Circular economy in practice: exploring antecedents, impediments and sustainable performance outcomes in a developing context

Abstract

This study aims to identify the antecedents, impediments and sustainable performance (SP) outcomes of circular economy practices (CEP) in manufacturing companies in Sri Lanka. This study used a quantitative method using survey data collected from 184 manufacturing firms. Authors examined the relationships among isomorphic influence (II), organisational culture, CEP and SP using PLS-SEM, which the authors selected for its predictive orientation and capacity to model complex relational structures. Furthermore, the study assessed impediments to CEP adoption by applying descriptive statistical techniques to the Likert-scale measures. Findings show that both II and organisational culture have strong positive impacts on the adoption of CEP. CEP significantly enhances firms' SP. Furthermore, government and regulatory impediments have emerged as the most critical, followed by financial, market, technological, knowledge and skills, strategic and cultural impediments. Regulatory bodies need to strengthen their institutional support by providing incentives, guidelines and regulations tailored to specific industries. Organisations need to foster an aligned internal culture and prioritise operational strategies with CE frameworks for enduring value retention. Furthermore, cross-sectoral collaborations and training programs can be developed with CE principles as the foundational approach. This study enhances and integrates the underdeveloped literature on institutional and resource-based frameworks by analysing CE in a developing country. Furthermore, this study captures region-specific contextual drivers and barriers to CE, thereby contributing to both theoretical and practical approaches to CEP in emerging markets.