Navigating the supply chain environmental sustainability: the moderating role of digitalisation in driving supply chain efficiency on circular economy performance

Within the supply chain sustainability literature, the role of circular economy (CE) from a supply chain management (SCM) perspective has gained increasing attention. However, how supply chain efficiency (SCE) facilitates CE development under digitalisation, and the moderating role of digital transformation (DT), remain unclear. Grounded in the dynamic capabilities framework, this study examines the effect of SCE on CE development and the moderating influence of DT, while considering economic feasibility. Using text analysis, DT measures are derived from corporate annual reports and merged with data from CNRDS and CSMAR. Panel regressions are conducted on 4,248 firm-year observations. The results show that SCE significantly promotes CE development, and this relationship is strengthened by DT. By contrast, DT has no significant moderating effect on the relationship between SCE and financial performance. These findings suggest that firms can leverage existing SCM capabilities to pursue CE in a cost-effective manner, highlighting the strategic role of DT in CE transitions.