Industrial Marketing Management 115 (2023) 86–98

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Industrial Marketing Management

journal homepage: www.elsevier.com/locate/indmarman

Achieving market performance via industry 4.0 enabled dynamic marketing

capability, sustainable human resource management, and circular
product design
Kirti Nayal a, Rakesh D. Raut a, Sachin Kumar Mangla b, f, *, Mukesh Kumar c, David Tuček d,
Beata Gavurova e
a
Operations and Supply Chain Management, Indian Institute of Management (IIM), Mumbai Vihar Lake, Powai, Mumbai, Maharashtra 400087, India
b
Research Centre – Digital Circular Economy for Sustainable Development Goals (DCE-SDG), Jindal Global Business School, O P Jindal Global University, Haryana,
India
c
Department of Mechanical Engineering, National Institute of Technology Patna, India 800005
d
Faculty of Management and Economics, Tomas Bata University in Zlín, Mostní 5139, 760 00 Zlín, Czech Republic
e
Center for Applied Economic Research, Faculty of Management and Economics, Tomas Bata University in Zlin, Mostni 5139, 760 01 Zlin, Czech Republic
f
Plymouth Business School, University of Plymouth, UK

A R T I C L E I N F O A B S T R A C T

Keywords: Business-to-business (B2B) firms are striving to sustain market growth and share in dynamic marketing envi­
Industry 4.0 enabled dynamic marketing ronment with an increasing need to protect natural resources in era of sustainability and industry 4.0. Although
capabilities (IDMC) many firms have adapted industry 4.0 technologies, circular economy and sustainability practices in their
Market performance (MPER)
business activities, but to sustain market growth is still a challenge. They need dynamic capabilities to face the
Sustainable human resource management
(SHRM)
current dynamic market instead of just resources and their capabilities. This study empirically examines whether
Circular product design (CEPD) Industry 4.0-enabled dynamic marketing capabilities and sustainable human resource management (SHRM) can
enable firms to implement circular product design strategies and further improve market performance. The
proposed framework is based on a dynamic capability view (DCV) and tested by structural equation modeling
using survey data from 424 Indian B2B manufacturing firms. The findings show that SHRM promotes Industry
4.0-enabled dynamic marketing capabilities (IDMC); IDMC and SHRM both support implementation of circular
product design strategies. Circular product design is supposed to facilitate IDMC to expand market performance.
But, IDMC alone is also enough to significantly enhance market performance, despite the combined positive
effect of circular product design and SHRM on market performance. These findings contribute to better under­
standing on what type of dynamic capabilities of organizational resources should be developed and utilized to
improve market performance. The study helps firms to develop dynamic marketing capabilities such as circular
product design strategies, SHRM and IDMC for helping them in improving market performance while also
growing sustainably.

1. Introduction municipal solid waste is generated annually; one-third of this is not

In the long term, the current rate of natural resource consumption in
the world will cause major economic and environmental sustainability
challenges. Based on the United Nations Environment Programme
(UNEP)’s report, in the last fifty years, the use of natural resources has
increased by more than three times, generating an annual resource need
beyond the earth’s capacity to regenerate. 2.01 billion metric tons of
environmentally managed (World Bank, 2018). Industries will ruin
natural resources at their absolute limit of consumption, (Jabbour et al.,
2020; Jabbour et al., 2020). For resource protection, adjustments are
required for how products are sourced, produced, delivered, used,
returned, and regenerated (Farooque, Zhang, Liu, & Hartley, 2022). A
popular method of aiming in this direction is the circular economy (CE)
concept which refers to “an economy that is regenerative and restorative

* Corresponding author.
E-mail addresses: kirti.nayal.2018@iimmumbai.ac.in (K. Nayal), rraut@iimmumbai.ac.in (R.D. Raut), sachin.kumar@plymouth.ac.uk, sachinmangl@gmail.com
(S.K. Mangla), mukesh.me18@nitp.ac.in (M. Kumar), tucek@utb.cz (D. Tuček), gavurova@utb.cz (B. Gavurova).

https://doi.org/10.1016/j.indmarman.2023.09.010
Received 29 November 2022; Received in revised form 14 August 2023; Accepted 20 September 2023
Available online 28 September 2023
0019-8501/© 2023 Elsevier Inc. All rights reserved.
K. Nayal et al.
by design.” The purpose of CE is to not generate waste in the whole
biological and technical cycles of resources (Jabbour, Fiorini, et al.,
2020). The CE can considerably reduce the consumption rate of natural
resources (Barreiro-Gen & Lozano, 2020). The world economy is
currently only 9% circular (The circularity gap report, 2019). However,
many scholars highlight that CE can be a limited concept (e.g., Barreiro-
Gen & Lozano, 2020; Gandolfo & Lupi, 2021) that does not meet its
promises related to making maximum use of material resources avail­
able to us (Clube & Tennant, 2020). Numerous scholars highlight the
importance of aligning the new product development (NPD) process
with CE fundamentals as CE introduces replacing end-of-life concepts
with recycling, reuse, recovery, and extended uses (Den Hollander,
Bakker, & Hultink, 2017; Kirchherr, Reike, & Hekkert, 2017). Circular
product design (CEPD) aims to develop products with multiple life cy­
cles, sustain materials’ quality, and eliminate waste (Selvefors, Rexfelt,
Renström, & Strömberg, 2019). Thus, CEPD can contribute to meeting
CE goals through developing sustainable products. It has emerged as one
of the main evolutions to transform the existing business economy into
circular economy. But few quantitative articles address CEPD (e.g.,
Pinheiro, Jugend, Lopes de Sousa Jabbour, Chiappetta Jabbour, &
Latan, 2022).
Recent articles (e.g. Chiaroni, Del Vecchio, Peck, Urbinati, & Vrontis,
2021; Ertz, Sun, Boily, Kubiat, & Quenum, 2022; Tseng, Tran, Ha, Bui, &
Lim, 2021) show that adopting industry 4.0 technologies promotes CE in
industries. Industry 4.0 can assist in product design, maintenance, re­
covery and redistribution of usable products (Ertz et al., 2022; Tseng
et al., 2021), resource flows and effective evaluation of products’ life­
cycle (Chiaroni et al., 2021). Moreover, Halstenberg, Lindow, and Stark
(2019) argued that industry 4.0 technologies also promote NPD man­
agement. Dynamic marketing capability is explored chiefly through
market performance (Guo et al., 2018; Mu, Bao, Sekhon, Qi, & Love,
2018; Qaiyum & Wang, 2018). Previously, scholars explored the role of
business intelligence and big data analytics (BDA) capabilities for CE
performance (Awan et al., 2021) and big data predictive analytics re­
sources and capabilities for market performance (Gupta, Drave, Dwi­
vedi, Baabdullah, & Ismagilova, 2020). However, the dynamic
marketing capability effect on circular product design is lacking in
research. An organization’s decision-making also depends on human
factors; organizations which display efficient decision-making by their
managers, show considerable growth and exceptional performance
(Gupta et al., 2020). It is necessary to understand the significant role of
human resource development practices in industry with inconsistent
market performance (Uraon & Gupta, 2020). Uraon and Gupta (2020)
investigate the effect of human resource management (HRM) practices
on market performance. However, the SHRM effect on circular product
design and dynamic marketing capability is lacking in exploration.
Existing literature explores the effect of industry 4.0 on CEPD (Pin­
heiro et al., 2022); the roles of human and industry 4.0 adoption for
market performance (Kumar & Bhatia, 2021) and dynamic marketing
capabilities (DMCs) on market performance (Guo et al., 2018). By
integrating technological infrastructure, personal skills and enhancing
management capabilities to trace material in real-time through the
product life cycle, many benefits can be generated in terms of the
circularity of product design (Awan, Shamim, et al., 2021). Based on
dynamic capability view (DCV), industry 4.0 technologies are not
enough to produce sustained advantage in firms’ performance; it re­
quires appropriate human skills to convert resources into capabilities
(Gupta et al., 2020; Singh & El-Kassar, 2019). This literature exposes the
need to consider CEPD in marketing research models as a solution for
improving market performance. (Chin, Shi, Singh, Agbanyo, & Ferraris,
2022) also highlighted the positive role of Blockchain technology
(BLCT) and value appropriation capability, a dynamic capability
necessary to achieve a trade-off between value capturing and value
creating activities, for green innovation performance.
Bag and Wood (2022) identify a gap in research, examining unique
resource sets and developing capabilities to adapt technological
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Industrial Marketing Management 115 (2023) 86–98
transformation. Prior literature frequently indicates that marketing ca­
pabilities can improve firms’ ability to efficiently build and take
advantage of resources (Guo et al., 2018). The need to reduce pressure
on natural resources and improve market performance is a primary
challenge for firms. Few authors have studied the effect of CEPD on
market performance (Pinheiro et al., 2022). Despite increasing interest
in the circular economy, the relationship of CEPD with market perfor­
mance remains unclear and complicated as suggested by Pinheiro et al.
(2022). Thus, more clarity is needed; one reason for non-clarity is the
lack of market demand for sustainable and eco-friendly products
(Aguiar, Mesa, Jugend, Pinheiro, & Fiorini, 2021). Although in extant
literature, Guo et al. (2018) reveal that dynamic marketing capabilities
are crucial to enhance market performance, little is known about how
both industry 4.0 enabled dynamic marketing capabilities and DMCs can
help in improving market performance in the context of business-to-
business (B2B) with the help of SHRM and CEPD. However, some au­
thors (e.g. Khan, Razzaq, Yu, & Miller, 2021; Pinheiro et al., 2022)
explored blockchain and industry 4.0 relations with CEPD, respectively.
Therefore, our study aims to address the following research objectives:
RO1. To investigate the effect of sustainable human resource man­
agement on industry 4.0-enabled dynamic marketing capability.
RO2. To investigate the effect of SHRM and industry 4.0 enabled
dynamic marketing capability on circular product design strategies.
RO3. To investigate the mediating effect of circular product design
on the relationship of SHRM and IDMC with market performance.
Our study contributes to both theoretical and practical literature.
Research based on the theoretical views of dynamic capabilities makes a
valuable contribution to human resources, marketing capabilities and
circular economy literature by advancing our understanding of the
complicated linkages among these dynamic capabilities of organiza­
tional resources. Earlier studies focus on the relationship of big data
analytic capability (BDAC) with CE (e.g. Awan, Shamim, et al., 2021;
Kristoffersen, Mikalef, Blomsma, & Li, 2021; Yu, Khan, & Umar, 2022);
green human resource management with CE (Obeidat, Abdalla, & Al
Bakri, 2023), CEPD with market performance (MPER) (Pinheiro et al.
(2022) and DMC with market performance (Guo et al., 2018; Hossain,
Agnihotri, Rushan, Rahman, & Sumi, 2022; Liang, Li, Zhang, Nolan, &
Chen, 2022;). Our study will significantly address the knowledge gap on
how IDMC and SHRM can support CEPD to enhance MPER in this era of
industry 4.0 and sustainability in B2B manufacturing firms.
Overall, these theoretical contributions shed new light and enhance
our awareness of current B2B marketing practices and performance. In
practice, managers of struggling B2B manufacturing firms will realize
the fundamental process of SHRM and IDMC from the research out­
comes. More particularly, managers will learn how to take actions on
SHRM and IDMC and then sync these with CEPD strategies to develop
pathways for market performance. In addition to this, by utilizing these
research findings, managers will be able to link sustainable development
goals (SDGs) 3, 5, 8, 9, 10, 12, 13 in their business processes while also
improving market performance.
2. Theoretical and literature background
2.1. Dynamic capability view (DCV)
Resources need to be enriched when faced with reinvention or
transformation to continue and safeguard their effectiveness. The aim is
to place competitors in a follower and defensive mode of business in the
market. Thus, it is clear that mere occupancy of resources will not result
in long term success for firms; instead, firms must utilize the capabilities
of these resources by financing both infrastructure and human resources
to attain competitive advantage (Auh & Menguc, 2009). Scholars also
debate that it is not enough to have particular resources and capabilities;
firms need dynamic capabilities (DCs) of their resources (Wu, 2010).
Some scholars recognize DCs as a company’s ability to combine, develop
and reconfigure both its resources and internal and external
K. Nayal et al.
competencies to attain sustainable competitive advantages (e.g. Teece,
2007; Winter, 2003). Other scholars describe these as routines or pro­
cesses (Barreto, 2010). For example, Eisenhardt and Martin (2000)
explain these DCs as processes that utilize other resources or processes to
reconstruct their resource bases, and whose nature changes with the rate
of market dynamics. Dynamic capabilities are also part of an organiza­
tion’s resource base, indicating that DCs can create, reform, or extend
other DCs. “DCs can be divided into three capacities: 1. To sense and
shape threats and opportunities, 2. To seize opportunities and 3. To
maintain competitiveness through combining, protecting and
enhancing, and when required reconfiguring, the internal and external
assets of the enterprises” (Teece, 2007). Presently, the unpredictable
problems ordained by the environment are testing companies, forcing
them to make use of their internal and external competencies to face a
range of challenges (Wamba et al., 2017). Industry 4.0 enabled dynamic
marketing capability, SHRM and CEPD can be considered as DCs from a
dynamic capability view based on the arguments provided by Teece,
Pisano, and Shuen (1997) and Helfat et al. (2009). CEPD, SHRM and
industry 4.0 enabled dynamic marketing capability under DCV can assist
an organization to address the CE and sustainable challenges in the era
of industry 4.0 to further enhance its market performance (Guo et al.,
2018; Gupta et al., 2020; Kumar & Bhatia, 2021; Pinheiro et al., 2022).
Industry 4.0 technologies can assist firms in responding more quickly
to a changing environment (Gupta et al., 2020) by collecting, trans­
forming, sharing, and analysing information that leads to enhancement
in decision-making effectiveness (Bag, Gupta, & Luo, 2020; Chan,
Denford, & Jin, 2016; Yang, Fu, & Zhang, 2021). The crux of dynamic
marketing capability (DMC) is based on the idea that an organization
can speedily adjust and change its internal resources configuration to
coordinate marketing management processes to cope with market de­
mand after receiving clear and instant updates on market changes
(Morgan, Katsikeas, & Vorhies, 2012). The DMC is non-imitable as it
takes time to develop because it is linked to customer linking capability.
Customers take their time to develop their trust on brand and product as
they develop trust only after repeated transactions (Lin, Sanders, Sun,
Shipton, & Mooi, 2016). Industry 4.0 enabled DMC can also be included
in higher order DCs. They have the ability to convert, reconstruct and
reshape current resources and capabilities through their utilization and
exploitation (Jayashree, Reza, Malarvizhi, & Mohiuddin, 2021) and can
also develop advanced dynamic capabilities (Felsberger, Qaiser,
Choudhary, & Reiner, 2022). HRM is identified with high order DCs as
their functions are based on cooperative learning (Fainshmidt & Frazier,
2017; Garavan, Shanahan, Carbery, & Watson, 2016; Teece & Pisano,
1994). HRM practices permit workers to explore, aggregate and use
knowledge and experience to develop novel concepts and explore new
opportunities (Fainshmidt & Frazier, 2017). This further supports the
accumulation, renewal and rearrangement of resource bases and gen­
eration of DCs (Chan et al., 2016; Garavan et al., 2016; Gutierrez-
Gutierrez, Barrales-Molina, & Kaynak, 2018). Therefore, SHRM is
considered as DCs as it is comprised of practices that utilize other re­
sources or processes to recreate their resource bases, and nature of
SHRM also changes with the rate sustainability needs of market envi­
ronment. Bari, Chimhundu, and Chan (2022) argue that firms must
recognize sustainability and green supply chain management concepts
as DCs in order to identify and seize new opportunities, as well as to
rearrange and transform the resource base in line with market dynamics.
CEPD can also be considered as a DC of an organization as it is needed to
adapt to market and environment changes. Pinheiro et al. (2022) also
conclude that it is a result of industry 4.0 and stakeholder pressure.
CEPD can be considered as a higher order DC as it can affect the envi­
ronment through a productive learning process to capture, manage and
integrate new knowledge into a firm’s processes (Eisenhardt & Martin,
2000; Gutierrez-Gutierrez et al., 2018; Loureiro, Ferreira, & Simões,
2021; Schilke, 2014; Teece et al., 1997).
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Industrial Marketing Management 115 (2023) 86–98
2.2. Sustainable human resource management (SHRM)
SHRM is defined as adopting human resource management (HRM)
practices that promote sustainable performance with an outside and
inside impact on the company in the long term while limiting unin­
tended negative effects and feedback (Ehnert, Parsa, Roper, Wagner, &
Muller-Camen, 2016). This is a more comprehensive business strategy
and involves more than just environmental benefits. Numerous human
resource (HR) practices exist connected to SHRM; these include work
roles, well-being, empowerment, training, participation, etc. (Sharma,
Luthra, Joshi, & Kumar, 2022). The SHRM concept is gaining attention
from researchers because of its benefits. It benefits organizations, soci­
ety, people, and the environment (Westerman, Rao, Vanka, & Gupta,
2020). Recent research identifies the critical role of human resource
management (HRM) systems in sustainable transformation. It empha­
sizes that organizations who develop their corporate sustainability, at
some point also need to invest more in developing SHRM (Guerci,
Decramer, Van Waeyenberg, & Aust, 2019). The measures are taken
from the conceptualization of SHRM’s dimensions by Järlström, Saru,
and Vanhala (2018). SHRM integrates value-added HRM practices to
attain a perfect fit with organizational and individual requirements
(Garg & Punia, 2017). SHRM includes the adoption of HRM strategies
and actions that enable firms to attain economic, environmental and
social goals that make both an internal and external impact in the long
term. In spite of much research on SHRM, there is still discord about its
conceptual items (Macke & Genari, 2019) and scholars in this area have
not yet reached agreement on the conceptual definition (Wikhamn,
2019). Mostly in literature authors have included social (consisting
justice, equality and transparent HR practices) (Järlström et al., 2018)
and economical dimensions under SHRM but missed evironmental
dimension.
2.3. Industry 4.0 enabled dynamic marketing capability (IDMC)
The concept of dynamic marketing capabilities originated from dy­
namic capabilities theory (Teece et al., 1997). Dynamic capabilities
denote an organization’s capacity to generate new products and pro­
cesses that can respond to varying market situations (Helfat, 1997).
DMCs are a subset of dynamic capabilities (DC) (Bruni & Verona, 2009)
focusing on customer value (Fang & Zou, 2009). DMC uses market
knowledge as input (Menguc & Auh, 2006); it acts as a means to acquire
market knowledge (Bruni & Verona, 2009), and it circulates market
knowledge within the firm (Fang & Zou, 2009). Fang and Zou (2009)
describe DMC as the efficiency and responsiveness of cross-functional
business practices for generating and delivering consumer value in
response to changes in market conditions. DMC has the ability to alter its
marketing actions to face changing market situations (Day, 2011).
Hoque, Nath, Ahammad, Tzokas, and Yip (2022) show that DMC is a
second-order construct including four components: proactive market
orientation, brand management capability, new product development
capability, and customer relationship management capability. Falasca,
Zhang, Conchar, and Li (2017) reveal two essential features that a
business process requires to have in order to be categorized as a DMC:
the ability to absorb and utilize knowledge and coordinate cross-
functional areas, leading to better resource utilization.
The evidence from literature on the role of industry 4.0 technologies
directly or indirectly supporting DMC is mixed. The concept of industry
4.0 enabled dynamic market capabilities is narrowly found to be sup­
ported by various studies in current literature. These include market
analytics capabilities relation with DMC’s components moderated by AI
(Hossain et al., 2022) and information technology support for customer
relationship management (Wang, Hu, & Hu, 2013). DMCs such as
networking, market orientation, market adaptation and innovation
(Ortiz, García, Gardó, & Vivas, 2021) can be supported by information
technologies enabling customer learning (Haq, Asadullah, & Manzoor,
2022). BDA capabilities and business intelligence and analytics found to
K. Nayal et al.
support data driven insight and big data decision-making quality (Awan,
Shamim, et al., 2021). The role of AI highlighted by Mikalef, Conboy,
and Krogstie (2021) to manage B2B marketing activities in dynamic and
uncertain environments facilitated by dynamic capabilities also supports
industry 4.0 enabled dynamic marketing capability. Baabdullah, Alal­
wan, Slade, Raman, and Khatatneh (2021) found the significant role of
AI practices in supporting business customer engagement and service
experience, which are also measures of dynamic marketing capability.
Industry 4.0 technologies such as artificial intelligence (AI), big data,
cloud, internet-of-things (IoT), and analytics play a significant role in
customer relationship management (Chatterjee, Chaudhuri, & Vrontis,
2022) and predicting customer needs and product customization (e.g. de
Jong, de Ruyter, Keeling, Polyakova, & Ringberg, 2021; de Sousa Jab­
bour, Jabbour, Foropon, & Godinho Filho, 2018; Libai et al., 2020).
These technologies collect and analyze real-time data, thus providing
valuable preliminary information to companies. Therefore, promoting
control of operations, based on the changes in market demand (Moeuf,
Pellerin, Lamouri, Tamayo-Giraldo, & Barbaray, 2018) can further
support acquisition of dynamic marketing capabilities leading to emer­
gence of industry 4.0 enabled dynamic marketing capability.
2.4. Circular product design strategies (CEPD)
CEPD originates from the circular models practised in design and
NPD activities at the micro-level of CE (Lüdeke-Freund, 2020). CEPD
focuses on three factors that differentiate it from the other design ap­
proaches of sustainability: value, quality of the circular products or
materials, and the use of closed-loop business models (Sumter, de
Koning, Bakker, & Balkenende, 2021). CEPD aims to sustain product
value as long as possible, focusing on design methods that help extend
the workable life of products, materials and components, either through
easy maintenance or by ensuring durability and reliability (Den Hol­
lander et al., 2017). To achieve this aim, the CEPD approach recom­
mends three basic looping strategies: narrowing, slowing, and closing
loops (Bocken, De Pauw, Bakker, & Van Der Grinten, 2016). With regard
to these looping strategies, CEPD is considered more complicated than
conventional NPD (Subramanian, Gunasekaran, Wu, & Shen, 2019). The
purpose of narrowing is to use resources at a minimum level within
production. Slowing seeks to design products with long lifecycles;
related processes aim to use and reuse products and materials for
extended use and reuse. Closing is focused on establishing continuous
product flows in a business environment from the end of the cycle to
after use and production (Bocken et al., 2016). In CEPD, product de­
signers consider circularity aspects in earlier phases of NPD by ana­
lysing, recycling, repairing, remanufacturing and examining the
potential of product sharing during the product lifecycle (Jabbour,
Fiorini, et al., 2020). Den Hollander et al. (2017) and Sinclair, Sheldrick,
Moreno, and Dewberry (2018) argue that the aim of CEPD is not only to
sustain the physical but also the emotional durability of products in
order to ensure that they can be used and reused by various customers in
multiple cycles.
2.5. Market performance (MPER)
Vesal, Siahtiri, and O’Cass (2021) define market performance as the
degree to which a company is ahead of its key competitors in terms of
market share, sales growth, profitability, and return on sales. Market
performance indicates a firm’s ability to penetrate new markets more
quickly than its rivals, launch new products or services more regularly,
have a higher success rate for its new products and services and maintain
a higher market share (Raguseo & Vitari, 2018). Firms are interested in
focusing on market performance to increase profitability (Gupta et al.,
2020). Literature defines performance using various terms such as effi­
ciency, productivity, equity, and effectiveness (Haytko, 1994). There­
fore, the literature defining measures of performance is more
complicated. However, performance is commonly measured in two
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Industrial Marketing Management 115 (2023) 86–98
types of activities: actual behaviour and outcomes (Anderson & Oliver,
1987). Outcomes indicate the accompalished results. The out­
comes’measures are more commonly used in empirical research and are
more popular among practitioners since information about outcomes is
mostly quickly available. Thus, our research model utilizes outcome-
based measures of market performance (Daugherty, Chen, & Ferrin,
2011).
3. Development of hypotheses
3.1. Sustainable human resource management (SHRM) and industry 4.0-
enabled dynamic marketing capabilities
Human resource (HR) development and management positively
impact customer focus and satisfaction (Parast & Golmohammadi,
2019). Employee empowerment and favourable working conditions in­
crease motivation, hard work commitment and responsibility of them
towards organizations thus completing task on time. The employee
satisfaction is likely to exhibit helping behaviours of employees towards
customers (Cho & Choi, 2021). In performance appraisal and rewards,
the required competencies and skills for customer management also
identified thus related developmental support is provided. In group
meeting the problems related to customers can be discussed and solved
by improving product and service (Lin et al., 2016). Extensive training in
an organization increases the intrinsic satisfaction of utilizing abilities,
enhances a feeling of accomplishment, encourages trying other methods
of doing a job, and develops a freedom to use the personal judgment of
the employee. Intrinsic job satisfaction supports deep acting and expe­
riencing the emotions needed to show to consumers. Deep acting en­
hances customer satisfaction, further supporting customer loyalty and
willingness to recommend Chen and Chi (2021). These all benefits of
SHRM can improve service and product quality to further improve brand
image and relationships with customers.
Some literature explores the relation between SHRM with organi­
zational knowledge sharing (Almarzooqi, Khan, & Khalid, 2019); the
human resource and IT relation with supplier learning, customer
learning and internal learning (Haq et al., 2022); human factors with
industry 4.0 (Kumar & Bhatia, 2021) and supportive HRM with
customer linking capability (Lin et al., 2016). But the research on effect
of SHRM on IDMC is lacking in literature. Research on DMC describes it
as the skill of an organization to utilize available resources to perform
marketing activities and achieve marketing goals (Morgan et al., 2012).
The dynamism of the current business environment, due to the preva­
lence of industry 4.0 and the need to achieve SDGs, highlights the gap in
the role of SHRM in developing industry 4.0 enabled DMC.
H1. Sustainable human resource management positively influences in­
dustry 4.0-enabled dynamic marketing capabilities.
3.2. Industry 4.0-enabled dynamic marketing capability and circular
product design
Garai and Sarkar (2022) state that consumers play a significant role
in the growing awareness of green practices embraced by firms in their
strategic and operational plans. From this aspect, it can be concluded
that the complexity of CEPD demands the participation of more stake­
holders in a collaborative design mechanism. CEPD becomes more data-
driven to estimate the environmental impact of products and monitor
lifecycles (Dokter, Thuvander, & Rahe, 2021). Industry 4.0 technologies
can provide data driven insights for efficient management of resources
through information sharing and thus improve the effectiveness of
decision-making related to product quality, availability and demand
(Awan, Shamim, et al., 2021; Stekelorum, Laguir, Lai, Gupta, & Kumar,
2021). Industry 4.0, such as big data analytics capability combined with
IoT and BLCT, has the potential to manage product and information
flows very efficiently. Achieving and managing circular flows is realized
K. Nayal et al.
by increasing life cycles of products and helping in recycling and reusing
through real time tracking and tracing. This also improves relationships
with consumers and suppliers (Khan et al., 2021; Kristoffersen et al.,
2021).
Harmonization between the design of circular products and the
business model is essential for successful transformation (Dokter et al.,
2021). However, there is a lack of research on the relationship between
dynamic marketing capability and circular product design; only a few
researchers have studied the relationship of industry 4.0 technologies or
their capabilities with CE practices. For example, Awan, Shamim, et al.
(2021) and Stekelorum et al. (2021) identify a positive effect of big data
capabilities on circular economy performance and CE practices imple­
mentation, respectively. Kristoffersen et al. (2021) suggest a positive
relationship of business analytics capability with CE implementation.
The positive effect of industry 4.0 (Pinheiro et al., 2022) and BLCT
(Khan et al., 2021) on CE practices is observed in current literature.
Additionally, Industry 4.0 technologies positively support supply chain
capability that further promotes CE practices (Yu et al., 2022).
H2. Industry 4.0-enabled dynamic marketing capability positively in­
fluences circular product design (H2).
3.3. Sustainable human resource management and Circular product
design (H3)
The role of employees in transitioning to a more circular business is
highlighted (Veleva, Bodkin, & Todorova, 2017). To achieve produc­
tivity and sustainable market competitiveness, the skills and compe­
tencies of employees are considered to be tangible strategic resources
(Mousavi, Bossink, & van Vliet, 2018). Investment and acquisition of
skills and competencies increase the efficiency and effectiveness of in­
dividuals in innovations thus creating value in terms of profitability to
the organization. These traits make firms dynamically capable of
applying sustainable innovation practices such as CE (Khan, Daddi, &
Iraldo, 2020). Good leadership positively influences organizational
culture; this in turn supports implementing CE practices. However, skills
and competencies alone are not enough to impact CE practices
(Chowdhury et al., 2022). Remanufacturing companies engaged in
designing and innovating products that last longer need specific skills
training and capability-building programs to promote CE (Bourguignon,
2016). Thus, human resources are essential in establishing, redesigning,
adapting, and dispersing environmental practices within firms
(Chowdhury et al., 2022).
Much research undertaken by scholars lacks literature on the rela­
tionship between SHRM and CEPD. However, Jabbour, Jugend, de
Sousa Jabbour, Gunasekaran, and Latan (2015) explored the relation of
human or organizational aspects with green product development and
(Obeidat et al., 2023) explored green human resource management with
CE. Sustainable HRM can be a part of HRM models focused on strategic
HRM; green human resource management is an example of this (Guerci
et al., 2019). Some green human resource management practices, such
as recruiting and involving, significantly and positively affect the cir­
cular economy in organizations. However, other types of green human
resource management practices, such as attracting and selecting,
training, appraisals and rewarding, are ineffective in influencing CE
(Marrucci, Daddi, & Iraldo, 2021). Therefore, for more clarity on rela­
tionship between HRM and CE, we propose a relationship between HRM
practices with CEPD to get more clarity in line with the sustainable goals
of B2B manufacturing firms.
H3. Sustainable human resource management practices positively influence
circular product design.
3.4. Circular product design and market performance (H4)
A large amount of literature on circular economy and performance
(e.g., Dey et al., 2022; Farooque et al., 2022; Paul, Islam, Mondal, &
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Industrial Marketing Management 115 (2023) 86–98
Rakshit, 2022; Yu et al., 2022) can support the relationship between
CEPD and market performance. However, these authors have largely
focussed on relationship of CE practices with economic or financial
performance. CE practices can enhance some firms’ revenue and market
share as they can assist them in advertising their products and being
more competitive in the global market (Raut et al., 2019). Including
ecolabels can also contribute to market demands for circular products
(Marrucci et al., 2021). However, many authors observe market chal­
lenges involving CEPD, such as consumer behaviour (Holtström, Bjel­
lerup, & Eriksson, 2019) and cost of market entry (Bech et al., 2019).
The economic viability of recycling is questioned due to various
reasons first, the low economic return of value recovery decisions.
Second, the difficulty in convincing customers who are not willing to
share and buy reused, remanufactured or recycled products. Third,
justifying higher prices of circular products than those products which
are prepared using unused raw materials (Holtström et al., 2019; Sel­
vefors et al., 2019). Pinheiro et al. (2022) show the positive effect of
CEPD on the market performance of firms in the electric-electronic and
equipment sector. With market share benefits and challenges identified,
more clarification on the influence of CEPD on market performance is
needed. Fig. 1. shows the proposed theoretical framework of our study.
H4. Circular product design positively influences the market performance.
4. Methodology
4.1. Questionnaire development
We apply a two-stage measurement-development process to choose
the measures of selected variables for the research model. Firstly, we
perform a literature review to recognize current measures of variables
studied or proposed by previous authors. Secondly, we contact a group
of experts consisting of academicians who have more than a decade of
experience in the education of human resource management, marketing,
and techno-managerial applications; we also invite industry pro­
fessionals with more than five years of experience in marketing and
sales, circular product design, human resource managerial roles and
information management. Experts are contacted to finalize the items
and conceptual model. Extracted from relevant literature, experts are
provided with 29 items of 4 constructs.
The most suitable items of variables (as shown in Annexure A
Table A1) are then developed into a survey questionnaire consisting of
5-point Likert scale questions. This is sent to the same experts for sug­
gestions on clarity, ease of understanding and simplicity of single barred
questions to modify and finalize the questionnaire. After this, the
questionnaire is pretested with the help of 10 experts and 40 new re­
spondents from industry. The reliability and normality of the received
responses are found to be satisfactory. After this, we move on to the
second and final phase of sampling and data collection.
4.2. Data collection
In this phase, the survey is circulated to 1200 employees through
mail having rich knowledge and experience in various managerial areas,
especially about the issues being explored. These employees work in 310
Indian B2B manufacturing organizations that use technology in their
operations. We found the list of manufacturing SMEs from the Centre for
Monitoring Indian economy (CMIE) database and contact details
through linkedin, google and email. As the answers to survey’s questions
were mostly objective, a web-based survey form is circulated via email
to avoid potential bias from the interviewer (Jadhav, Orr, & Malik,
2019). We opted for manufacturing firms due to this sector’s significant
contribution to economic growth and its simultaneous creation of crit­
ical environmental challenges such as resource depletion and pollution
(Vesal et al., 2021). These organizations have been integrating Industry
4.0 technologies into their marketing operations for over five years,
K. Nayal et al.
Fig. 1. Proposed theoretical framework.
acknowledging the time required for developing robust marketing ca­
pabilities (Mu et al., 2018). Our data collection was collected in the year
2022, spanning from August to October, employing an online ques­
tionnaire aimed at respondents across various roles within
manufacturing firms. Respondents were allotted a three-month period to
provide their input, and a reminder was sent after two months.
Following the evaluation of 493 completed responses, a total of 424
responses were collected, yielding a response rate of 35.33%. Therefore,
the sample size is comprised of 424 respondents from personnel in the
manufacturing industry, including data scientists, senior research sci­
entists, online presence managers, chief information managers, a vice
president of digital strategy, IT managers, regional marketing managers,
sales and marketing executives, a technical support manager and
product managers from each distinct business group of the different
sectors’ industrial companies. The characteristics of the sample are
suitable for performing the final analysis of this research. Details are
shown in Annexure A, Table A2.
4.3. Non response bias and common method bias
Considering the punctual and on-time response in data collection due
to the large initial sampling, non-response bias is not a big problem in
this research study. In addition to this, we have also assured the re­
spondents of confidentiality of the data. Repondents were kept anony­
mous to each other and also no differences in data were found in terms of
employment level of the respondents. Each informant answered ques­
tions about dynamic marketing capability, sustainable human resource
management practices, CEPD strategies in their company, and market
performance. To demonstrate the data’s representativeness, we assessed
potential non-response bias (NRB) by examining significant differences
between responses obtained early and those acquired later. Based on the
results, we identified no significant distinctions between early and late
responses, leading us to conclude that the findings remain unaffected by
non-response bias.
A preliminary test is performed to address the normality of data,
since the response rate of our collected data is <50%. One sample
Kolmogorov-Smirov (K-S) test is performed to test the normality of
received data (as shown in Annexure A, Table A3). The average
parameter mean and standard deviation are found to be significant as
the asymptomatic significance value is <0.05. We also check for any
issue of common method bias (CMB). Complete removal of CMB is
impossible in single informant surveyed data (Kumar, Raut, Mangla,
Ferraris, & Choubey, 2022). Complete removal of CMB is impossible in
single informant surveyed data. For this, we have already taken steps in
questionnaire design and end data collection. Firstly, the items of in­
dependent variables are measured prior to the dependent variables
(Kumar & Bhatia, 2021). Secondly, in the questionnaire design, we
encourage potential respondents to anonymize their respective answers,
ensuring them that we use these answers only for research.
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Industrial Marketing Management 115 (2023) 86–98
Additionally, respondents are assured that there is no specific right
answer to each question and informed that they need to answer each
question based on their knowledge rather than sentiments. After data
collection, we follow the method of Harman’s single-factor test (Nayal,
Raut, Queiroz, & Priyadarshinee, 2023; Nayal, Raut, Yadav, Priya­
darshinee, & Narkhede, 2022; Podsakoff, Mackenzie, & Lee, 2003). for
CMB. All the model items are not merged into one single factor; the
highest eigenvalue factor explains 36.55% of the total variance.
Considering this fulfilment of the condition, we confirm that common
method bias is less likely to disturb our findings and is acceptable in this
research study.
5. Data analysis and findings
5.1. Reliability and validity
To check the suitability of data, we perform KMO and Bartlett’s tests.
KMO value of 0.952 (> 0.6) and significant Bartlett’s test at p < 0.0001
level (acceptable <0.05), shows suitability for factor analysis. Firstly,
reliability and validity are examined. Table A4 and Table A5 (in
Annexure A) show the measurement model’s composite reliability and
validity results. We perform exploratory factor analysis (EFA) to identify
the basic constructs underlying indicators of our model with Promax
rotation (Gorsuch, 1988). To extract the dimensions of our variables in a
model, we apply three conditions (1) excluding items with a loading
<0.4; (2) items with cross loadings onto two (3) or three. To check the
reliability of measured items, this study utilizes Cronbach’s α value
which is used for the scale composed of various items under one vari­
able. The results of reliability analysis show an acceptable level of in­
ternal consistency for factors ranging from 0.904 to 0.975. The values of
Cronbach’s α for SHRM (0.975), IDMC (0.904), CEPD (0.973), and
MPER (0.943) are all found to be >0.7. After data reliability and factor
validation performed in EFA, we extract four factors with 23 items.
Next, confirmatory factor analysis (CFA) of all the factors and mea­
surement variables of the research model is applied using AMOS v21; the
validity of these factors and variables is checked. As an outcome of the
CFA, the values of “GFI =0.960”, “IFI = 1.00”, “CFI = 1.00” (>0.9), “TLI
= 1.00”, and “RMSEA = 0.001” (< 0.05), of the factors of the research
model are found to be acceptable. The Chi-square value (CMIN/DoF) is
0.834 (< 3). Additionally, the factor loadings of all items are >0.6. Thus,
the convergent validity is confirmed. The values of composite reliability
(CR) and average variance extracted (AVE) are determined for all fac­
tors. The AVE values higher than 0.5 and CR values higher than 0.7 for
all factors also confirm the convergent validity of all measurement
variables (see Annexure A, Table A4).
Discriminant validity can be examined based on the condition that
the square root of average variance extracted (AVE) is higher than the
factor correlations (Hair, Black, Babin, Anderson, & Tatham, 2006). To
check the discriminant validity of research constructs, we determine the
K. Nayal et al. Industrial Marketing Management 115 (2023) 86–98

correlation values among the measurement variables. We find that the production and new technology (Haq et al., 2022). Supportive HRM
square root of AVE is greater than the correlation coefficient. By facilitates the ability of a firm to seize the dynamic consumer needs and
comparing the values of the square root of AVE and the correlation adjust their products and services to outweigh the negative impacts of
coefficient from Annexure A, Table A5, we find that our research model market dynamism (Lin et al., 2016). Therefore, SHRM promotes in­
satisfies the conditions for discriminant validity. dustry 4.0 enabled dynamic marketing capability of an organization can
be supported by the argument that ease of information sharing between
consumer and organizations and within organization facilitated by
5.2. Structural model
SHRM lead to improved IDMC.
According to the findings in line with RO2, both SHRM and IDMC
In order to examine the hypothesized relationships among the vari­
positively influence CEPD. The existing literature lacks in both empirical
ables, we utilize structural equation modeling (SEM) using AMOS v21.
and theoretical research that discussed IDMC relation with CEPD.
The SEM path diagram is shown is Annexure A, Fig. A1. The model
However, scholars have found positive relation of big data related
fitness value (CMIN/DoF), also known as the Chi-square value, is found
capability such as business analytics capability, BDAC etc. with CE
to be 1.49; this is <3, denoting a best fit model. The values of 0.90 or
(Awan, Shamim, et al., 2021; Kristoffersen et al., 2021; Stekelorum
above for GFI and CFI and values <0.08 for RMSEA indicate a suitable fit
et al., 2021). Moreover, literature has also found positive effect of In­
of the hypothesized model and data (Hair et al., 2006). Thus, goodness-
dustry 4.0 with CE (Yu et al., 2022), BLCT with CE practices (Khan et al.,
of-fit indexes (0.963), CFI (0.989) and RMSEA (0.034) of SEM analysis
2021) and industry 4.0 with circular product design (Pinheiro et al.,
for the research model are acceptable. The results for the research model
2022). IDMC that can also be achieved through BDAC, business analytics
are presented in Fig. A1 (Annexure A) and Table 1. Table 1 shows the
capability or BDA based on DCV can help in achieving circular flows as
acceptance of all four hypotheses, indicating that all p values are <0.05;
they have the potential to combine material and information flows
this means that there is a 95% possibility that there is a positive rela­
needed to enable circular flows. These capabilities can support firms in
tionship between the variables of the proposed research model. Based on
adjusting resources with long term and short-term strategies as per the
these results, all hypotheses are accepted. IDMC positively affects SHRM
market environment thus improvement in circulation of resources
(β = 0.159 at p = 0.001); IDMC (β = 0.0.272 at p = 0.001) and SHRM (β
(Awan, Sroufe, & Shahbaz, 2021; Gupta, Chen, Hazen, Kaur, & Gonza­
= 0.575 at p = 0.001) both positively affect CEPD; lastly, CEPD posi­
lez, 2019). Focal firms can take best course of action related to repur­
tively affects market performance (β = 0.237 at p = 0.001). Mediation
posing products based on CE principles such as reducing, reliability,
effect is also checked by using AMOS v21 in the forms of full mediation,
standardization, fulfilling demand and on time availability through
partial mediation and no mediation. The results of mediation analysis
analysing information about products’ availability and market needs.
are shown in Annexure A, Table A6. CEPD fully mediates the relation­
Suppliers can take improved decisions related to products quality and
ship of SHRM with MPER (β = 0.237 for indirect effect at p = 0.001). In
thus improve product’s life cycle (Edwin Cheng et al., 2022). The real
addition to this, CEPD partially mediates the relationship of IDMC with
time traceability, rich and accurate data all supports in solving chal­
market performance.
lenges of CEPD implementation such as circular purchasing and circular
design (de Sousa Jabbour, Jabbour, Godinho Filho, & Roubaud, 2018;
6. Discussion of findings
Kouhizadeh & Sarkis, 2018). The traceability and transparency sup­
ported by industry 4.0 can support CE by tracing products after con­
The findings of empirical analysis highlighted in previous section
sumption also to recover parts (Jabbour, Sousa Jabbour, Sarkis, &
address the research objectives by showing the possible relationship
Godinho Filho, 2019). Keeping high level of reciprocity, mutual trust
among SHRM, IDMC, CEPD and MP. By addressing the RO1 we found
and respect, close interaction and friendship with customers support
that SHRM positively influences industry 4.0 enabled dynamic market­
ecological design (Yu, Zhang, Cao, & Kazancoglu, 2021). Thus, devel­
ing capability in B2B SMEs. Existing empirical literature found a positive
oping DMC enabled by industry 4.0 technologies can also support CEPD
effect of supportive HRM with customer linking capability (Lin et al.,
as developing close relationships with customers as per the market dy­
2016), human capital on market-sensing capability (Elsharnouby &
namics inclusively indicates IDMC.
Elbanna, 2021) and human resource and information technology on
The effect of SHRM on CEPD also remains unexplored in literature.
supplier, internal and customer learning (Haq et al., 2022). However,
Although Obeidat et al. (2023) showed a positive relation of green
(Kumar & Bhatia, 2021) found non-significant effect of the human factor
human resource management with CE. Jabbour et al., 2015) found non-
on industry 4.0 adoption. SHRM positively affect employee satisfaction
significant effect of human and organizational aspects on green product
that further improves customer orientation in tourism and hospitality
development. Green human resource management are crucial in
sector (Cho & Choi, 2021). Sustainable human resource management
creating the path for environmentally promotive organization (Ramus &
promotes knowledge sharing thus improving information exchange and
Steger, 2000). Del Giudice, Chierici, Mazzucchelli, and Fiano (2021)
transfer between employees, teams or organizations (Almarzooqi et al.,
provided proofs on the role of HRM to attain successful implementation
2019). Moreover, human resource promotes information exchange of
of CE practices. Previously authors have mostly focussed on green
customer and supplier with organization and also within organizations
human resources for developing green capabilities through hiring new
related to product innovation, product development, functions,
employees that are environmentally trained, providing training on
relevant green topics, reward for green performance, valuing sugges­
Table 1 tions of employees on environmentally related problems. But our focus
Hypotheses testing results: Path coefficients, standard error, t-statistics, and p-
is SHRM that also involves financial and social aspects of sustainability
values.
of human resources. The equality on renumerations, rights, rules,
Path of Estimate Standard Critical P- Accepted/ consideration of individual differences, growth and rewards motivate
hypotheses error ratio value Rejected
them to be more responsible for environmental performance and
H1 IDMC < 0.159 0.044 3.621 *** Accepted behaviour that needs extra efforts. Occupational health and safety,
SHRM valuing their work and opinions, more flexibility in working hours,
H2 CEPD < 0.272 0.061 4.460 *** Accepted
IDMC
leaves and retirement and easily accessible top management also pro­
H3 CEPD < 0.575 0.052 11.084 *** Accepted motes environmental behaviour. These aids of SHRM also add in to
SHRM making the employees hard working, committed, responsible and cre­
H4 MPER < 0.237 0.034 6.928 *** Accepted ative for environmental product design. The proactive decision making
CEPD
of HR mangers by considering long term profitability and totality can

92
K. Nayal et al.
promote socially responsible organizational practices, further support­
ing environmental behaviour. Socially responsible SHRM practices
focused on employee’s well-being led to long term retention of em­
ployees thus saving cost of more investment in training to acquire spe­
cific skills and competencies required for CEPD. Thus, SHRM practices
ultimately support CEPD that is somewhere related to green product
development (González-Benito & González-Benito, 2006).
The RO 3 is fulfilled by studying the mediating role of CEPD between
the relation of SHRM and IDMC with market performance. The effect of
CEPD on market performance is not widely explored in contemporary
literature. However, Pinheiro et al., 2022) found positive relation of
CEPD with MPER. The CE based products’ advertising can be easier in
international marketing also (Raut et al., 2019). But the cost of circular
product can be a challenge for increasing market share because of lower
acceptability by consumers (Kirchherr et al., 2018). Thus, CEPD relation
with market performance remains complicated in literature. Success of
product and firm performance are related because success of individual
short-term products is responsible for managing long term performance
of a firm (Luchs, Swan, & Creusen, 2016). Measures of product success
such as market share, sales and profit are also related to firm perfor­
mance and market performance. Environmental performance as one of
the goals of CE (Li, Ding, & Sun, 2019) can also be achieved through
CEPD strategies. An improved environmental performance assists firm
in building good image thus attain reputation, that could be a source of
market authority because green image leads to enhanced trust and
loyalty of consumers (Li et al., 2019). CEPD can also fulfils the con­
sumers’ expectations as per their current needs of green products thus
increase customer satisfaction, customer loyalty and market acquisition
thus further increasing market share as compared to the competitors.
From the mediation analysis findings, CEPD fully mediates the
relationship between SHRM and market performance. The literature has
not empirically studied this mediation effect. However, Uraon and
Gupta (2020) found that human resource development practices posi­
tively influence market performance. The stakeholders’ pressure and
external pressure as per the market environment nowadays can motivate
firm to implement SHRM practices to successfully implement CEPD.
SHRM plays crucial role in increasing and maintaining employees’
environmental behaviour, commitment, responsibility, hard work and
creativity (Järlström et al., 2018) towards CEPD that demands extra
efforts. CEPD improves market share as advertising is easier and cus­
tomers can be more satisfied and loyal. Additionally, brand reputation
improves thus increasing market performance, so CEPD can indirectly
affect relation of SHRM with MPER. SHRM with CEPD as a mediator is
complementary to the relationship of SHRM with MPER. Therefore,
when CEPD strategies are need of the time that can be fulfilled more
easily with the help of investment and development of SHRM, both in
culmination will ultimately improve market performance.
The second finding from mediation analysis showed that CEPD
partially mediates the IDMC effect on market performance, thus both
direct and indirect effect exists. The available literature lacks in medi­
ation effect of CEPD on influence of IDMC on market performance.
However, some authors have found positive effect of BDPA as resources
and capabilities on MPER (Gupta et al., 2020), industry 4.0 on market
performance (Kumar & Bhatia, 2021) and dynamic marketing capability
on market performance (Guo et al., 2018). The IDMC can be considered
as combination of targeted IT resources supported by novel technologies
that are destined to enable decision support information by utilizing
technical and managerial capabilities to ultimately create business in­
telligence capabilities. These capabilities assist organization in projec­
ting themselves as data driven decision makers thus facilitating rational
and real time decision making to serve market demand. Transparency
and critical business support to the organization strengthen resources to
configure the adaptive capability sufficient to face the dynamic needs
and situations based on market information. BDA capability that is also
connected to IDMC could help organizations gain advantage in terms of
competitors’ performance (Dubey et al., 2020; Mikalef, Boura, Lekakos,
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Industrial Marketing Management 115 (2023) 86–98
& Krogstie, 2020). Industry 4.0 technologies can assist to make decision
making on product development, pricing and forecasting thus fulfilling
customers’ demand in a better way thus increasing sales and market
share (Joshi & Gupta, 2019; Li, Dai, & Cui, 2020). The mediation
analysis showed that IDMC alone is more sufficient to improve market
performance without combining it with CEPD.
The technological integration with the help of industry 4.0 improve
the information flow and assisting in developing products based on
circular design. Customer related capability that is related to main­
taining and developing good relationship with customers plays crucial
role in gaining and exploring insights from the market (Fosso Wamba,
Queiroz, Wu, & Sivarajah, 2020). Therefore, BDA sensing capability that
can support firm to build and nurture relationships with customers can
also pave the way to collaborate on development of services or products
(Fosso Wamba et al., 2020). When we align circular product design
strategies with industry 4.0 enabled marketing capabilities both in
combination would ultimately improve market performance but less
significant than IDMC effect on MPER. In other way, CEPD also increase
the need to develop IDMC to ultimately improve market performance.
The reason can be satisfying dynamic demand of customer more effi­
ciently as per current trend of sustainable and eco-labelled products.
6.1. Theoretical implications
Firstly, this study contributes to existing literature on DMC (e.g. Guo
et al., 2018; Qaiyum & Wang, 2018; Wang et al., 2013) and HRM (e.g.
Kumar & Bhatia, 2021; Lin et al., 2016) by extending these in accor­
dance with industry 4.0 and the sustainability era. Extant literature is
lacking in exploring the role of HRM in developing DMC and also SHRM
for the development of industry 4.0 enabled DMC. However, Kumar and
Bhatia (2021) revealed a positive relation between human factors and
industry 4.0 while Lin et al. (2016) suggest a positive relation of sup­
portive HRM with customer linking capability. Although literature does
not explore deeply into DMC, some authors do examine marketing an­
alytics capability (Hossain et al., 2022), marketing analytics (Liang
et al., 2022) and big data capabilities (Awan, Shamim, et al., 2021).
These technological capabilities can be considered under the dynamic
capability view as argued by Qaiyum and Wang (2018). Thus, inclusion
of IDMC as one variable contributes to dynamic capabilities literature
that includes DMC and dynamic technological capability (Qaiyum &
Wang, 2018).
Secondly, the technological aspect is equally important in the current
scenario of industry 4.0 and sustainability and also to ensure smooth
operations under market uncertainties. Our study shows the positive
role of industry 4.0 enabled dynamic capability in implementing CEPD
strategies in B2B manufacturing firms. Current literature lacks in
exploring the roles of DMC and IDMC in implementing CE practices or
circular product design strategies. Therefore, our finding related to the
IDMC role for implementing CEPD adds to literature on the role of BDA
capability in implementing CE practices (Stekelorum et al., 2021), BDAC
improving CE performance (Awan, Shamim, et al., 2021) as well as the
role of business analytics capability in the implementation of CE prac­
tices (Kristoffersen et al., 2021). In addition, our finding also contributes
significantly to the effect of industry 4.0 technologies on CE practices
including circular design and purchasing (Yu et al., 2021), BLCT on
circular design, circular purchasing, remanufacturing and recycling
(Khan et al., 2021) and industry 4.0 on CEPD (Pinheiro et al., 2022). Our
research is a first to unearth empirical evidence for a positive significant
effect of IDMC on CEPD. We have extended our study from DMC to IDMC
and from CE to CEPD and not limited to this relationship but also with
market performance. From mediation analysis, it is shown that indirect
and direct effect exists for IDMC relations with market performance.
Moreover, IDMC can more positively affect market performance without
presence of CEPD as a mediator (β = 0.06), as compared to the effect of
IDMC on market performance with CEPD as a mediator (β = 0.045).
These mediation analysis findings add literature to Industry 4.0 effect on
K. Nayal et al.
CEPD and then further on MP (Pinheiro et al. (2022), DMC relationship
with market performance (Guo et al. (2018) and industry 4.0 on market
performance (Kumar & Bhatia, 2021).
Thirdly, this study incorporates SHRM, improving our understanding
of human resource management as per the current need. It incorporates
sustainable development goals 3,5,8 and10 to achieve good health and
well-being, gender equality, decent work, economic growth and reduced
inequalities in the workplace. This study also helps in understanding the
role of SHRM practices in achieving circularity in B2B firms through
implementing CEPD strategies. Our study is a pioneer in exploring the
role of SHRM in implementing circular product design strategies in the
context of B2B manufacturing firms. We have extended our study to
SHRM from HRM and CE to CEPD and also not limited to SHRM with
CEPD but also with market performance. Our study also reveals that
SHRM and CEPD, when combined enhance market performance based
on dynamic capability perspective. Mediation analysis findings showed
full mediation effect of CEPD on relationship between SHRM and MPER.
This revelation contributes to the literature on GRHM with circular
performance (Marrucci et al., 2021), HR development practices with
market performance (Uraon & Gupta, 2020) and green human resource
management on CE (Obeidat et al., 2023).
6.2. Managerial implications
6.2.1. Transforming human resource management towards industry 4.0
enabled dynamic marketing capability
Firms need to implement practices for the wellbeing of employees, to
develop their specific skills and competencies to address non-imitable
industry 4.0 enabled dynamic marketing capability and also to sup­
port task completion. It is vital to seize, sense and reconfigure the
continually changing consumer demands. Given the pressures of the
marketplace, managers need to face the development of dynamic mar­
keting capability enabled by industry 4.0. HR managers need to consider
justice and equality for all employees, proactive decision-making for
long-term profitability, employee well-being, and transparent HR prac­
tices aligned to SDG 3, 5, 8 and 10 to enhance and successfully develop
industry 4.0-enabled dynamic marketing capability. Good business
knowledge and high-level skills of employees make it easier for a firm to
identify the dynamically changing needs of consumers for sustainable
products and provide solutions for product availability. Management
must ensure that there is no bias in rewards and incentives, there is
equality in salaries and remuneration and that employees’ health and
well-being are catered for. These factors increase efficiency of task
completion and productivity while motivating the workforce. This
supports their interactions and relationships with all stakeholders
(manufacturer, suppliers, buyer, customers), encourages a rapid
response to solve consumer problems and boosts coordination both
within and outside the company, ultimately enhancing the brand image.
Sustaining and improving relationships with existing consumers retains
the customer base. With the continuously changing needs of consumers,
positive relationships instil trust. Establishing relationships with new
consumers helps a company to provide better services and products, thus
improving loyalty among potential consumers. SHRM practices also
contribute to retaining skilled and trained employees; this is important
in promoting and developing dynamic marketing capability.
6.2.2. Synching IDMC with CEPD strategies
Our research findings indicate that developing dynamic marketing
capability in alignment with industry 4.0 can help B2B manufacturing
firms in facilitating CEPD strategies. Improved coordination and re­
lationships between suppliers and customers supported by industry 4.0
make it easier for firms to implement CEPD strategies in both the
downstream and upstream supply chain. In presence of IDMC, B2B
players can collaborate efficiently to design circular products and match
circular economy principles (e.g. recycling, upgrading, exchanging) for
used products. Improved communication and coordination among
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Industrial Marketing Management 115 (2023) 86–98
stakeholders and within a firm increase flexibility and efficiency, thus
helping in identifying, customizing and responding rapidly to changing
consumer needs. Availability and accessibility to huge amounts of in­
formation facilitate BDA capability, business analytics capability, mar­
keting analytics and marketing analytics capability (Awan, Shamim,
et al., 2021; Hossain et al., 2022; Kristoffersen et al., 2021; Liang et al.,
2022). Up to date information improves the quality of decision-making
related to logistics, service and products; providing solutions to
customer problems can also be speeded up. Improved material and in­
formation flow, tracking of data, information related to products and
transparency can all be facilitated by BDA, IoT and blockchain. Working
in this way helps in improving relationships with both suppliers and
customers. Good working relationships help in managing circular flows
by extending the use of products and components, as trust in the com­
pany makes it easier to recover, repair, recycle or reuse products. An
improved brand image and better relationships with suppliers and cus­
tomers can assist in sustaining emotional durability to increase use and
reuse of products by various users. Consumers are more confident to
return, remanufacture and recycle products.
6.2.3. Transforming HRM practices for CEPD strategies
Our research outcomes show that transforming HRM practices to
sustainable HRM practices assists in successfully implementing CEPD
strategies in B2B manufacturing firms. HR managers and top manage­
ment need to understand that SHRM can contribute to improved
employee engagement in sustainable management, thus assisting the
adoption of circular practices. Promoting sustainable processes,
knowledge and skills when hiring and training staff increases work
engagement; investing time and money for sustainable training can also
improve circular behaviour at work. As CEPD relies on the new skills of
designers involved in the development of circular products and services,
technological expertise is required e.g. big data, intelligent product
development and additive manufacturing (de Sousa Jabbour et al.,
2019; Yang, Zhou, Yu, & Yu, 2019). Sustainable process training is
useful for the educational development of a team to learn the impor­
tance of sustainable management and gain a positive attitude and pro­
active strategy towards circular practices; awareness is also increased. In
addition, equality in rewards and remuneration when combined with
the well-being, health and safety of employees, motivates staff to work
more efficiently and effectively work on CEPD. Creativity to work on
innovative circular products is also increased. Promoting feedback and
financial, or non-financial compensation, based on employee perfor­
mance can enhance reasoning abilities, commitment and a positive
outlook for CEPD strategies as its implementation requires extra efforts.
Sustainable human resource management can assist in retaining valu­
able employees for a longer time, thus reducing costs that can be better
utilized to develop new circular products.
6.2.4. Pathways of market performance through CEPD, IDMC and SHRM
The mediation findings help B2B firms to learn and think more
strategically. If they want to increase market performance in era of CE
and sustainability, they need to focus on combining CEPD with sus­
tainable human resource management. SHRM practices improve
employee understanding, engagement, motivation and the capability to
develop and implement CEPD strategies for end-to-end business opera­
tions. SHRM also improves employee efficiency and productivity thus
improving quality and service of products. It improves relationships
with stakeholders and makes it easier to promote a close-loop supply
chain. SHRM helps in keeping a trained and skilled workforce, thus
saving overall costs of re-hiring that can be utilized to innovate and
develop more circular products as per consumer demand and also to
improve service and product quality. All of these benefits further assist
in improving customer satisfaction, loyalty among existing consumers,
improving brand image, thus ultimately enhancing market performance.
Where CEPD acts as a catalyst, these strategies help firms in advertising
products as eco-friendly and fulfilling increasing demand for green-
K. Nayal et al.
products, thus being more competitive in the business environment
(Raut et al., 2019). The challenges faced by circular products such as
market reactions to CEPD, consumer behaviour (Holtström et al., 2019),
cost of market entry (Bech et al., 2019), the economic viability of cir­
cular products, convincing customers to buy products that are some­
times higher in price (Holtström et al., 2019; Selvefors et al., 2019) can
be addressed by improving market performance through implementa­
tion of SHRM practices.
However, practitioners can increase market performance more
meaningfully in another way. Focusing solely on developing industry
4.0-enabled dynamic marketing capability as an indirect effect of CEPD
on the relationship between IDMC and market performance is less sig­
nificant. But in the current era of industry 4.0, sustainability and CE,
SHRM and CEPD are equally as important as IDMC. IDMC improve
products and service quality through improved product and material
flow. Relationships among stakeholders also benefit. Improving brand
image and loyalty among consumers increases market share and growth.
Market performance can also be improved through IDMC and the CEPD
path, less significant than the other two paths. Industry 4.0 enabled DMC
improves supplier and customer relationships, material and information
flow, tracking of products and transparency. These all help in improving
implementation of circular practices by making it easier to purchase
environmentally friendly material or products from suppliers. Consumer
circular behaviour post-delivery of products can also be tracked. Suc­
cessful implementation of CEPD strategies improves market perfor­
mance as advertising and sales of eco-labelled products become easier
with the increasing demand of eco-friendly, sustainable or circular
products. Overall, IDMC can also help firms in overcoming challenges
presented by circular products related to overall cost and acceptability
by consumers. Market performance can be further enhanced.
7. Conclusion and limitations
Our research is the first to present empirical evidence on enhancing
market performance through suitable pathways including SHRM, IDMC,
and CEPD factors based on the dynamic capability view. This study is
grounded on three dynamic capabilities namely SHRM, IDMC and CEPD
from the perspective of dynamic capability theory. We analyze primary
survey data from 424 respondents in B2B firms, using SEM for analysis
to investigate our proposed hypotheses. Data is collected only from
those employees who have either worked or are working in firms which
have adopted industry 4.0 for their routines marketing operations for
more than five years. Sustainable human resource management prac­
tices support development of industry 4.0 enabled dynamic marketing
capabilities. SHRM and IDMC both positively influence CEPD strategies.
B2B firms can improve market performance through combined imple­
mentation of SHRM and CEPD and also by combining IDMC and CEPD.
Improving market performance only through application of IDMC is,
however, more significant than the indirect effect of CEPD on relation
between IDMC and market performance. Therefore, our study is a
pioneer for B2B manufacturing firms to understand the mechanisms of
acting upon SDG9 through IDMC; SDG3, 5, 8 and 10 through SHRM and
SDG12 and 13 through CEPD. By doing so, we add knowledge to the
importance of dynamic marketing capability enabled by industry 4.0,
sustainable human resource management in achieving successful
implementation of circular product design strategies. Moreover, we add
knowledge on role of IDMC and SHRM to improve market performance
through CEPD and also role of SHRM to develop IDMC. Hence, this study
can be the pioneer one for those firms which are struggling to sustain the
competitive advantage in dynamic market while also achieving sus­
tainable goals. Overall, this research presents the recent approach of
exploration in B2B manufacturing firm’s technological, financial, envi­
ronmental and social aspects.
Our research provides various opportunities based on our limita­
tions, which researchers can utilize in the future. The study explores new
dimensions of DMC and HRM through IDMC and SHRM respectively. It
95
Industrial Marketing Management 115 (2023) 86–98
targets B2B firms of developing countries that are technologically
advanced and can quickly develop industry 4.0-enabled dynamic mar­
keting capability but who are struggling to fully exploit these dynamic
capabilities. Firstly, it would be interesting to see how sustainable
human resources in non-technical firms are working to complement
dynamic marketing capabilities. Secondly, the demographic limitation
of the survey does not provide generalized findings. In our study, data is
collected from India, a developing country. It would be interesting to
address this gap and compare results by collecting data from developed
countries. We have collected data from the manufacturing industry;
future researchers can include data from service-based B2B firms.
Thirdly, future researchers can investigate the effect of industry 4.0 on
SHRM and dynamic marketing capability, as we have combined the
concept of industry 4.0 into DMC but have not addressed the role of
industry 4.0 for SHRM. Fourthly, the basic nature of this research is
cross-sectional. Thus, future research can study the same model based on
longitudinal or experimental observations during data collection.
Data availability
Data will be made available on request.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://doi.
org/10.1016/j.indmarman.2023.09.010.
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