The influences of circular economy practices on manufacturing firm's performance: A meta-analytic structural equation modeling study

Circular economy (CE) can arguably produce various performance benefits. Using meta-analysis and structural equation modeling (MASEM), this study synthesizes the findings from 66 empirical studies composed of 13,643 manufacturing firms. This study investigates the relationship between practices based on two CE principles (i.e., eliminating waste and pollution and circulating products and materials) and five performance outcomes grounded in the natural resource-based view of a firm. The results indicate that most CE practices significantly improve firm performance. Specifically, practices based on eliminating waste and pollution principle positively affect environmental, cost-reduction, social, financial/market, and operational performances. Practices based on circulating products and materials principle improve environmental, financial/market, and operational performances, but not cost reduction and social performances. In addition, the hybrid CE practices (i.e., practices based on both CE principles) are positively linked to cost-reduction, social, financial/market, and operational performances, but they have a negative effect on environmental performance. The results suggest the possible synergy between the two CE principles. This study provides practitioners and policymakers with insights and recommendations for a better understanding of how CE practices (together) produce different performance outcomes.