See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/337001164

Analyzing the role of industry 4.0 technologies and circular economy practices
in improving sustainable performance in Indian manufacturing organizations.

Preprint · November 2019

CITATIONS READS

0 454

2 authors:

Sachin Kamble Angappa Gunasekaran

Edhec Business school California State University, Bakersfield
84 PUBLICATIONS   1,073 CITATIONS    601 PUBLICATIONS   30,580 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

2021 International Conference on Resource Sustainability (icRS) at University College Dublin View project

Digital Supply Chain View project

All content following this page was uploaded by Sachin Kamble on 18 September 2020.

The user has requested enhancement of the downloaded file.

 Analyzing the role of industry 4.0 technologies and circular economy practices in
improving sustainable performance in Indian manufacturing organizations.

Sachin S. Kamble
Professor, EDHEC Business School, Roubaix, France.
Sachin.kamble@edhec.edu
National Institute of Industrial Engineering, Mumbai, India.

Angappa Gunasekaran
Dean and Professor, School of Business and Public Administration,
California State University, Bakersfield.
agunasekaran@csub.edu

Cite as:
Kamble, S. S., Gunasekaran, A. (In Press). Analyzing the role of industry 4.0 technologies and
circular economy practices in improving sustainable performance in Indian manufacturing
organizations. Production Planning and Control.

Abstract

The focus of industry 4.0 (I4) technologies is to address the issue of scarce resources and improve
productivity by providing solutions to economize the use of limited resources and find other
substitute raw materials. Circular economy (CE) is also identified as a solution to manage the
increasing pressure of environmental regulations, price volatility in resources, and supply
uncertainty. However, the relationship between I4 technologies, CE and sustainable performance
(SP) is still unexplored and demands a more conceptual and empirical investigation on
understanding how the I4 technologies favor the transition towards CE practices and what impact
they have together on SP. Based on a survey of 238 manufacturing practitioners from India, the
study investigates the mediating and moderating role of CE practices on the relationship between
I4 technologies and SP. The findings reveal that developing an environment of CE is not a
prerequisite for implementing I4 technologies. However, I4 technologies support developing
efficient CE environment, which, leads to the achievement of sustainable organizational goals.
Future research directions and implications for practitioners are provided.

Keywords: Industry 4.0, Circular Economy, Sustainable Performance, Manufacturing,

Organizational capability theory.

1
1 Introduction
The increase in the GDP level, population, and improved lifestyle has increased the demand for
renewable and non-renewable (Preston & Herron 2016). It is estimated that the growing
population will lead to an extraordinary consumption of natural resources causing substantial
environmental impacts. The scarcity of natural resources is a cause of concern for the
manufacturing organizations, questioning the economic sustainability of their supply chains and
supply uncertainty (Krautkraemer 2005; Preston & Herron 2016). The focus of the innovative
technologies is to address the issue of scarce resources and improve productivity, thereby
offering a solution to economize the use of limited resources and find substitute raw materials
(Krautkraemer 2005; Heck & Rogers 2014; Fatorachian and Kazemi, 2018). The recent studies
by Stock and Seliger (2016) and Kamble et al. (2018a) recommend the organizations to adopt
Industry 4.0 technologies for improved sustainable performance (SP). However, these studies
did not explicitly explain how this could be achieved. Circular Economy (CE) strategy is another
initiative that is aimed at managing the increasing pressure of environmental regulations, price
volatility in resources, and supply uncertainty on the organizations (Lieder & Rashid 2016;
Batista et al., 2018a). Organizations have started adopting the CE and sustainable manufacturing
practices for mitigating the ecological risks leading to reduced waste generation and efficient use
resources (Moktadir et al., 2018).
The previous literature claim that the advanced digital manufacturing technologies have the
potential to augment the resource circularity within the supply chains (de Sousa Jabbour et al.,
2018; Bressanelli et al., 2018; Pagoropoulos et al., 2017; Tseng et al., 2018a; Antikainen et al.,
2018). Although there exists a general agreement on I4 technologies as an enabler of CE, the
literature lacks the clarity on understanding how the I4 technologies favor the transition towards
CE (Lieder and Rashid, 2016; de Sousa Jabbour et al., 2018). The literature lacks conceptual and
empirical investigations on the linkages between I4 technologies and CE practices. In this study,
I4 technologies and CE practices are conceptualized as the dynamic capabilities of the
organization and study their combined effect on the sustainable performance of the organization.
The dynamic capabilities support the organization to address the challenges posed by rapidly
changing environments by developing competencies (Teece et al., 1997). Further, the dynamic
capabilities are also found to address the complex issues involved in achieving sustainable
objectives of the organization (Beske et al. 2015). The literature on sustainability recognizes the

2
need for more empirical studies identifying the relevant dynamic capabilities that could be
adopted by the organizations for improved sustainability (Amui et al., 2017). The present study
attempts to address the above gaps in the literature by empirically investigating the extent of
influence I4 technologies and CE practices have on SP of the organizations. More specifically,
the study was undertaken to address the following research questions (RQs):
RQ1: What is the theoretical framework of relationships between I4 technologies, CE
practices, and SP?
RQ2: How do I4 technologies and CE practices affect the SP?

Based on the data collected from 238 practitioners from Indian manufacturing organizations, the
findings of this study contribute to the existing literature of sustainability. The study investigates
how the I4 technologies and two new dynamic capabilities that can be used by the organizations
in achieving improved SP. The remaining of the paper is organized in the following sections.
Section 2 presents the theoretical background and hypothesis for the study. Section 3 provides
the details on the research approach adopted in this study. Section 4 presents the analysis and
findings. The discussions on the findings, theoretical and practical implications are presented in
section 5, and Section 6 presents the conclusions and limitations of the study.

2 Theoretical background and hypothesis development

2.1 Organizational capability theory (OCT)
The increasing changes in the customer preferences and intensified supply chain competition
have compelled the organizations to adopt innovative technologies for transforming their
traditional manufacturing processes into smart manufacturing systems. Industry 4.0 offers a
competitive technology advantage that is characterized by a high level of automation, data
exchange and use of full network integration of products and production processes (Lin et al.,
2018; Carvalho et al., 2018). I4 provides a strategic and operational advantage to the
organizations over its competitors (Müller et al., 2018; Kamble et al., 2018c). The strategic
benefits include the opportunity to create new business models and generate data-driven
solutions that are difficult to imitate (Laudien et al., 2017). In this study, we conceptualize the
I4 technologies as a set of valuable resources possessed by the organizations offering the high
capability for integrating the products and production processes. The insights obtained from the
literature help us to underpin the present study on the organizational capability theory. The

3
organizational capabilities are defined “as a firm`s capacity to deploy its resources, tangible or
intangible, to perform a task or activity to improve performance” (Amit and Schoemaker, 1993;
Grant, 1991; Teece et al., 1997). I4 technologies act as a dynamic capability, “that provides the
ability to integrate, build, and reconfigure internal and external competencies to address rapidly
changing environments” (Teece et al., 1997). The literature identifies CE as one of the
organizational resources that address the challenge of growing resource depletion rates (Jakhar
et al. 2018). CE practices are aimed at optimizing the already used resources, waste generation
and create an environment of resource efficient and regenerative model, enabling resource
efficiency (Guo et al., 2017; Mangla et al., 2018a; Jakhar et al., 2018). CE contributes towards
business sustainability by creating innovative models of production and consumption,
investment and job opportunities, reducing material and manufacturing costs, and improving
supply chain resiliency (Lieder and Rashid, 2016; de Sousa Jabbour et al., 2018). However, to
adapt the CE business model the organizations are required to reconfigure their existing resource
capabilities by adding new resource capabilities (Barney, 1991), integrate their existing
resources (Helfat and Peteraf, 2003), or substitute their existing resources with new ones (Sirmon
et al. 2007). These adaptations involve high investment costs, are uncertain, rigid, and lacks
empirical support from the literature (Lahti et al. 2018). The present study is aimed at advancing
the literature on organizational capability theory by investigating the influence the new dynamic
capabilities, i.e., I4 and CE practices have on SP.
2.2 Sustainable performance
Sustainability is defined as “development that meets the needs of the present generation without
compromising the ability of future generations to meet their own needs” (WCED, 1987). In the
business context, a sustainable business is defined as “the organization that creates profit for its
shareholders while protecting the environment and improving the lives of those with whom it
interacts” (Savitz and Weber, 2006). Economic prospects, environmental protection, and social
responsibility are the three dimensions of sustainability (Gimenez et al., 2012). The
organizations are ensured of continuous growth if they can achieve a balanced development on
all three sustainability dimensions (Wu et al., 2015). The literature indicates that the stakeholders
of an organization have different expectations and therefore the organizations are under pressure
to perform on all the three dimensions, collectively referred to as a triple bottom line (3BL)
(Elkington, 1998).

4
2.2.1 Industry 4.0 technologies
A German strategic initiative, I4 was developed to create smart factories using merging
technologies such as big data analytics, internet of things (IoT), 3D printing, augmented reality,
cloud computing and robotic systems to develop cyber-physical systems that drives the 3BL
performance of the of the organizations (Lee and Lee, 2015; Lasi et al., 2015; Kamble et al.,
2018a). The deployment of I4 technologies is found to reduce the product costs, improve lead
times, product quality and offer other benefits associated with the use of technologies (Albers et
al., 2016; Bibby and Dehe, 2018). I4 technologies are expected to accelerate industries toward
the development of extraordinary operational competences and improvement in productivity
(Pfeiffer and Suphan, 2015; Kamble et al., 2018b).
2.3 Circular economy practices
CE takes a deviation from the linear pattern of traditional manufacturing practices of “take, make,
and dispose” to manage the depleting resources and associated impacts (Wang et al., 2018). CE
is based on the concept of recycling, remanufacturing, and reuse for improving the circularity of
the material use and is gaining significant attention from the manufacturing practitioners (Lieder
and Rashid, 2016; Mangla et al., 2018b; Batista et al., 2018). Studies claim that CE has the
potential to improve resource utilization and reduce waste paving the way to achieve a balanced,
sustainable growth for the organizations (Ghisellini et al. 2016). However, few studies have
raised concerns on the feasibility of CE implementation in the organizations (Allwood, 2014)
because of high costs of implementation (Wang et al., 2018), rebound effect and its effectiveness
(Pedersen and Hauschild, 2016). The effective implementation of CE is an outcome of how well
the various CE practices are executed at the different levels, i.e., at micro, meso, and macro
levels (Yuan et al., 2006; Geng and Doberstein, 2008). At the micro level, the CE practices are
aimed at implementing CE strategy at the organizational level (single enterprise). The important
dimensions of CE practices at the micro level include cleaner production, eco-design (ED), green
purchasing/ consumption, and product recycling or reuse (Ghisellini et al., 2016; Su et al., 2013;
Liu et al., 2018). The CE practices at the meso level use industrial symbiosis to achieve mutual
economic and environmental benefits. At this level, the CE practices are aimed at developing
eco-industrial parks and bring industries together to share and utilize the available resources
effectively and efficiently (Côté and Hall, 1995; Côté and Cohen-Rosenthal, 1998). At the macro
level, the CE practices extend its boundaries and make an effort to understand on how the

5
physical resources and materials can be managed and utilized effectively and efficiently at the
regional or national level (Murray et al., 2017). The present study deals with the CE practices at
the micro level, i.e., the practices implemented by the manufacturing organizations at the
organizational level.

2.4 Industry 4.0 technologies and sustainable performance

The contribution of I4 in achieving the sustainability goals steers the manufacturing
organizations towards a new area of growth and development. Each technique and strategy of I4
contains the aspects of sustainability and involves the productive processes. The I4 technologies
are based on the principles of a networked manufacturing system that are virtually connected to
the networks are modular and can respond to the internal and external demands in real time
(Carvalho et al., 2018). The I4 technologies are claimed to have a positive influence on the SP.
The smart products manufactured in the I4 environment are expected to bring significant
economic, environmental and social benefits (Blunck and Werthmann, 2017; Luthra and Mangla,
2018; Kamble et al., 2018a). The sustainable improvements in the performance may be in the
form of increased profitability, improvements in resource utilization, and reduced waste
generation (Tseng et al., 2018b). I4 technologies are identified to have a strong potential to
comply with the sustainability requirements while contributing in industrial value creation and
sustainable manufacturing leading to improved organizational performance (Kiel et al., 2017;
Stock and Seliger, 2016; Müller et al., 2018). Therefore, we hypothesize that;

Hypothesis 1: I4 technologies have a direct positive influence on the SP.

2.5 Industry 4.0 and Circular economy

I4 technologies are found to drive the deployment of CE, which together have a huge potential
for optimizing the sustainable performance goals such as reduced resource consumption and gas
emission rates (Tseng et al., 2018b). Wang et al. (2018) demands an urgent need to promote the
lifecycle-based CE by improving the manufacturing efforts inside the factory. Lieder and Rashid
(2016) claim that the IT in manufacturing industries is matured enough to support the
implementation of CE. The combination of the cyber-physical system, big data analytics, IoT
and innovative business frameworks are expected to promote CE and sustainable industrial value
creation environment (Antikainen et al., 2018; Bressanelli et al., 2018). Bressanelli et al. (2018)

6
identified eight functionalities enabled by I4 technologies. These functionalities revolve around
having better product designs, improved customer service, predictive maintenance, optimized
product usage, product up gradation and renovation, and E-O-L activities. I4 technologies such
as IoT, cloud computing and CPS are gaining acceptance in the industrial organizations taking
us closer to a sustainable circular economy (Hatzivasilis et al., 2018; Kusi-Sarpong et al., 2019).
The stand-alone products are being transformed into smart products with the use of IoT, BDA
and cloud computing and other I4 technologies. These intelligent products can be monitored for
their usage, working condition, and location in real-time (Pagoropoulos et al., 2017). The
information on the smart products may help the companies to upgrade product firmware, thereby
reducing the risks of obsolescence, improving product life, enabling CE (Pialot et al., 2017). IoT
and RFID technologies are found to play a significant role in product and spare part traceability
(Franco, 2017; Cheng et al., 2010) thereby contributing to the CE objectives (Nobre and Tavares,
2017). BDA, which helps to derive meaningful insights from the collected data in real-time, can
support the advancement of CE by offering significant information required for the
sustainability-oriented decision-making process (Jabbour et al., 2017). Lopes de Sousa Jabbour
et al. (2018) proposed that the CE practices in an organization can be enhanced by using I4
technologies. It is reported that data collection and sharing of information supports the I4
technologies in integrating value chains (de Man and Strandhagen, 2017; Stock and Seliger,
2016). Therefore, the interaction between the I4 technologies and CE practices contributes
positively to sustainable operations (Lopes de Sousa Jabbour et al., 2018).

2.6 Circular economy and sustainable performance

Geissdoerfer et al., (2017) identified CE as one of the pre-requisite conditions for sustainability
and demands a further investigation on the relationship between the CE and sustainability. CE
practices have a positive impact on the TBL, contributing to the sustainability of the
organizations and slowing down the resource loops (Hobson et al., 2018). CE is expected to be
an essential component of the future supply chains with sustainable objectives (Manninen et al.
2018). The CE principles support the organizations to overcome the supply chain challenges and
transform them into circular supply chains (De Angelis et al., 2018; Yang et al., 2018). It is
reported that CE practices and sustainable manufacturing practices are increasingly being
adopted by manufacturing organizations to mitigate environmental risks (Moktadir et al., 2018).

7
Lahti et al. (2018) suggest that organizations with CE and sustainable business models will have
an edge over their competitors and enormous potential that could lead to long term profits and
market competitiveness.
Therefore, we hypothesize the following:
H2: CE practices mediate the relationship between I4 technologies and SP.
H3: CE practices moderates the relationship between I4 technologies and SP.
The proposed research model is presented in figure 1.

Figure 1: Research framework

3 Research Methodology
3.1 Procedures and sample
The data for the study was collected from Indian manufacturing organizations. Manufacturing is
emerging as the highest growth sector in India, attracting foreign investments from several
automobiles, mobile phone, television manufacturers to set up their manufacturing plants in
India. It is estimated that the Indian manufacturing sector will reach US$ 1 trillion by 2025, and
rank amongst the top three growth economies of the world by 2020 (IBEF, 2018). With highly
optimistic predictions, the Indian manufacturing sector is in the process of building a
manufacturing ecosystem imbibing the latest trends of digital manufacturing (Iyer, 2018). The
study will provide meaningful insights on the status of I4 implementation, the extent of
circularity imbibed in their manufacturing policies, and sustainability of the Indian
manufacturing organizations. However, we believe that the findings of our study have
generalizability to other emerging economies that are gearing to develop the digital
manufacturing ecosystem. The study used an online survey-based methodology. Total 650

8
manufacturing practitioners from 75 manufacturing organizations selected from the Centre for
Monitoring Indian Economy (CMIE) database were approached for their responses using simple
random sampling. The questionnaire was distributed using Google-drive link. We received 238
completed questionnaires within eight weeks of the survey, with three follow-up reminders. The
response rate was 36 percent with all the questionnaires usable, as incomplete submissions were
not allowed. Participation in the survey was kept voluntarily. However, only those respondents
who have at least two years of experience in the manufacturing industry and are aware of the I4
technologies and CE practices were requested to participate in the survey. Table 1 represents the
sample characteristics of the selected respondents and the characteristics of the manufacturing
organizations.
Table 1: Sample characteristics
Parameter Details Percentage (%)
Gender Male 74.78
Female 25.21
Age Less than 25 years 0
25–35 years 42.85
35–45 years 36.13
45–55 years old 18.06
Above 55 years old 2.96
Education College level (diploma/certificate) 11.76
Undergraduate 36.97
Postgraduate and Doctorate 51.27
Experience in Less than two years 0
Manufacturing domain 2-5 years 47.05
5-8 years 30.25
8-15 years 17.21
15 years and above 05.49
Job profile Plant manager 08.40
Manufacturing/production 59.66
Logistics and Supply chain planning 15.96
Digitalization and technology 05.04
Maintenance 04.20
Purchasing 03.38
Safety and Environment 03.36
Industry Automobile and auto-components 34.48
Chemical and petrochemicals 37.93
Processed foods 10.34
Beverages 08.62
Cosmetics and toiletries
08.62

9
3.2 Measurement Scales
All the responses were collected on a five-point Likert scale. The measurement items for the I4
ranged from 1 (not considering implementing it) to 5 (successfully implemented). The items for
I4 technologies were developed by referring to the prior literature (Kamble et al., 2018a;
Tortorella and Fettermann, 2017). It included seven items concerning the present status of
implementation of the I4 technologies (e.g., Our manufacturing firm is in the process of
implementing or implemented IoT). While developing the measures for the CE practices, it was
observed from the literature that the concepts of green supply chain management and CE
overlapped and supplemented each other on the dimensions of sustainability (Genovese et al.,
2017; Zhu et al., 2011). The green supply chain management is more focused on improving the
environmental performance compared to economic performance, while the CE is promoted as
an organizational policy to improve the economic performance through mitigation of the
ecological and resource challenges (Sarkis, 2012; Geng et al., 2009; Liu et al., 2018). The
literature confirms green purchasing, eco-design or design for the environment, internal
environmental management, customer cooperation for environmental concerns, and investment
recovery as the five key elements of green supply chain management practices (Zhu et al., 2005;
Zhu et al., 2008; Gavronski et al., 2011; Laari et al., 2016). At the organizational level, the
comparison of green supply chain and CE practices shows that the elements of internal
environment management and eco-design are highly related, and customer cooperation and
environmental concerns and investment recovery are partially related with each other (Liu et al.,
2018). Significant differences in the practices are observed on internal environment
management, green purchasing, and investment recovery at the global level, and internal
environment management at the eco-industrial park, and regional/national level. As our study is
aimed at analyzing the implementation of CE practices at the organizational level, there may be
a possibility of high relation of CE practices with the green supply chain practices (Manninen et
al., 2018; Petit-Boix and Leipold, 2018). Masi et al., (2018) found that the organizations are
usually inclined to implement the customer cooperation practices related to resource and energy
utilization efficiency, giving less emphasis to green purchasing and customer cooperation. They
found that eco-design and internal environment management practices are better implemented at
the organizational level to achieve SP. The literature search revealed that Zhu et al. (2010) first
developed the measures for CE practices at the organizational level, which was subsequently

10
used in other studies (Zhu et al., 2011; Silva et al., 2019). CE practices were also used in the
study conducted by Sousa-Zomer (2018). The measurement scale used in the present study for
CE practices included seventeen items categorized in three dimensions, namely, internal
environmental management, eco-design, and investment recovery. The measurement items for
SP were developed based on previous studies (Zhu et al., 2011; Sajan et al.,2017; Kamble et al.,
2018a). The items ranged from 1 (highly disagree) to 5 (highly agree) (e.g., our firm achieved a
reduction in waste), and were categorized in three main dimensions namely, economic
performance (eight items), environment performance (six items) and social performance (six
items).
Subjective validity was conducted on the developed measurement instrument to check the
ambiguity, clarity, and correctness of the measures used in the instrument and to decide on the
retention of the items. The subjective validity was performed by a team of eight experts,
consisting of two academicians teaching manufacturing management, two senior managers with
more than ten years’ experience in manufacturing technology, one senior consultant in
digitalization of manufacturing, two senior experts with experience in environment management,
and one expert with six years’ experience in IT applications in management. This was followed
by a pilot study on thirty-eight management students perusing their postgraduate studies in
manufacturing management from a premier technical institute in India. The selected students had
a minimum experience of one year and were aware of the applications of I4, CE practices, and
sustainability outcomes. The subjective validity by experts and the pilot study helped us to
establish the content validity of the measurement scales (DeVellis, 2012; Dillman, 1978). The
expert suggestions and Cronbach alpha (α) values (above 0.70) helped us to identify the items
that raised concerns about ambiguity, clarity, and appropriateness. Such items were modified
and reframed to finalize the instrument. The final list of measurement items is provided in
Appendix 1.

4 Analysis and findings

Once the content validity of the scales was ascertained the next stage of data analysis included
the commonly used convergent and discriminant validity tests such as exploratory factor analysis
(EFA), Cronbach alpha (CR), composite reliability (CR), average variance extracted (AVE), and
confirmatory factor analysis (CFA). This was followed by structural equation modeling (SEM)
to test the mediation and moderation effects of CE on the relationship between I4 technologies
11
and SP. A three-step mediation method was used to test the influence on the relationship between
I4 technologies and SP (Baron and Kenny, 1986). The significance of the mediating effect was
tested using the Sobel test (Sobel, 1982). Finally, the moderation effect of CE practices was
examined as per the guidelines provided by Cohen and Cohen (1983).
4.1 Validity tests
Apart from the above analysis, the normality of the data was checked using the residual plots,
statistics of Skewness, and Kurtosis. No significant deviations from the standard values were
observed, as the maximum absolute values for Skewness (1.248) and Kurtosis (1.515) were
within the range (<2 for Skewness and < 7 for Kurtosis) (Curran et al., 1996). The detailed
descriptive statistics for the measurement items are presented in table 2. As the data was collected
using an online survey, no incomplete submissions were allowed, thus eliminating the issue of
missing values. However, the effects due to the delay in submitting the responses were evaluated
by comparing the mean values of all the constructs for the early and late respondents using a
two-sample Kolmogorov-Smirnov test. (Ryans, 1974; Wallace and Mellor, 1988). The early
respondent group consisted first 20 percent of the respondents, and the late respondent group
consisted of the last 20 percent of the responses. No significant differences in the mean values
of the two groups were observed indicating the absence of non-response bias (sig. level of 0.10).
The presence of common method bias (CMB) was tested using Harman’s one-factor test as per
the guidelines suggested by Podsakoff et al., (2003). The total variance explained by a single
factor was 40.11 percent compared to 76.91 percent by ten distinct factors with eigenvalues
greater than 1, as revealed by EFA, indicating the absence of CMB. Variance inflation factor
(VIF) was used to test the presence of multicollinearity within the items, and all the items were
collapsed into a composite index for testing the structural model (Boßow-Thies and Alber, 2010).
No multicollinearity issues were observed as the VIF values for all the formative items ranged
in between 1 and 4.251, which was below the threshold value of 10 (Hair et al. 2006). The
predictive validity of the model was tested using Stone-Geisser’s Q2 using cross-validated
redundancy approach with an omission distance of 8 (Chin, 2010). The value of Q2 obtained for
the SP (endogenous variable) was 0.310, indicating a significant predictive validity of the
constructs used to study the effects of I4 technologies and CE practices on SP. To test the
appropriateness of the selected sample size of 238, the power analysis (1-β) was conducted
(Cohen, 1992). The post-hoc test was performed using the software- G*Power 3.1 ((Faul et al.,

12
2009) with a sample size of 238, significance level of 0.05 and an effect size of 0.10 suggested
a significant association with the magnitude of power of 0.99, which was above the cutoff of
0.80 (Cohen, 1992).
Table 2: Descriptive statistics and validity measures
Construct Mean Std. Skewness Kurtosis Factor CA CR AVE
Items
Deviation Statistics Statistics Loadings
I4 technologies Cloud
2.88 1.34 .153 -1.193 .730
0.811 0.835 0.522
Computing
Big Data
3.22 1.25 -.187 -1.035 .751
Analytics
IoT 3.29 1.31 -.315 -.962 .703
Augmented
2.22 1.29 .695 -.726 .521
Realty*
Cyber-
physical 2.81 1.39 .122 -1.262 .673
systems
3D printing 2.24 1.24 .628 -.663 .664
Robotic
3.40 1.37 -.460 -.993 .578
systems
CE practices
Management MS1 3.61 1.19 -.755 -.236 .665 0.946 0.949 0.764
systems (MS) MS2 3.44 1.20 -.570 -.482 .534
MS3 3.59 1.21 -.673 -.400 .632
MS4 3.63 1.25 -.781 -.342 .679
MS5 3.59 1.19 -.571 -.557 .607
MS6 3.49 1.26 -.522 -.762 .590
Eco-design (ED) ED1 3.10 1.25 -.140 -1.004 .848 0.930 0.935 0.747
ED2 3.21 1.18 -.445 -.509 .828
ED3 3.22 1.22 -.285 -.863 .822
ED4* 3.77 1.07 -.629 -.356 .843
ED5 3.15 1.23 -.237 -.691 .818
Investment recovery IR1 3.37 1.20 -.422 -.793 .590 0.858 0.858 0.550
(IR) IR2 3.71 1.24 -.781 -.412 .644
IR3 3.18 1.32 -.381 -1.060 .737
IR4 3.23 1.32 -.292 -1.049 .607
IR5 3.21 1.29 -.254 -1.103 .622
Sustainable performance (SP)
Economic ES1 4.07 0.91 -1.160 1.449 .772 0.919 0.921 0.595
sustainability (ES) ES2 4.12 0.85 -.885 .731 .771
ES3 3.68 1.07 -.665 -.108 .787
ES4 3.83 0.97 -.704 .269 .706
ES5 3.82 1.03 -.508 -.497 .728
ES6 3.78 1.02 -.670 -.045 .670
ES7 3.74 1.10 -.586 -.556 .718
ES8* 3.52 1.05 -.426 -.663 .519
Social Sustainability SS1 4.06 1.02 -.846 -.021 .790 0.951 0.937 0.718
(SS) SS2 4.18 0.98 -1.245 1.049 .775
SS3 4.07 1.02 -.904 .079 .747
SS4 4.10 0.96 -1.248 1.515 .640
SS5* 4.01 0.97 -.974 .814 .578
SS6 4.10 0.97 -1.220 1.373 .637

13
 Environmental EVS1 3.66 1.08 -.889 .375 .686 0.971 0.967 0.833
Sustainability (EVS) EVS2 3.62 1.12 -.748 -.008 .802
EVS3 3.61 1.17 -.707 -.349 .801
EVS4 3.58 1.06 -.770 .320 .639
EVS5 3.56 1.11 -.620 -.145 .795
EVS6 3.67 1.13 -.907 .078 .801
*exhibited cross-loading >0.35 with other factors
Refer appendix 1 for the abbreviations.

4.2 Measurement Model

CFA was used to evaluate the uni-dimensionality of the theoretical constructs (Gerbing and
Anderson 1988). Uni-dimensionality was ensured with a satisfactory model fit index of χ2/df
=3.39; Root mean square error of approximation (RMSEA)=0.072, Comparative fit index (CFI)
=0.866, and Incremental fit index (IFI)=0.878 (Hair et al. 2014; Hu and Bentler 1999). The CA
and CR values for all the constructs were above 0.70, indicating scale reliability (Nunnally and
Bernstein, 1978; O’Leary-Kelly and Vokurka 1998). EFA was used to test the convergent
validity. The factor loadings for all the items were found to be above 0.50 (except for ED4 and
AR) and t-values greater than 2. The items ES8 and SS5 were found to have a cross loading of
greater than 0.35. The convergent validity was achieved by dropping the items ED4, AR, ES8,
and SS5 from the final analysis (Flynn et al., 2010; Hair et al., 2010). All the constructs exhibited
AVE values of more than 0.5, indicating convergent validity. The correlation between the
constructs and the square root of AVE were compared to test the discriminant validity (Fornell
and Larcker 1981). The higher values of AVE for each construct compared to the correlations
between that construct and the other constructs suggested discriminant validity (Fornell and
Larcker 1981). The construct-wise CA, CR, and AVE values are presented in table 2. Table 3
shows the composite mean scores for all the constructs used in the study and the correlations
between them.

14
Table 3: Composite mean scores and correlation values

Mean SD ED ES SS EVS I4T MS IR

ED 2.95 1.02 0.864
ES 3.53 0.71 0.372 0.771
SS 2.90 0.67 0.363 0.718 0.848
EVS 3.16 0.94 0.363 0.724 0.664 0.913
I4T 2.81 0.84 0.291 0.286 0.321 0.304 0.650
MS 2.68 0.83 0.622 0.453 0.413 0.586 0.355 0.874
IR 3.52 1.00 0.677 0.476 0.430 0.547 0.360 0.693 0.742

4.3 Structural model

The structural model was tested using SEM on Smart PLS. The SEM, as shown in figure 2,
indicated a satisfactory model fit without any concern for multicollinearity, as revealed by the
diverse set of model fit indices (absolute, parsimonious, and non-centrality-based fit indices).
The χ2 value of 29.40 and the χ2/df ratio of 2.45 was found to be lower than the threshold value
of 3 (Carmines and McIver, 1981). Table 4 presents the values for other fit indices such as GFI,
RMSEA, CFI, and IFI. All the model fit indices were found to have values higher than the
suggested threshold limit (Hair et al. 2014; Hu and Bentler, 1999).
Table 4: Model-fit statistics of the measurement model.
Model-fit statistic Recommended value Obtained value
2
χ /df <3 2.45
Significance (p) ≤ 0.05 0.003
GFI > 0.90 0.968
RMSEA < 0.10 0.078
CFI > 0.90 0.982
IFI > 0.90 0.982

15
Figure 2: Results of the Structural Model
4.3.1 The direct effect of I4 technologies on SP (H1)
The direct effect of I4 technologies on SP in the presence of the mediating variable was found
to be insignificant with a standardized beta coefficient of 0.07 (t-value=1.47, p=0.14). However,
our first hypothesis was to analyze the direct effect of I4 technologies on SP in the absence of
CE practices. A significant standardized beta coefficient of 0.386 (t-value=5.854, p=0.000) was
obtained for the direct path I4 technologies →SP in the absence of the mediating variable (CE
practices). Thus, supporting our first hypothesis (H1) stating that I4 technologies have a direct
effect on the SP.

4.3.2 Mediating effect of CE practices on I4 technologies and SP (H2)

The mediating effect of CE practices on the relationship between I4 technologies and SP was
tested using the path coefficients of direct and indirect effects of I4 technologies on the SP. The
results of the SEM were used to verify the existence of one of the following three conditions
(Hoyle and Kenny, 1999). (i) Full mediation: An insignificant direct relationship between I4
technologies and SP in the presence of CE practices and a significant indirect effect of I4
technologies on SP. (ii) Partial mediation: insignificant direct and indirect impact of I4
technologies on SP. (iii) No Mediation: insignificant direct and indirect effects of I4 technologies

16
on SP and insignificant direct impacts of I4 technologies on CE practices, and CE practices on
SP. The results obtained from the study indicated that the CE practices fully mediates the
relationship between I4 technologies and SP. The direct effect of path I4 technologies →SP
without the mediating variable (CE practices) was found to be significant with a standardized
beta coefficient of 0.386 (t-value=5.85, p=0.00) whereas, the direct effect of the path I4
technologies →SP in the presence of the mediating variable (CE practices) was insignificant
with a standardized beta coefficient of 0.07 (t-value=1.18, p=0.213). The Sobel test (Sobel, 1982)
indicated the mediated path I4 technologies →CE practices →SP to be significant with a
standardized beta coefficient of 0.324 (z-value-5.827, std. error= 0.05 and p-value=0.00). Thus,
we conclude that the CE practices mediate the relationship between I4 technologies and SP,
supporting H2.

4.3.3 Moderating effect of CE practices (H3)

To test the moderating effect of CE practices on the relationship between the I4 technologies and
SP, we used the hierarchical moderated correlation (Cohen & Cohen, 1983). Thus, to estimate
the moderation effect, we first computed the interaction term (I4 technologies *CE practices) by
centering the I4 technologies and CE practices before multiplying them with each other, and then
separately evaluating the significance of the paths I4 technologies →SP, CE practices →SP, and
I4 technologies *CE practices →SP. The results of the moderated model showed a significant
standardized beta coefficient of 0.41 for the path I4 technologies →SP (with R2 = 0.17 and Q2 =
0.16, p<0.01), 0.764 for the path CE practices (with R2 = 0.62, Q2 = 0.592, p=0.00). However,
the interaction path I4 technologies*CE practices was found to be insignificant with a
standardized beta coefficient of -0.184 (with R2 = 0.041, Q2 = 0.017 at p= 0.053). Further, we
performed the incremental f- test to validate the findings of the moderation effects. The f2 values
obtained for the constructs I4 technologies (f2 =0.004), CE practices (f2 =0.982) and I4
technologies * CE practices (f2 =0.019) indicated a weak or insignificant effect of I4 technologies
*CE practices on SP (Cohen, 1988). Thus, we conclude that the CE practices do not moderate
the relationship between I4 technologies and SP, rejecting H3.

The summary of the results of the hypothesis is presented in table 5.

17
Table 5: Summary of hypothesis results

Hypothesis Hypothesis statement Estimate S.E. C.R. Sig. Result

Direct effect of I4
H1 0.386 0.06 5.854 *** Supported
technologies on SP
Mediating effect of CE
practices on the
H2 0.324 0.05 5.827 *** Supported
relationship between I4
technologies and SP
Moderating effect of CE
practices on the
H3 -0.184 - - 0.053 Rejected
relationship between I4
technologies and SP

5 Discussions and Implications

5.1 Discussions on the findings
The findings of the study identify I4 technologies to have a direct and positive influence on the
SP supporting the theoretical propositions made in the previous studies (Blunck and Werthmann,
2017; Luthra and Mangla, 2018; Kamble, 2018a). The study identifies the potential of I4
technologies to comply with the sustainable goals of the organizations (Kiel et al., 2017; Stock
and Seliger, 2016). The robotic systems (mean =3.40), IoT (mean=3.28), big data analytics
(mean=3.21), and cloud computing (mean= 2.88) were found to be the leading I4 technologies
being implemented by the Indian manufacturing companies. The economic dimension of
sustainability (β=0.90) was found to be the key outcome for the Indian organizations, followed
by environmental (β=0.84) and social dimensions (β=0.81). The findings reveal that the CE
practices have a significant mediating effect on the relationship between I4 technologies and SP
supporting the propositions made in the previous studies (Tseng et al., 2018b; Antikainen et al.,
2018; de Sousa Jabbour et al., 2018). The findings of the study identify I4 as a significant
information communication technology that supports effective implementation of CE practices
leading to improved SP (Jabbour et al., 2017; de Sousa Jabbour et al., 2018). The management
support (β=0.88) was found to be a critical component of CE practices followed by investment
recovery (β=0.88), and eco-design (β=0.76). However, the findings suggest that CE practices do
not moderate the relationship between I4 technologies and SP. This indicates that the relationship
between I4 technologies and SP is not dependent on the degree to which the organizations have

18
adopted the CE practices. In other words, Indian manufacturing practitioners perceive that the
successful implementation of I4 technologies can lead to the achievement of SP even in the
absence of CE practices. The findings of the study are summarized as follows;
• Successful implementation of I4 technologies leads to improved SP (represented by
hypothesis 1).
• Successful implementation of I4 technologies leads to efficient CE practices, and efficient
CE practices lead to improved SP (represented by hypothesis 2).
• The integrated effect of I4 technologies and CE practices on SP is insignificant, which means
that the manufacturing organizations must first finalize their CE and SP goals followed by
adopting the appropriate I4 technology that will help them to achieve these goals. It should
not happen that the organizations first implement any I4 technology and then later try to align
it with the achievement of specific CE or SP objectives (represented by hypothesis 3).
The findings support the previous studies and acknowledge the contribution of CE practices in
achieving a balanced economic, environmentally and socially sustainable growth for the
organizations independent of the I4 technologies (Ghisellini et al., 2016; Geissdoerfer et al.,
2017). However, the findings indicate that a well-planned implementation strategy for I4
technologies and CE practices will bring tremendous improvements in the SP of the
manufacturing organizations. Overall, the findings confirm the impact of I4 technologies on SP
in the presence of CE practices as the mediating variable, explaining 49 percent of the total
variance in SP.

5.2 Theoretical implications

Most of the existing literature on Industry 4.0 is exploratory and propose theoretical propositions
on the level of impact it has on the sustainability goals of the organization. This study is one of
the preliminary studies that empirically investigates the effect of I4 technologies on SP and
addresses this gap in the literature. The study makes two significant theoretical contributions to
the literature. Firstly, we advance the organizational capability theory by conceptualizing I4
technologies as dynamic capabilities of the manufacturing organizations offering sustainable
performance outcomes. In doing so, this study addresses the significant gap in the literature
providing a new set of dynamic capabilities in the form of I4 technologies that will enable
sustainability as a strategic core competence of an organization (Amui et al. 2017). Secondly,
the literature suggests that the impact of any information communication technology initiatives

19
(I4 technologies in our study) on organizational performance has to be studied in the presence of
a mediating variable (Banker et al., 2006; Tippins and Sohi, 2003). Addressing this gap, we
identify and validate CE practices as a significant mediating variable influencing the relationship
between I4 technologies and SP.

Additionally, we evaluate the moderating effect of CE practices on the relationship between I4

technologies and SP. The above contributions to the literature offer few implications for the
researchers. The future studies should focus on identifying other significant mediating variables
that may influence the relationship between I4 technologies and SP. The researchers may also
be interested in studying the impact of other moderating variables such as the size of the
organization, type of the manufacturing industry, level of data security and privacy on the
relationship between I4 technologies and SP.

5.3 Implications for the practitioners

The findings of the study offer critical insights for the practicing managers on the implementation
of I4 technologies in Indian manufacturing organizations, and the influence they have on SP in
a CE environment. The findings reveal that I4 technologies are gaining broader acceptance in
the Indian manufacturing organizations. The positive direct impact of the I4 technologies on the
SP shows that the practitioners acknowledge I4 technologies as the driver for achieving
sustainability. However, I4 technologies will not unlock their entire sustainability potential
unless the implementing organizations thoroughly assess the related benefits and risks.
Therefore, it is implied that the practitioners in these organizations clarify and thoroughly assess
the potential, risk and have a feasibility study on which specific I4 technologies will contribute
to the identified sustainability goals (Müller et al., 2018). It is essential that the practitioners and
consultants understand that the organization may not require all the I4 technologies to be
implemented. It is therefore required to have a critical evaluation of all the available technologies
and evaluate the extent to which they contribute to SP goals. Although the I4 technologies offer
tremendous promise, there are many barriers such as high investment costs and lack of successful
demonstrations in other industries that hinders the adoption of I4 technologies (Koch et al.,
2014). Therefore, it is essential that the practitioners and consultants in Indian manufacturing
organizations identify the barriers of I4 technologies implementation and overcome them by
analyzing the dependencies between these barriers (Kamble et al., 2018b). The positive

20
relationship between the I4 technologies and SP requires the practitioners to plan for a
comprehensive change management program that should include creating awareness amongst
the employees on the benefits of I4 technologies, upgrading the employee skill and
competencies, review the existing business model and more importantly convince the employees
for I4 technologies implementation. The study found that the I4 technologies lead to the
improvement of sustainability dimensions, i.e., economic, social and environmental, implying
that the practitioners may plan to pursue all the three sustainability dimensions simultaneously
(Kamble et al. 2018a). The findings supported the presence of CE practices as a significant
mediating variable between I4 technologies and SP. The mediation implies a condition where
the CE practices serve as a third variable (mediating), which gets influenced by the I4
technologies and then causes the SP. For the practitioners, it implies that I4 technologies lead to
a development of CE environment that further supports achieving SP. Therefore, it is implied
that the practitioners in Indian manufacturing organizations should appreciate the role of I4
technologies as an enabler of the CE, which in turn will lead to sustainable performance
improvements. The practitioners must understand that the I4 technologies provide a purpose and
momentum for implementing CE strategy. For example, CE strategy involves decisions on
recycling, remanufacturing, and parts harvesting, which requires data collection and analysis on
the usage and condition of parts. I4 technologies, which is a data-driven information
communication technology innovation, can support the CE strategy by providing enormous data
using big data analytics, IoT, and other systems. Other I4 technologies such as robotic system is
found to contribute towards the CE strategy by reducing the human errors, product rework, and
wastages. Additive manufacturing may improve the just-in-time production of required parts,
thereby eliminating the cost of inventory or risk of obsolescence. Therefore, the practitioners are
required to ensure that the objectives of implementing the I4 technologies should be aligned with
the goals of the CE practices. However, the findings does not support the presence of CE
practices as a moderating variable implying that CE environment is not a necessary condition
for the implementation of I4 technologies to influence SP positively. Therefore, it is
recommended to the practitioners that their I4 technologies implementation strategy should be
based on the CE and SP objectives the organization wants to achieve. It should not happen that
the organizations design their CE practices or set sustainable goals after implementing the I4
technologies.

21
6 Conclusions and limitations of the study
The study provides insights from practitioners in the Indian manufacturing organizations who
have initiated or have implemented the I4 technologies. The findings serve as a learning outcome
to those organizations, planning to implement I4 technologies to achieve sustainable
performance benefits. The study also provides additional insights into how CE practices can be
integrated into the I4 technologies implementation plan. The findings show the potential benefit
of I4 technologies influencing the CE practices and SP, thus motivating the manufacturing
organizations to implement I4 technologies.
We have outlined the following limitations of the study that requires to be considered before
generalizing the findings to the other context.
i. I4 technologies is a unified term that includes different technology applications such as big
data analytics, IoT, robotic systems, augmented reality, and additive manufacturing. In the
present study, we have used it as a generalized term. Application specific studies may be
required to be conducted in the future.
ii. The implementation of I4 technologies is still in its initial stages in countries like India. The
study measures the level of I4 technologies implementation in Indian manufacturing
organizations and not the successful implementation of I4 technologies. Hence, we suggest
validating the findings of the study, once we have successful validations of I4 technologies
in Indian manufacturing organizations.
iii. The CE practices considered in this study are at the organizational level. It is suggested that
the future studies should include companies from specific eco-parks or industrial regions so
that we develop different perspectives on CE practices and the mediating impact it will have
on the relationship.
iv. The selection of practitioners from Indian manufacturing organizations may not allow us to
generalize our findings to other countries. However, we feel that the findings may be almost
like manufacturing organizations operating in emerging economies. Future studies should
consider different industries and countries.

22
References
Albers, A., Gladysz, B., Pinner, T., Butenko, V. and Stürmlinger, T., 2016. Procedure for defining the
system of objectives in the initial phase of an industry 4.0 project focusing on intelligent quality control
systems. Procedia CIRP, 52, pp.262-267.
Allwood J., 2014. Squaring the Circular Economy: The Role of Recycling within a Hierarchy of Material
Management Strategies. Handbook of Recycling, Elsevier Inc., Waltham, MA.
Amit, R., & Schoemaker, P. J. 1993. Strategic assets and organizational rent. Strategic management
journal, 14(1), 33-46.
Amui, L. B. L., Jabbour, C. J. C., de Sousa Jabbour, A. B. L., & Kannan, D. 2017. Sustainability as a
dynamic organizational capability: a systematic review and a future agenda toward a sustainable
transition. Journal of Cleaner Production, 142, 308-322.
Antikainen, M., Uusitalo, T., Kivikytö-Reponen, P., 2018. Digitalization as an Enabler of Circular
Economy. Procedia CIRP 73, 45–49. https://doi.org/10.1016/j.procir.2018.04.027
Banker, R.D., Bardhan, I.R., Chang, H. and Lin, S., 2006. Plant information systems, manufacturing
capabilities, and plant performance. MIS quarterly, pp.315-337.
Barney, J. Firm resources and sustained competitive advantage. J. Manag. 1991, 17, 99–120.
Baron, R. and Kenny, D. 1986. The Moderator-Mediator Variable Distinction in Social Psychological
Research: Conceptual, Strategic, and Statistical Considerations. Journal of Personality and Social
Psychology. 51: 1173–82.
Batista, L., Bourlakis, M., Liu, Y., Smart, P. and Sohal, A., 2018a. Supply chain operations for a circular
economy. Production Planning & Control, 29(6), pp.419-424.
Batista, L., Bourlakis, M., Smart, P. and Maull, R., 2018b. In search of a circular supply chain archetype–
a content-analysis-based literature review. Production Planning & Control, 29(6), pp.438-451.
Bibby, L., & Dehe, B. (2018). Defining and assessing industry 4.0 maturity levels–case of the defence
sector. Production Planning & Control, 29(12), 1030-1043.
Blunck, E., Werthmann, H., 2017. Industry 4.0 – an Opportunity To Realize Sustainable Manufacturing
and Its Potential for a Circular Economy. DIEM Dubrovnik Int. Econ. Meet. 644–666.
Boßow-Thies, S. and Albers, S., 2010. Application of PLS in marketing: content strategies on the internet.
In Handbook of Partial Least Squares (pp. 589-604). Springer, Berlin, Heidelberg.
Bressanelli, G., Adrodegari, F., Perona, M., Saccani, N., 2018. Exploring how usage-focused business
models enable circular economy through digital technologies. Sustain. 10.
https://doi.org/10.3390/su10030639
Carmines, E. G., and J. P. McIver. 1981. “Analyzing Models with Unobserved Variables: Analysis of
Covariance Structures.” In Social Measurement: Current Issues, edited by G. W. Bohrnstedt, and E.
F. Borgatta, 65–115. Beverly Hills, CA: Sage Publications.
Carvalho, N., Chaim, O., Cazarini, E., Gerolamo, M., 2018. Manufacturing in the fourth industrial
revolution: A positive prospect in Sustainable Manufacturing. Procedia Manuf. 21, 671–678.
https://doi.org/10.1016/j.promfg.2018.02.170
Cheng, C.-Y.; Barton, D.; Prabhu, V., 2010. The servicisation of the cutting tool supply chain. Int. J.
Prod. Res. 48, 1–19.
Chin, W.W., 2010. How to write up and report PLS analyses. In Handbook of Partial Least Squares:
Concepts, Methods and Application. Esposito Vinzi, V.; Chin, W. W.; Henseler, J.; Wang, H. (Eds.),
Springer, Germany, 645-689.
Cohen, J. and Cohen, P. 1983. Applied Multiple Regression/Correlation Analysis for the Behavioral
Sciences. Hillsdale, NJ: Lawrence Erlbaum.
Cohen, J.,1992. Statistical power analysis. Curr. Dir. Psychol. Sci.1, 98–101.
Côté, R. and Hall, J. 1995. Industrial parks as ecosystems. Journal of Cleaner Production, Vol. 3 No. 1,
pp. 41-46.
Côté, R.P. and Cohen-Rosenthal, E. 1998. Designing eco-industrial parks: a synthesis of some
experiences. Journal of Cleaner Production, Vol. 6 No. 3, pp. 181-188.

23
Curran, P. J., West, S. G., & Finch, J. F. 1996. The robustness of test statistics to nonnormality and
specification error in confirmatory factor analysis. Psychological Methods, 1(1), 16–29.
De Angelis, R., Howard, M., & Miemczyk, J. 2018. Supply chain management and the circular economy:
towards the circular supply chain. Production Planning & Control, 29(6), 425-437.
de Man, J.C. and Strandhagen, J.O., 2017. An Industry 4.0 research agenda for sustainable business
models. Procedia CIRP, 63, pp.721-726.
DeVellis, R. F. 2012. Scale development: Theory and applications. Newbury Park, CA: Sage
publications.
Dillman, D. A. 1978. Mail and telephone surveys: The total design method. Wiley Interscience.
Elkington, J. 1988. Cannibals with Forks: The Triple-Bottom-Line of the 21st Century; New Society
Publishers: Stoney Creek, ON, Canada.
Fatorachian, H., & Kazemi, H. (2018). A critical investigation of Industry 4.0 in manufacturing:
theoretical operationalisation framework. Production Planning & Control, 29(8), 633-644.
Faul, F., Erdfelder, E., Buchner, A., Lang, A.-G., 2009. Statistical power analyses using G* power 3.1:
tests for correlation and regression analyses. Behav. Res. Methods 41, 1149–1160.
Fornell, C., Larcker, D. F., 1981. Evaluating structural equation models with un- observable variables
and measurement error. J. Mark. Res., 39–50.
Franco, M.A., 2017. Circular economy at the micro level: A dynamic view of incumbents’ struggles and
challenges in the textile industry. J. Clean. Prod. 168, 833–845
Geissdoerfer, M., Savaget, P., Bocken, N.M.P., Hultink, E.J., 2017. The Circular Economy – A new
sustainability paradigm? J. Clean. Prod. 143, 757–768. https://doi.org/10.1016/j.jclepro.2016.12.048
Geng, Y. and Doberstein, B. 2008. Developing the circular economy in China: challenges and
opportunities for achieving ‘leapfrog development. International Journal of Sustainable Development
and World Ecology, Vol. 15 No. 3, pp. 231-239.
Geng, Y., Zhang, P., Cote, R.P. and Fujita, T. 2009. Assessment of the national eco-industrial park
standard for promoting industrial symbiosis in China”, Journal of Industrial Ecology, Vol. 13 No. 1,
pp. 15-26.
Genovese, A., Acquaye, A.A., Figueroa, A. and Koh, S.C.L. 2017. Sustainable supply chain management
and the transition towards a circular economy: evidence and some applications, Omega-International
Journal of Management Science, Vol. 66 No. B, pp. 344-357.
Ghisellini, P., Cialani, C. and Ulgiati, S., 2016. A review on circular economy: the expected transition to
a balanced interplay of environmental and economic systems. Journal of Cleaner production, 114,
pp.11-32.
Gimenez, C.; Sierra, V.; Rodon, J. 2012 Sustainable Operations: Their Impact on the Triple Bottom Line.
Int. J. Prod. Econ. 140, 149–159.
Grant, R. M. 1991. The resource-based theory of competitive advantage: implications for strategy
formulation. California management review, 33(3), 114-135.
Guo, B., Geng, Y., Ren, J., Zhu, L., Liu, Y. and Sterr, T. 2017. Comparative assessment of circular
economy development in China’s four megacities: the case of Beijing, Chongqing, Shanghai and
Urumqi. Journal of Cleaner Production, Vol. 162, pp. 234-246.
Hair, J., W. Black, B. Y. A. Babin, R. Anderson, and R. Tatham. 2014. Multivariate Data Analysis. A
Global Perspective. New Delhi:Pearson Prentice Hall.
Hatzivasilis, G., Fysarakis, K., Soultatos, O., Askoxylakis, I., Papaefstathiou, I., Demetriou, G., 2018.
The Industrial Internet of Things as an enabler for a Circular Economy Hy-LP: A novel IIoT protocol,
evaluated on a wind park’s SDN/NFV-enabled 5G industrial network. Comput. Commun. 119, 127–
137. https://doi.org/10.1016/j.comcom.2018.02.007
Heck, S. & Rogers, M., 2014. How resource scarcity is driving the third Industrial Revolution. Available
at: http://www.mckinsey.com/business-functions/ sustainability-and-resource-productivity/our-
insights/how-resource-scarcity-is- driving-the-third-industrial-revolution.
Helfat, C.E.; Peteraf, M.A. The dynamic resource-based view: Capability lifecycles. Strateg. Manag. J.
2003, 24, 997–1010.

24
Hobson, K., Lynch, N., Lilley, D., Smalley, G., 2018. Systems of practice and the Circular Economy:
Transforming mobile phone product service systems. Environ. Innov. Soc. Transitions 26, 147–157.
https://doi.org/10.1016/j.eist.2017.04.002
Hu, L., and P. M. Bentler. 1999. Cutoff Criteria for Fit Indexes in Covariance Structure Analysis:
Conventional Criteria Versus New Alternatives. SEM 6 (1): 1–55.
IBEF (India brand equity foundation). 2018. Manufacturing Sector in India. Available at:
https://www.ibef.org/industry/manufacturing-sector-india.aspx
Iyer, A. 2018. Moving from industry 2.0 to industry 4.0: A case study from India on leapfrogging in smart
manufacturing. Procedia Manufacturing, 21, 663-670.
Jabbour, C.J.C., de Sousa Jabbour, A.B.L., Sarkis, J. and Godinho Filho, M., 2017. Unlocking the circular
economy through new business models based on large-scale data: An integrative framework and
research agenda. Technological Forecasting and Social Change.
https://doi.org/10.1016/j.techfore.2017.09.010
Jakhar, S. K., Mangla, S. K., Luthra, S., & Kusi-Sarpong, S. 2018. When stakeholder pressure drives the
circular economy: measuring the mediating role of innovation capabilities. Management Decision.
https://doi.org/10.1108/MD-09-2018-0990
Kamble, S., Gunasekaran, A., & Arha, H. 2018c. Understanding the Blockchain technology adoption in
supply chains-Indian context. International Journal of Production Research, 1-25. DOI:
10.1080/00207543.2018.1518610
Kamble, S.S., Gunasekaran, A. and Sharma, R., 2018b. Analysis of the driving and dependence power of
barriers to adopt industry 4.0 in Indian manufacturing industry. Computers in Industry, 101, pp.107-
119.
Kamble, S.S., Gunasekaran, A., Gawankar, S.A., 2018a. Sustainable Industry 4.0 framework: A
systematic literature review identifying the current trends and future perspectives. Process Saf.
Environ. Prot. 117. https://doi.org/10.1016/j.psep.2018.05.009
Kiel, D., Müller, J.M., Arnold, C., Voigt, K.-I., 2017. Sustainable Industrial Value Creation: Benefits and
Challenges of Industry 4.0, International Journal of Innovation Management.
https://doi.org/10.1142/S1363919617400151
Koch, V., Kuge, S., Geissbauer, R. Schrauf, S. 2014. Industry 4.0: Opportunities and Challenges of the
Industrial Internet, Available at: from Strategy & PwC, Accessed on 20th December 2017
http://www.strategyand.pwc.com/reports/ industry-4-0.
Krautkraemer, J. A., 2005. Economics of Natural Resource Scarcity: The State of the Debate. Resources
for the Future, (05–14), p.1,4,5. Available at: http://
www.rff.org/files/sharepoint/WorkImages/Download/RFF-DP-05-14.pdf.
Kusi-Sarpong, S., Gupta, H., Khan, S. A., Jabbour, C. J. C., Rehman, S. T., & Kusi-Sarpong, H. (2019).
Sustainable supplier selection based on industry 4.0 initiatives within the context of circular economy
implementation in supply chain operations. Production Planning and Control. Available at:
https://researchportal.port.ac.uk/portal/en/publications/sustainable-supplier-selection-based-on-
industry-40-initiatives-within-the-context-of-circular-economy-implementation-in-supply-chain-
operations(630f4fe7-9288-4fa1-a5af-d8495c013dfc).html
Laari, S., Toyli, J., Solakivi, T. and Ojala, L. 2016. Firm performance and customer-driven green supply
chain management. Journal of Cleaner Production, Vol. 112, pp. 1960-1970.
Lahti, T., Wincent, J., & Parida, V. 2018. A definition and theoretical review of the circular economy,
value creation, and sustainable business models: Where are we now and where should research move
in the future?. Sustainability, 10(8), 2799.
Lasi, H., Fettke, P., Kemper, H.G., Feld, T. and Hoffmann, M., 2014. Industry 4.0. Business &
Information Systems Engineering, 6(4), pp.239-242.
Laudien, S.M.; Spieth, P.; Clauß, T. 2017. Digitalization as Driver of Business Model Innovation: An
Exploratory Analysis. In Proceedings of the 28th International Society for Professional Innovation
Management (ISPIM) Conference, Vienna, Austria, 18–21 June 2017.

25
Lee, K. Lee, 2015. The internet of things (IoT): applications, investments, and challenges for enterprises,
Bus. Horiz. 58 (4), 431–440, https://doi.org/10.1016/j.bushor.2015.03.008.
Lieder M, Rashid A., 2016. Towards Circular Economy Implementation: A Comprehensive Review in
Context of Manufacturing Industry. Journal of Cleaner Production 115:36–51.
Lin, D., Lee, C. K. M., Lau, H., & Yang, Y. (2018). Strategic response to Industry 4.0: an empirical
investigation on the Chinese automotive industry. Industrial Management & Data
Liu, J., Feng, Y., Zhu, Q., & Sarkis, J. 2018. Green supply chain management and the circular economy:
Reviewing theory for advancement of both fields. International Journal of Physical Distribution &
Logistics Management, 48(8), 794-817.
Lopes de Sousa Jabbour, A.B., Jabbour, C.J.C., Godinho Filho, M., Roubaud, D., 2018. Industry 4.0 and
the circular economy: a proposed research agenda and original roadmap for sustainable operations.
Ann. Oper. Res. 1–14. https://doi.org/10.1007/s10479-018-2772-8
Luthra, S., Mangla, S.K., 2018. Evaluating challenges to Industry 4.0 initiatives for supply chain
sustainability in emerging economies. Process Saf. Environ. Prot. 117, 168–179.
https://doi.org/10.1016/j.psep.2018.04.018
Mangla, S.K., Bhattacharya, A. and Luthra, S. 2018b. Achieving sustainability in supply chain operations
in the interplay between circular economy and industry 4.0, Production Planning & Control: The
Management of Operations, available at:http://explore.tandfonline.com/cfp/est/jmt05555-tppc-
achieving-sustainability-in-supplychain-
operations?utm_source=CPB&utm_medium=cms&utm_campaign=JMT05555 (accessed March 4,
2019).
Mangla, S.K., Luthra, S., Mishra, N., Singh, A., Rana, N.P., Dora, M. and Dwivedi, Y. 2018a, Barriers
to effective circular supply chain management in a developing country context. Production Planning
& Control, Vol. 29 No. 6, pp. 551-569.
Manninen, K., Koskela, S., Antikainen, R., Bocken, N., Dahlbo, H. and Aminoff, A. 2018. Do circular
economy business models capture intended environmental value propositions?, Journal of Cleaner
Production, Vol. 171, pp. 413-422.
Masi, D., Kumar, V., Garza-Reyes, J.A. and Godsell, J., 2018. Towards a more circular economy:
exploring the awareness, practices, and barriers from a focal firm perspective. Production Planning &
Control, 29(6), pp.539-550.
Moktadir, M.A., Rahman, T., Rahman, M.H., Ali, S.M., Paul, S.K., 2018. Drivers to sustainable
manufacturing practices and circular economy: A perspective of leather industries in Bangladesh. J.
Clean. Prod. 174, 1366–1380. https://doi.org/10.1016/j.jclepro.2017.11.063
Moreno, M. and Charnley, F., 2016. Can re-distributed manufacturing and digital intelligence enable a
regenerative economy? An integrative literature review. In Sustainable Design and Manufacturing
2016 (pp. 563-575). Springer, Cham.
Müller, J.M., Kiel, D., Voigt, K.I., 2018. What drives the implementation of Industry 4.0? The role of
opportunities and challenges in the context of sustainability. Sustain. 10.
https://doi.org/10.3390/su10010247
Murray, A., Skene, K. and Haynes, K. 2017. The circular economy: an interdisciplinary exploration of
the concept and application in a global context”, Journal of Business Ethics, Vol. 140 No. 3, pp. 369-
380.
Nobre, G.C.; Tavares, E. 2017. Scientific literature analysis on big data and Internet of Things
applications on circular economy: A bibliometric study. Scientometrics. 111, 463–492.
Nunnally, J. C., and I. H. Bernstein. 1978. Psychometric Theory.
O'Leary-Kelly, S.W. and Vokurka, R.J., 1998. The empirical assessment of construct validity. Journal of
operations management, 16(4), pp.387-405.
Pagoropoulos, A., Pigosso, D.C.A., McAloone, T.C., 2017. The Emergent Role of Digital Technologies
in the Circular Economy: A Review. Procedia CIRP 64, 19–24.
https://doi.org/10.1016/j.procir.2017.02.047

26
Pedersen G, Hauschild M., 2016. Circular and Safe? The 6th International Symposium on Food
Packaging, Barcelona, Spain. 16-18 November.
Petit-Boix, A. and Leipold, S. 2018. Circular economy in cities: reviewing how environmental research
aligns with local practices. Journal of Cleaner Production, Vol. 195, pp. 1270-1281.
Pfeiffer, S. and Suphan, A., 2015. The labouring capacity index: Living labouring capacity and experience
as resources on the road to industry 4.0. Available at: https://www.sabine-
pfeiffer.de/files/downloads/2015-Pfeiffer-Suphan-EN.pdf
Pialot, O.; Millet, D.; Bisiaux, J. 2017. “Upgradable PSS”: Clarifying a new concept of sustainable
consumption/production based on upgradablility. J. Clean. Prod. 141, 538–550.
Preston, M. & Herron, J.P., 2016. Minerals and metals scarcity in manufacturing: The ticking time bomb.
PwC. Available at: http://www.pwc. com/gx/en/services/sustainability/publications/metal-minerals-
scarcity.html.
Ryans, A. B. 1974. Estimating Consumer Preferences for a new Durable Brand in an Established Product
Class. Journal of Marketing Research 11: 434–443.
Sajan, M.., Shalij, P.R., Ramesh, A., Biju Augustine, P., 2017. Lean manufacturing practices in Indian
manufacturing SMEs and their effect on sustainability performance Abstract. J. Manuf. Technol.
Manag. 28, 772–793. https://doi.org/10.1108/09574090910954864
Sarkis, J. 2012. A boundaries and flows perspective of green supply chain management”, Supply Chain
Management-An International Journal, Vol. 17 No. 2, pp. 202-216.
Savitz, A.W. and Weber, K. 2006. The Triple Bottom Line; Jossey-Bass: San Francisco, NC, USA,
Silva, F. C., Shibao, F. Y., Kruglianskas, I., Barbieri, J. C., & Sinisgalli, P. A. A. 2019. Circular economy:
analysis of the implementation of practices in the Brazilian network. Revista de Gestão, 26(1), 39-60.
Sirmon, D.G.; Hitt, M.A.; Ireland, R.D. 2007. Managing firm resources in dynamic environments to
create value: Looking inside the black box. Acad. Manag. Rev. 32, 273–292.
Sobel, M. E. 1982. Asymptotic confidence intervals for indirect effects in structural equation models.
Sociological Methodology, 13(1982), 290–312.
Sousa-Zomer, T.T., Magalhães, L., Zancul, E., Campos, L.M. and Cauchick-Miguel, P.A. 2018. Cleaner
production as an antecedent for circular economy paradigm shift at the micro-level: evidence from a
home appliance manufacturer”, Journal of Cleaner Production, Vol. 185, pp. 740-748.
Stock, T., Seliger, G., 2016. Opportunities of Sustainable Manufacturing in Industry 4.0. Procedia CIRP
40, 536–541. https://doi.org/10.1016/j.procir.2016.01.129
Su, B., Heshmati, A., Geng, Y. and Yu, X. 2013. A review of the circular economy in China: moving
from rhetoric to implementation”, Journal of Cleaner Production, Vol. 42, pp. 215-227.
Teece, D. J., Pisano, G., & Shuen, A. 1997. Dynamic capabilities and strategic management. Strategic
management journal, 18(7), 509-533.
Tippins, M.J. and Sohi, R.S., 2003. IT competency and firm performance: is organizational learning a
missing link?. Strategic management journal, 24(8), pp.745-761
Tortorella, G.L., Fettermann, D., 2017. Implementation of Industry 4.0 and lean production in Brazilian
manufacturing companies. Int. J. Prod. Res. 7543, 1–13.
https://doi.org/10.1080/00207543.2017.1391420
Tseng, M.L., Tan, R.R., Chiu, A.S.F., Chien, C.F., Kuo, T.C., 2018. Circular economy meets industry
4.0: Can big data drive industrial symbiosis? Resour. Conserv. Recycl. 131, 146–147.
https://doi.org/10.1016/j.resconrec.2017.12.028
Wallace, R. O., and C. J. Mellor. 1988. Nonresponse Bias in Mail Accounting Surveys: a Pedagogical
Note. The British Accounting Review 20 (2): 131–139.
Wang, P., Kara, S., Hauschild, M.Z., 2018. Role of manufacturing towards achieving circular economy:
The steel case. CIRP Ann. 67, 21–24. https://doi.org/10.1016/j.cirp.2018.04.049
World Commission on Environment and Development (WCED).1987. Our Common Future; Oxford
University Press: Oxford, UK.
Wu, L., Subramanian, N., Abdulrahman, M.D., Liu, C., Lai, K. hung, Pawar, K.S., 2015. The impact of
integrated practices of lean, green, and social management systems on firm sustainability

27
 performance-evidence from Chinese fashion auto-parts suppliers. Sustain. 7, 3838–3858.
https://doi.org/10.3390/su7043838
Yang, M., Smart, P., Kumar, M., Jolly, M. and Evans, S., 2018. Product-service systems business models
for circular supply chains. Production Planning & Control, 29(6), pp.498-508.
Yuan, Z.W., Bi, J. and Moriguichi, Y. 2006. The circular economy – a new development strategy in
China”, Journal of Industrial Ecology, Vol. 10 Nos 1/2, pp. 4-8.
Zhu, K.; Kraemer, K.; Xu, S. 2003. Electronic business adoption by European firms: A cross-country
assessment of the facilitators and inhibitors. Eur. J. Inf. Syst., 12, 251–268.
Zhu, Q., Geng, Y. and Lai, K.H. 2011. Environmental supply chain cooperation and its effect on the
circular economy practice-performance relationship among Chinese manufacturers”, Journal of
Industrial Ecology, Vol. 15 No. 3, pp. 405-419.
Zhu, Q., J. Sarkis, and K. H. Lai. 2008. Green supply chain management implications for “closing the
loop”: Cross-industry experiences in China. Transportation Research Part E: Logistics and Transportation
Review 44(1): 1−18.
Zhu, Q., Sarkis, J., & Geng, Y. 2005. Green supply chain management in China: pressures, practices and
performance. International Journal of Operations & Production Management, 25(5), 449-468.

28
Appendix 1: Details of measurement items
Construct Items Source
I4 Technologies
The extent to which the following I4 technologies are implemented in your organization
I4 Cloud computing (CC) Kamble et al.,
Technologies Big data analytics (BDA) (2018a),
Internet of Things (IoT) Tortorella and
Additive manufacturing (ADM) Fettermann,
Robotic systems (RS) (2017),
Augmented reality (AR)
Cyber-physical systems (CPS)
Circular Economy Practices
The extent to which the following CE practices are adopted in your organization
Management Total quality environmental management (MS1) Zhu et al.,
systems (MS) Environmental auditing programs such as ISO 14000 certification (MS2) (2010), Zhu et
Eco-labeling of products (MS3) al., (2011)
Pollution prevention programs (MS4)
Incorporation of environmental factors in internal performance evaluation
system (MS5)
Generation of environmental reports for internal evaluation purposes (MS6)
Eco-design (ED) Design of products with the objectives to reduce consumption of materials
and energy (ED1)
Design of products for reuse, recycle, recovery of material, parts (ED2)
Design of products to avoid or reduce the use of hazardous products (ED3)
Design of processes for minimization of waste (ED4)
Suppliers use environmental packaging (degradable and non-hazardous)
(ED5)
Suppliers use environmental packaging (degradable and non-hazardous)
(ED6)
Investment Investment recovery (sale) of excess inventories/materials at a regular time
Recovery (IR) interval (IRP1)
Sale of scrap and used materials at regular intervals (IRP2)
Sale of excess capital equipment (IRP3)
Collection and recycling end-of-life products and materials (IRP4)
Recycling system for used and defective products (IRP5)
Sustainable Performance (SP)
The role of I4 technologies and CE Practices on achieving the following sustainable performance goals
Economic Lower production costs (EP1) Zhu et al.,
Sustainability Increased profit (EP2) (2011), Sajan
(ES) Decreased NPD costs (EP3) et al., (2017),
Reduced energy usage (EP4) Kamble et al.,
Reduction in costs of inventory (EP5) (2018a)
Reduced product rejection and rework costs (EP6)
Decreased purchasing costs for raw material (EP7)
Reduction in treatment costs for production waste (EP8)
Social Better working conditions (SP1)
sustainability Better workplace safety (SP2)
(SS) Healthier employees (SP3)
Improved labor relations (SP4)
Decrease in number of accidents (SP5)
The decrease in the number of customer complaints (SP6)
Reduced solid waste generation (EVP1)
Reduced liquid waste generation (EVP2)

29
 Environmental Decreased gas emissions (EVP3)
Sustainability Reduced energy consumption (EVP4)
(EVS) Reduced consumption of hazardous/harmful/toxic materials (EVP5)
Improved environmental situation of the firm (EVP6)

30

View publication stats