Enhancing Circular Economy Business Performance through Supply Chain Transparency: The Roles of Digital Technologies and Institutional Support

Abstract

Circular economy transition is now a strategic approach in China as the country tries to balance economic development and environmental sustainability. Digital technologies and institutional support are now considered as key facilitators of this shift, but the empirical data on how these drivers can be converted into the business performance of the circular economy has been heterogenous, especially with respect to the importance of supply chain transparency and complementary operational capabilities. The paper examines the role of digital technologies, that is, Digital Platform Integration, Artificial Intelligence Adoption, Blockchain Integration Internet of Things Utilization and the impact of Institutional Support to Sustainability on Circular Economy Business Performance in China. It also investigates the mediating effect of Supply Chain Transparency, the moderating effects of Reverse Logistics Efficiency and Circular Supply Chain Performance. The research design was quantitative relying on survey data on 387 Chinese involved in supply chain, sustainability and digital transformation activities. Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS was applied to the proposed conceptual framework to test both the measurement and structural models, as well as mediation and moderation effect. The findings indicate the positive impacts of all the investigated digital technologies and institutional support on the supply chain transparency are significant. On the other hand, supply chain transparency has a positive influence on the business performance of the circular economy in a strong way. In addition, the circular supply chain performance and reverse logistics efficiency enhance the positive association between supply chain transparency and the circular economy business performance significantly. The results can be used by managers and policymakers in China as it indicates that investments into digital technologies should be accompanied by open supply chain practices and effective reverse logistics systems to achieve the full benefits of the circular economy. These transformations continue to require institutional support to speed them up and maintain them. This research presents one of the limited empirical analyses of institutional support and digital technologies combined to form a circle of business performance related to a supply chain transparency in the Chinese environment and considers the main operational contingencies.