Understanding the effect of market orientation on circular economy practices: The mediating role of closed‐loop orientation in German SMEs

Abstract

The implementation of circular economy (CE) practices is considered a key driver towards sustainable development of firms. Earlier studies point to the general strategic approach of market orientation as an antecedent to CE practice implementation.Still, insights are limited as the mechanisms underlying this relationship remain unclear. Based on a sample of 121 German small and medium-sized enterprises (SME), we empirically examine how the strategic approach of closed-loop orientation mediates the relationship between market orientation and the implementation of three types of CE practices. Using structural equation modelling, we find that while market orientation is positively related to all three types of CE practices, closed-loop orientation mediates these relationships for only two. Our study extends CE literature by suggesting that market orientation is translated into closed-loop orientation to spur CE practice implementation. We also offer a differentiated understanding of CE practice implementation in the context of German SMEs.

Circular economy‐based new products and company performance: The role of stakeholders and Industry 4.0 technologies

“…In addition, working in the EEE sector means that these professionals are also involved with Industry 4.0 technologies. Several previous studies have contacted staff in this type of position as a suitable profile of respondent (e.g., Bag et al, 2021; Dangelico et al, 2013; Schmidt et al, 2021). The website Survey Monkey hosted the management of the questionnaire sent to the participating companies.…”

“…Since CPD has been pointed out as one of the key movements towards the CE, it has been the subject of many recent studies (e.g., Arroyabe et al, 2021; Bocken et al, 2016; Schmidt et al, 2021). CPD aims to develop products that have multiple cycles (Selvefors et al, 2019) while preserving the quality of materials and avoiding waste (Franco, 2019).…”

“…Since CPD has been pointed out as one of the key movements towards the CE, it has been the subject of many recent studies (e.g., Arroyabe et al, 2021;Bocken et al, 2016;Schmidt et al, 2021).…”

The Mediating Effect of Innovation in Between Strategic Orientation and Enterprise Performance: Evidence From Malaysian Manufacturing Small-to-Medium-Sized Enterprises

“…Innovative businesses are extremely market-driven, and they make every effort to stay competitive by developing new products or adding new features to their present ones to maintain a strong market position ( Suriati, 2014 ). Being market-oriented means having a strategic adaptable mindset; businesses strive to recognize current market trends and must use technology and market-driven strategies to stay competitive in today’s highly competitive market ( Schmidt et al, 2021 ).…”

“…Strategic orientation reflects the processes, principles, applications, and decision-making techniques that guide the organization’s activities. It responds to the external environment and generates the intended behavior to improve performance and organizational sustainability ( Fernando et al, 2019 ; Robb and Stephens, 2021 ; Schmidt et al, 2021 ).…”