, 221–232. https://doi.org/10.1016/j.resconrec.2017.09.005
Kouhizadeh, M., Zhu, Q., & Sarkis, J. (2020). Blockchain and the circular economy: Potential tensions and critical reflections from practice. Production Planning & Control, 31(11–12), 950–966. https://doi.org/10.1080/09537287.2019.1695925
Kumar, P., Singh, R. K., & Kumar, V. (2021). Managing supply chains for sustainable operations in the era of industry 4.0 and circular economy: Analysis of barriers. Resources, Conservation and Recycling, 164, 105215. https://doi.org/10.1016/j.resconrec.2020.105215
Kumar, A., Sah, B., Singh, A. R., Deng, Y., He, X., Kumar, P., & Bansal, R. C. (2017). A review of multi criteria decision making (MCDM) towards sustainable renewable energy development. Renewable and Sustainable Energy Reviews, 69, 596–609. https://doi.org/10.1016/j.rser.2016.11.191
Luthra, S., & Mangla, S. K. (2018). Evaluating challenges to Industry 4.0 initiatives for supply chain sustainability in emerging economies. Process Safety and Environmental Protection, 117, 168–179. https://doi.org/10.1016/j.psep.2018.04.018
Machado, C. G., Winroth, M. P., & Ribeiro da Silva, E. H. D. (2020). Sustainable manufacturing in Industry 4.0: An emerging research agenda. International Journal of Production Research, 58(5), 1462–1484. https://doi.org/10.1080/00207543.2019.1652777
Marrucci, L., Daddi, T., & Iraldo, F. (2021). The contribution of green human resource management to the circular economy and performance of environmental certified organisations. Journal of Cleaner Production, 319, 128859. https://doi.org/10.1016/j.jclepro.2021.128859
Mhatre, P., Panchal, R., Singh, A., & Bibyan, S. (2021). A systematic literature review on the circular economy initiatives in the European Union. Sustainable Production and Consumption, 26, 187–202. https://doi.org/10.1016/j.spc.2020.09.008
Mittal, S., Khan, M. A., Romero, D., & Wuest, T. (2018). A critical review of smart manufacturing & Industry 4.0 maturity models: Implications for small and medium–sized enterprises (SMEs). Journal of Manufacturing Systems, 49, 194–214. https://doi.org/10.1016/j.jmsy.2018.10.005
Moktadir, M. A., Kumar, A., Ali, S. M., Paul, S. K., Sultana, R., & Rezaei, J. (2020). Critical success factors for a circular economy: Implications for business strategy and the environment. Business Strategy and the Environment, 29(8), 3611–3635. https://doi.org/10.1002/bse.2600
Momaya, K. S. (2017). Management of technology and innovation (MOT) for competitiveness: diagnosing problems at vonda motors. Case Centre No. 318–0001–1. Retrieved 27 Dec 2023, from https://www.thecasecentre.org/products/view?id=149299
Moreno, M., Turner, C., Tiwari, A., Hutabarat, W., Charnley, F., Widjaja, D., & Mondini, L. (2017). Re–distributed manufacturing to achieve a circular economy: A case study utilizing IDEF0 modeling. Procedia CIRP, 63, 686–691. https://doi.org/10.1016/j.procir.2017.03.322
Nelles, M., Gruenes, J., & Morscheck, G. (2016). Waste management in Germany–development to a sustainable circular economy? Procedia Environmental Sciences, 35, 6–14. https://doi.org/10.1016/j.proenv.2016.07.001
Pagoropoulos, A., Pigosso, D. C., & McAloone, T. C. (2017). The emergent role of digital technologies in the circular economy: A review. Procedia Cirp, 64, 19–24. https://doi.org/10.1016/j.procir.2017.02.047
Ponis, S., Aretoulaki, E., Maroutas, T. N., Plakas, G., & Dimogiorgi, K. (2021). A systematic literature review on additive manufacturing in the context of circular economy. Sustainability, 13(11), 6007. https://doi.org/10.3390/su13116007
Raj, A., Dwivedi, G., Sharma, A., de Sousa Jabbour, A. B. L., & Rajak, S. (2020). Barriers to the adoption of industry 4.0 technologies in the manufacturing sector: An inter–country comparative perspective. International Journal of Production Economics, 224, 107546. https://doi.org/10.1016/j.ijpe.2019.107546
Rajput, S., & Singh, S. P. (2019). Connecting circular economy and industry 4.0. International Journal of Information Management, 49, 98–113. https://doi.org/10.1016/j.ijinfomgt.2019.03.002
Reddy, K. N., & Kumar, A. (2021). Capacity investment and inventory planning for a hybrid manufacturing–remanufacturing system in the circular economy. International Journal of Production Research, 59(8), 2450–2478. https://doi.org/10.1080/00207543.2020.1734681
Reio, T. G., Jr., & Shuck, B. (2015). Exploratory factor analysis: Implications for theory, research, and practice. Advances in Developing Human Resources, 17(1), 12–25. https://doi.org/10.1177/15234223145598
Schöggl, J. –P., Rusch, M., Stumpf, L., & Baumgartner, R. J. (2023). Implementation of digital technologies for a circular economy and sustainability management in the manufacturing sector. Sustainable Production and Consumption, 35, 401–420. https://doi.org/10.1016/j.spc.2022.11.012
Sehnem, S., Jabbour, C. J. C., Pereira, S. C. F., & de Sousa Jabbour, A. B. L. (2019). Improving sustainable supply chains performance through operational excellence: Circular economy approach. Resources, Conservation and Recycling, 149, 236–248. https://doi.org/10.1016/j.resconrec.2019.05.021
Shayganmehr, M., Kumar, A., Garza–Reyes, J. A., & Moktadir, M. A. (2021). Industry 4.0 enablers for a cleaner production and circular economy within the context of business ethics: A study in a developing country. Journal of Cleaner Production, 281, 125280. https://doi.org/10.1016/j.jclepro.2020.125280
Shojaei, A., Ketabi, R., Razkenari, M., Hakim, H., & Wang, J. (2021). Enabling a circular economy in the built environment sector through blockchain technology. Journal of Cleaner Production, 294, 126352. https://doi.org/10.1016/j.jclepro.2021.126352
Singhal, D., Tripathy, S., & Jena, S. K. (2020). Remanufacturing for the circular economy: Study and evaluation of critical factors. Resources, Conservation and Recycling, 156, 104681. https://doi.org/10.1016/j.resconrec.2020.104681
Stahel, W. R. (2016). The circular economy. Nature, 531(7595), 435–438. https://doi.org/10.1038/531435a
Suchek, N., Fernandes, C. I., Kraus, S., Filser, M., & Sjögrén, H. (2021). Innovation and the circular economy: A systematic literature review. Business Strategy and the Environment, 30(8), 3686–3702. https://doi.org/10.1002/bse.2834
Sung, T. K. (2018). Industry 4.0: A Korea perspective. Technological Forecasting and Social Change, 132, 40–45. https://doi.org/10.1016/j.techfore.2017.11.005
Thorley, J., Garza–Reyes, J. A., & Anosike, A. (2021). Circular economy: A conceptual model to measure readiness for manufacturing SMEs. Benchmarking: an International Journal, 29(4), 1362–1390.
Torres–Guevara, L. E., Prieto–Sandoval, V., & Mejia–Villa, A. (2021). Success drivers for implementing circular economy: A case study from the building sector in Colombia. Sustainability, 13(3), 1350. https://doi.org/10.3390/su13031350
Trevisan, A. H., Lobo, A., Guzzo, D., de Vasconcelos Gomes, L. A., & Mascarenhas, J. (2023). Barriers to employing digital technologies for a circular economy: A multi–level perspective. Journal of Environmental Management, 332, 117437. https://doi.org/10.1016/j.jenvman.2023.117437
Tseng, M. –L., Tan, R. R., Chiu, A. S. F., Chien, C. –F., & Kuo, T. C. (2018). Circular economy meets industry 4.0: Can big data drive industrial symbiosis? Resources, Conservation and Recycling, 131, 146–147. https://doi.org/10.1016/j.resconrec.2017.12.028
Upadhyay, A., Mukhuty, S., Kumar, V., & Kazancoglu, Y. (2021). Blockchain technology and the circular economy: Implications for sustainability and social responsibility. Journal of Cleaner Production, 293, 126130. https://doi.org/10.1016/j.jclepro.2021.126130
Yadav, G., Kumar, A., Luthra, S., Garza–Reyes, J. A., Kumar, V., & Batista, L. (2020a). A framework to achieve sustainability in manufacturing organisations of developing economies using industry 4.0 technologies’ enablers. Computers in Industry. https://doi.org/10.1016/j.compind.2020.103280
Yadav, G., Luthra, S., Jakhar, S. K., Mangla, S. K., & Rai, D. P. (2020b). A framework to overcome sustainable supply chain challenges through solution measures of industry 4.0 and circular economy: An automotive case. Journal of Cleaner Production. https://doi.org/10.1016/j.jclepro.2020.120112
Acknowledgements
Authors are thankful to the Editor in Chief, Reviewers, Guest Editors and anonymous reviewers for their constructive feedback on the paper which helped to improve the quality of manuscript.
Funding
Not applicable.
Author information
Authors and Affiliations
Contributions
Conceptualization: RA, MS, SK, IG; Methodology: AJ, RA; Formal analysis and investigation: RA, SK, MS, IG; Writing—original draft preparation: AJ, IG; Writing—review and editing: AJ, RA, IG; Resources: RA, SK; Supervision: RA, SK, MS, IG.
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that there is no conflict of interest.
Ethical Approval
Not applicable—Manuscript does not report on or involve the use of any animal or human data or tissue.
Consent for Publication
Not applicable—Manuscript does not contain data from any individual person.
Supplementary Information
Below is the link to the electronic supplementary material.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Jamwal, A., Kumari, S., Agrawal, R. et al. Unlocking Circular Economy Through Digital Transformation: the Role of Enabling Factors in SMEs. JGBC (2024). https://doi.org/10.1007/s42943-024-00090-w
Received:
Accepted:
Published:
DOI: https://doi.org/10.1007/s42943-024-00090-w
Keywords
- Circular economy
- Digital technologies
- Industry 4.0
- SMEs
- Exploratory factor analysis
- Bayesian best worst method
- Environmental management