CIRCULAR ECONOMY INTEGRATION IN OPERATIONS MANAGEMENT: EFFECTS ON OPERATIONAL PERFORMANCE AND BRAND EQUITY

Abstract

In the context of globalization and escalating resource depletion pressures, the transition from the traditional linear economy to a circular economy (CE) has emerged as an inevitable strategic orientation. This study aims to examine the effects of integrating a triad of core circular economy practices—namely eco-design, green procurement, and reverse logistics on firms’ operational performance and brand equity. This study employs a mixed-methods design, beginning with a qualitative phase involving semi-structured interviews with 10 industry experts to refine the measurement scales. In the quantitative phase, data were collected from a survey of 350 manufacturing firms located in industrial zones in Southern Vietnam, specifically in Ho Chi Minh City, focusing on small and large enterprises in the electronics and consumer goods sectors. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The empirical results confirm that all three circular practices, spanning input sourcing, product design, and end-of-life recovery, exert positive and significant impacts on both operational performance and brand equity. Notably, the findings reveal that operational performance serves as a complementary partial mediator, substantially amplifying the effect of green initiatives on brand equity. These results provide practical evidence cautioning firms against the “greenwashing” trap, while reinforcing a critical strategic message: sustainability commitments can only generate competitive advantage and foster enduring market trust when they are deeply embedded in an operational system characterized by excellence, leanness, and resource optimization.