Corporate accountability for disclosing circular economy, servitisation and industry 4.0 practices: an insight from global fortune 500 listed companies
Year: 2025
Type: dissertation
Abstract: Sustainability reporting is gaining popularity among corporations. However, businesses require a clear approach to report on the integration of Circular Economy (CE) principles with servitisation and Industry 4.0 (I4.0) technologies. These integrations can create new revenue streams and opportunities for circular value production. Concerns about greenwashing, where companies falsely claim CE practices, underscore the need for firms to embed environmentally responsible practices into their servitisation strategies. This includes ensuring transparency in material sourcing, product lifecycle management, waste reduction, and product efficacy enhancement. The study employs a triangulation of theories—Resource-Based View (RBV), Dynamic Capabilities Theory (DCT), and Stakeholder Theory (ST)—to understand the circular value of resources and capabilities of manufacturers. Thus, the researcher developed a comprehensive understanding of sustainable strategies for circular product development from the business ecosystem perspective. This addresses the gap in theoretical frameworks covering environmental sustainability and social responsibility in business strategy formulation. Despite the growing recognition of CE's importance, there remains a need for a framework to assess its implementation, especially in conjunction with servitisation and I4.0 strategies. To fill this gap, the researcher has developed a self-constructed CE disclosure index, a novel approach in the field. This index aims to provide practical guidance for businesses navigating the complexities of modern economic landscapes. It empowers stakeholders to make informed, environmentally conscious decisions, thereby safeguarding the integrity of CE initiatives and advancing sustainable practices in corporate environments. The research methodology involves three key steps: establishing relationships between latent variables, developing the CE disclosure index for content analysis, and conducting Partial Least Squares Structural Equation Modelling (PLS-SEM) using Smart-PLS. The main findings indicate that implementing CE and servitisation positively impacts product longevity and encourages extended use. However, the study found an insignificant relationship between I4.0 and CE, suggesting the need for further investigation into their complex interplay. Furthermore, the study highlights that integrating I4.0 technologies can facilitate the transition to servitisation and enhance operational capabilities. A robustness analysis identified a significant indirect effect of I4.0 on CE through servitisation, underscoring the importance of considering their interplay. Overall, the results show a promising trend in companies' transparency and accountability in reporting on CE, servitisation, and I4.0 initiatives. Managerial Implications: Managers and practitioners in various industries can use the study's analysis to understand better how CE principles align with servitisation and I4.0 technologies. The results guide reviewing collaborative and augmented partnerships, empowering decision-makers to enhance strategic planning and implementation. The study's outcomes offer practical insights that managers can directly apply, providing a basis for informed decision-making. Managers can navigate the complexities of transforming their operations by understanding the challenges and opportunities associated with adopting a circular BM with a service-oriented approach. Practical Implications: by using the provided self-developed CE disclosure index for reporting, manufacturing companies can effectively align their decisions and activities with their CE objectives and broader mission. While organisations may be at different stages of CE implementation, they should consistently strive to foster a culture of CE and report on their perceived impact. Although, it may be crucial to integrate stakeholders’ feedback and recommendations about the strategic development and execution of sustainable and circular business practices. This integration promotes better governance and the successful implementation of CE strategies. Policy Implications: Government bodies and policymakers can use the current study's findings as a reference for shaping effective CE policies. The insights gained provide a foundation for understanding CE compliance, aiding in developing a robust policy framework that supports and advances the transition from a linear economy (LE) to a CE paradigm.
Author: Atif, Sehrish
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6893187465
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