Work

Factors influencing circular economy business model adoption: Evidence from NCA and PLS-SEM

Year: 2025

Type: article

Abstract: Several studies have examined the factors influencing circular economy business model adoption. However, understanding remains limited from the perspective of Necessary Condition Analysis, leaving a notable gap in circular economy research that explicitly applies Necessary Condition Analysis to uncover the hidden conditions necessary for the successful implementation of circular strategies in business organizations. Drawing on the Resource-Based View and Stakeholder Theory, this study combines Partial Least Squares Structural Equation Modeling (PLS-SEM) with Necessary Condition Analysis (NCA) to distinguish “should-have” associations from “must-have” thresholds. Using survey data from 209 marble manufacturing firms, we examine eight factors: circular human resource management, circular entrepreneurship, circular marketing, circular financing, circular manufacturing technologies, circular-oriented workplace culture, circular open innovation, and government support. The integrated results show that several internal capabilities and one institutional factor are both necessary and sufficient (circular human resource management, circular entrepreneurship, circular manufacturing technologies, circular-oriented culture, government support), circular open innovation is necessary-only , circular financing is sufficient-only, and circular marketing is neither in this context. NCA bottleneck thresholds provide actionable benchmarks indicating minimum levels each necessary condition must meet at different target levels of CEBM adoption. Methodologically, the study demonstrates how a dual-logic approach reveals hidden constraints that sufficiency models alone overlook. Theoretically, it reframes selected capabilities and institutional enablers as foundational preconditions rather than merely supportive resources. Practically, it offers a sequenced roadmap: meet the lowest unmet threshold first, then deploy sufficiency levers to scale circular outcomes supporting managers and policymakers seeking credible pathways toward a regenerative, circular economy.

Source: Journal of Open Innovation Technology Market and Complexity

DOI: 10.1016/j.joitmc.2025.100697

Authors: Noor Ul Hadi, M. Imran Khan

Institution: Prince Mohammad bin Fahd University

Language: English

Topic: Sustainable Supply Chain Management

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,250