Circular Economy and Sustainability

https://doi.org/10.1007/s43615-021-00093-2

ORIGINAL PAPER

Stakeholder Influence on Adoption of Circular Economy

Principles: Measuring Implications for Satisfaction
and Green Legitimacy

Charles Baah 1 & Ebenezer Afum 1 & Yaw Agyabeng-Mensah 1 &

Douglas Opoku Agyeman 2

Received: 10 March 2021 / Accepted: 8 July 2021/

# The Author(s), under exclusive licence to Springer Nature Switzerland AG 2021

Abstract
Stakeholder roles in the adoption of circular economy concepts and corresponding
impacts on firms have been crucial for academics and practitioners. However, substantial
research gaps exist in relation to the specific influence of organizational, regulatory and
community stakeholder groups on the adoption of circular economy principles and how
these affect internal and external stakeholder satisfactions and green legitimacy in the
context of an emerging economy. Drawing on the stakeholder and institutional theories,
stakeholder pressures, adoption of circular economy principles, stakeholder satisfaction
and green legitimacy were explored. Using a quantitative approach, the findings showed
that regulatory stakeholders have the most influence on adoption of circular economy
principles, followed by organizational and community stakeholders. In particular, adop-
tion of circular economy principles robustly influenced external stakeholder satisfaction
and green legitimacy while moderately influencing internal stakeholder satisfaction.
These findings serve as a guide for policy making, management decision making and
future research.

Keywords Stakeholder influence . Circular economy principles . Internalandexternal stakeholder

satisfactions . Green legitimacy . PLS-SEM

* Charles Baah
charlieba3@gmail.com

Ebenezer Afum
ebenezerafum@gmail.com

Yaw Agyabeng-Mensah
yawagyabeng830@gmail.com
Douglas Opoku Agyeman
odouglasagyeman@yahoo.com

Extended author information available on the last page of the article

 Circular Economy and Sustainability

Introduction

From the seventeenth century leading up to the twentieth century, industrial nations have been
successful in generating wealth due to linear economy principles [15]. Despite the tremendous
growth, success and development that have been attributed to the linear economy, this model
has shown weaknesses in the present era by imposing enormous strain on natural resources
and the environment [29]. Based on these negative outcomes of the linear economy model,
several scholars have forecasted the breakdown of this model in the immediate future [15, 39].
Specifically, the “single-use” lifestyles of both manufacturers and consumers have basically
made the planet a “take, make, dispose” world as suggested by Esposito et al. [17]. The authors
further indicated that linear economy models are unsustainable primarily because such models
embody one directional method of production where natural resources serve as raw materials,
which become inputs in the production process to create goods which are purchased and
thrown away after a single use. Thus, linear economy models rely significantly on natural
resources to manufacture products, which go to landfills after its life cycle [39]. de Römph and
Cramer [10] further specified that challenges that emanate from resource extraction and
processing, production and consumption and the mechanisms of waste treatment have placed
circular economy high on political agenda and has become stakeholders’ priority.
Esposito et al. [17] and Rincón-Moreno et al. [39] further indicated that with linear
economy principles still in place, humanity risks the threat of running out of natural resources
(e.g. water, energy, food, air) that support human existence and present way of life. These
concerns have warranted diverse bodies both local and international to call for circular
economy models which minimize resources usage and allow enough time for resource
replenishment. According to the non-profit group Forum for the Future, consumption of
resources is 50% faster than their replenishment. As such, internal, external and community
stakeholders among other organizations such as the World Economic Forum and the Ellen
MacArthur Foundation have pioneered researches on circular economy, which is gaining more
attention recently. Circular economy, which has been associated with eco-effectiveness, does
not only aim for environmental friendliness or eco-efficiency as in the case of a linear economy
but also focuses on maximizing resource usage along all stages of a product’s life cycle, from
sourcing to supply chain, to consumption, to the residual broken parts for one function and
transformed back into a new source for another production process. According to Rincón-
Moreno et al. [39] and Esposito et al. [16], these processes that emphasize reducing, reusing,
recycling and recovering of materials in production and consumption tackle issues of low
resource utilization. Moreover, experts at the Ellen MacArthur Foundation and the McKinsey
Center for Business and Environment forecast that circular economy models have the potential
to reduce usage of new materials by 32% within 15 years [16].
Seeing the growing negative impacts of linear models on the globe, stakeholders have
started mounting pressures on the adoption of circular economy principles at the organizational
level [29]. Circular economy studies, which have mostly been centred in Asia and Europe,
indicate that stakeholders are critical players in the adoption and implementation of the
“complex” circular economy principles. Thus, in the case of developed countries, practices
have been initiated to achieve the goal of circular economy, which enhance eco-effectiveness
through making resources viable for the longer term by producing within a closed system, or
circle, where firms reuse by a process of disassembling, recovering and improving, reinforcing
and repurposing used materials. The World Economic Forum [50] specified that circular
economy principles are the way to preserving our current way of life by reducing natural
Circular Economy and Sustainability

resource utilization and allowing the earth ample time to replenish its resources. These circular
economy principles according to the World Economic Forum [50] aim to resolve dwindling
natural and human capital issues. Despite calls by stakeholders and other sustainability bodies
to promote circular economy principles globally, few developing countries have taken initia-
tives to respond to this call [29]. According to Jabbour et al. [29], most studies being centred
and based in Europe, Asia and America raise concerns as to what developing countries that are
heavily dependent on natural resources to fuel economic growth and development are doing on
the issue of enhancing eco-effectiveness. This issue is critical because Baah et al. [4–6] specify
that the world is an interconnected global village where consequences of activities done on one
continent can be felt by another. On this basis, it is important to assess and examine how
stakeholders are putting in efforts in the adoption of circular economic principles especially in
the context of developing countries and emerging economies.
According to Shubham et al. [47], stakeholders are very critical for developmental agenda
due to the powers they wield and their continuous ability to influence firm decisions. Firms
also adhere to stakeholder demands for various reasons ranging from meeting legal obligations
or requirements to the need or desire to achieve legitimacy. No matter the type, size or goals of
a firm, stakeholders both internal and external are crucial pillars of organizational success
seeing the interconnected societies that currently exist [4–6]. Over the years, stakeholders have
been known to be the driving force for diverse firms in the adoption of sustainable practices in
the linear economy [3, 47]. Shubham et al. [47] explained that regulatory stakeholders are the
most potent force in the adoption of green initiatives in most developing economies. Although
there are calls to move beyond just being sustainable (linear economy/eco-efficiency) to
incorporate circular economy principles (eco-effectiveness), there have been few scrutinies
on the roles stakeholders play. Thus, this study stresses on the “stakeholder side” of circular
economy by highlighting stakeholder influences on the adoption of circular economy princi-
ples and how such adoptions influence internal and external stakeholder satisfaction as well as
green legitimacy.
Particularly, emerging or developing economies, which are characterized by the con-
sumption of raw materials to fuel economic growth, the unavailability of sufficient
environmental and social policies, proactive environmental and social practices in addi-
tion to weak sustainable technologies, are now required to adopt circular economic
models which are disruptive as it changes the incumbent model and forces a rethinking
of the many various aspects of production and consumption across the entire production
and consumption chain [4–6, 16, 29]. Although the adoption of circular economy prin-
ciples seems unrealistic and cost-intensive for firms operating in emerging economies,
stakeholders are gradually making inroads in line with influencing firm decisions in
relation to adopting the so-called complex circular economy principles. According to
Jabbour et al. [29], although stakeholders know the huge investment that comes with
circular economy, there is actually no option left in sustaining the earth for future
generations apart from adopting circular economy measures that prolong the availability
of remaining pool of resources to ensure prolonged supply for the growing needs of
humanity while also ensuring environmental preservation. From the above discourse, this
study seeks to empirically detail organizational, regulatory and community stakeholder
influences on the adoption of circular economy principles and how such adoptions
influence internal and external stakeholder satisfaction as well as green legitimacy in
the context of a developing economy faced with resource dependency, lack of sustainable
technologies and sufficient environmental and social policies.
 Circular Economy and Sustainability

This paper is organized as follows. The “Theoretical Framework and Hypothesis Devel-
opment” section exposes the theoretical framework and hypotheses development. The next
sections, “Research Methodology”, “Result” and “Discussion”, reflect research method, result
and discussion that highlight theoretical and managerial implications. The “Conclusion”
section finally exposes conclusions of the study as well as research limitations and future
research recommendations.

Theoretical Framework and Hypothesis Development

Stakeholder Influence

According to Bag et al. [8], governments are initiating policies and structures that aim to
promote circular economy and eco-effectiveness but the critical players that drive change at the
firm level mostly are the firm’s immediate stakeholders. Genovese et al. [23] further suggest
that stakeholders are endorsing and influencing a paradigm shift towards a closed-loop system
where materials at the end of their life cycles are ploughed back into the production-
consumption cycle. On this basis, circular economy principles present the ideal route to
achieve such closed-loop systems and, hence, the pressure from stakeholders on the adoption
of circular economy principles. As indicated by Freeman [19], stakeholders are influenced or
influence the decisions and outcomes of an organization. Clarkson et al. [9] further indicated
that stakeholders are able to influence and are influenced by organizations because of their
invested financial or human capital which allows them rightful interest and significant stakes in
firm operations [33]. Stakeholders, over the years, have diversely been categorized as stipu-
lated by Baah et al. [4–6]. According to Kassinis and Vafeas [30], stakeholders can be
categorized into latent, expectant and definitive stakeholders based on power, legitimacy and
urgency traits. The authors emphasized that stakeholders that have above two of these traits are
critical to firm survival, and as such, organizations are mandated to seek out and provide
answers to their demands.
Additionally, González-Benito and González-Benito [24] also asserted that primary
and secondary stakeholders as specified by Sarkis et al. [44] could further be grouped
into organizational, regulatory and community stakeholders. The authors explained
that organizational stakeholders make up the firm since the organization exists by
and for them. Organizational stakeholders include customers, suppliers, employees and
shareholders as indicated by Baah et al. [4–6]. Regulatory stakeholders possess
coercive powers that bully organizations to embrace green initiatives [4–6]. This
stakeholder group encompass governments, trade associations, regulatory bodies and
the media [4–6, 24]. Community stakeholders, not mostly recognized, are in the
general view considered as people, groups, organizations or businesses that have
interest, concern or stakes in the community [25]. According to Baah et al. [4–6],
organizational and regulatory stakeholders robustly influence a firm’s existence, and
hence, firms needed to seek out and answer stakeholder groups’ demands in order to
achieve competitive and superior performance. However, present environmental con-
cerns and demands indicate that community stakeholders are taking important roles in
pushing for change. Specifically, involving the local community and increasing social
and ecological awareness have made very visible the link that exists between business
sustainability and a thriving community [25]. In detail, firms now derive value from
Circular Economy and Sustainability

directly being associated to the sustainability of the community in which they operate.
On this basis, Baah et al. [4–6] indicated that satisfying specific stakeholder groups’
demands while neglecting others will eventually have negative implications on a
firm’s reputation, brand, competitiveness and overall performance especially seeing
the interconnected stakeholder societies that currently exist. From the above, this
study explores the influence of organizational, regulatory and community stakeholders
on the adoption of circular economic principles.

Circular Economy Principles

As explained by Garcés-Ayerbe et al. [21], embracing circular economy principles

must be done through the lenses of stakeholder demands, market and legal environ-
ments. According to the European Commission [18], a circular economy is “one in
which the value of products, materials and resources is maintained for as long as
possible, therefore diminishing waste and resource use”. Although this novel field of
firm sustainability embodies complex and emerging concepts and approaches, the
underlying features as captured by Jabbour et al. [29] and Garcés-Ayerbe et al. [21]
in handling waste or products at their end-of-life cycle are summarized by the 4Rs,
namely, reducing, reusing, recycling and recovering. From the preceding discourse,
circular economy is a system that revolves around optimizing resource use and waste
by mechanisms of closed-loop and regenerative approaches in the production-
consumption cycle while also ensuring minimum extraction and use of new resources
(such as energy, water and materials) and waste generation through eco-efficient and
eco-effective production processes and technologies. In contemporary linear economy
models where emphasis is placed on the acquisition, usage and discarding of existing
materials without thought to reintegrate back used materials into the production-
consumption cycle [34] coupled with the manufacturing of disposable products have
created a linear consumption behaviour pattern with consumers as indicated by
Agyabeng-Mensah et al. [2] and Afum et al. [1]. These patterns have contributed to ecological
imbalances such as resource scarcity and low rate of resource replenishment [8].
According to the Ellen MacArthur Foundation [15], the overwhelming shortfalls of the
linear economy have motivated need for the implementation of circular economy principles,
which integrate new eco-effective patterns of consumption and sustainable manufacturing.
Esposito et al. [16] further exposed that the Ellen MacArthur Foundation [15] proposed the
ReSOLVE framework which bases on six business models to emphasize the following: (a)
moving to renewable and recyclable sources so that organic nutrients from used and waste
materials can be ploughed back or reintegrated into production systems (Regenerate model);
(b) focus on the design of products to last longer and for the product to take service forms, so
as consumers can use the products or services without buying ownership of them (Share
model); (c) enhancing energy adeptness, reducing waste across supply chain processes and
stimulating efficient use of natural resources to avoid waste generation (Optimize model); (d)
reintroducing products at the end of their product life cycle and waste to production processes
as inputs by means of repairing, reusing, refurbishing, remanufacturing and recycling activi-
ties. This maintains the value of materials and energy circulating within the production-
consumption cycle (Loop model); (e) promoting replacement of physical products with virtual
services (Virtualize model); and (f) replacing old technologies that promote usage of non-
renewable materials with disruptive technologies (Exchange model).
 Circular Economy and Sustainability

Stakeholder Satisfaction and Green Legitimacy

Stakeholder groups have expectations that firms must try in the best of their ability to satisfy
[13, 38]. If organizations fail or stay too far from stakeholder demands/requirements or
expectations, they risk losing legitimacy and reputation which will affect performance and
invite scrutiny and social control [36]. In this vein, the institutional theory exposes that
stakeholders have demands or requirements which mostly influence firm decisions and
adoption of practices [4–6, 12, 13]. Fundamentally, the theory indicates that organizations
adopt certain practices based on the industry in which they operate. The act of adopting these
practices has been termed institutional isomorphism, and being “industry obedient” breeds
organizational legitimacy. In detail, Deephouse et al. [13] indicated that corporations that
diverge from industry beliefs, norms and practices lose legitimacy with stakeholders which
also affects stakeholder satisfaction. According to Ruf et al. [41], stakeholder satisfaction is the
economic returns of stakeholders during the process of achieving their objectives. Dyer and
Singh [14] further indicated that stakeholder satisfaction stimulates trust, loyalty and strong
relationships with stakeholders and, as such, builds competitive advantages.
Furthermore, Sarkis et al. [45] indicated that in this era of sustainability, firms that respond
to environmental requirements of their stakeholders create value that ensures sustained
competitiveness. Jabbour et al. [29] also highlighted that satisfied stakeholders will ensure
and aid in the smooth adoption of circular economy principles which boosts legitimacy. In
recent sustainability literature, meeting stakeholder demands have been associated with more
than just attaining higher output but also green legitimacy [31, 32]. Martín-de Castro et al. [32]
explained that green legitimacy centres on non-market stakeholder perceptions of a firm’s
green or environmental orientation. From the viewpoint of the institutional theory, enhancing
environmental reputation signifies positive stakeholder estimations, evaluations or gauge of a
firm in relation to engagement in environmental initiatives. Thus, green legitimacy comes from
integrating principles that embody environmental issues or concerns that positively align with
stakeholder demands. Yang and Wu [51] proposed that organizations earn green or environ-
mental legitimacy when they engage in environmental and social practices that protect the
environment and society. From briefly explaining the study variables, we next develop the
hypotheses of the study.

Stakeholder Influence, Circular Economy Principles, Stakeholder Satisfaction

and Green Legitimacy

As exposed by Jabbour et al. [29], circular economy literature is on the rise and still evolving
although there is a lack in theoretical groundwork. Seeing the present limitation of the concept,
this study adopts the institutional and the stakeholder theories [13, 20] in providing the basis
for the adoption of circular economy practices in the context of an emerging economy. The
institutional theory as already indicated in the “Stakeholder Satisfaction and Green Legitima-
cy” section has been suggested as the underpinning for the adoption of diverse practices in
industries [4–6]. On the basis of institutional isomorphism, diverse firms are engaging in
practices that industry leaders and stakeholders consider as acceptable and appropriate in the
effort to achieve legitimacy with stakeholders. Although the institutional theory to a larger
extent can be associated with the adoption of sustainability concepts such as circular economy
principles, the stakeholder theory also expounds the roles of stakeholder groups in pushing for
the engagement and sustenance of such practices in an industry [4–6, 12, 13]. Baah et al. [4–6]
Circular Economy and Sustainability

in combining both the institutional and stakeholder theories indicated that there exists a
common ground between these two theories in that both theories emphasize adoption of
sustainable practices and stakeholder satisfaction (i.e. meeting stakeholder demands).
Having already exposed both stakeholder and institutional theories, the literature [4–6, 13,
20] highlighted that organizational, regulatory and community stakeholders coerce firms to
either be reactive or proactive towards circular economy principles. In as much as internal
stakeholders work from within the organization in being committed to implementing sustain-
able initiatives, external stakeholders are also ensuring the existence of the right kind of
policies, social and environmental structures and subsidies for sustainable technologies
([29]; .[11]). While Baah et al. [4–6] in their study indicated that regulatory and organizational
stakeholders were most potent in influencing the adoption of green initiatives, Govindan and
Hasanagic [26] indicated that the government, which falls under regulatory stakeholders, was
most potent in influencing environmental decisions of firms. Shubham et al. [47] supported the
above assertion by indicating that coercive isomorphic pressures, which emanate from regu-
latory stakeholders, were most potent in influencing sustainability decisions of firms. Russell
and Kosny [42] also indicated that external stakeholders which include community stake-
holders have greater influence on the circular economy implementation. Jabbour et al. [29]
further indicated that local communities, central governments and non-governmental organi-
zations among industrial entities seem to have an influence on the adoption of circular
economy principles. The inconsistencies in findings coupled with the neglect of community
stakeholders in sustainability literature has motivated this study to capture community stake-
holder in addition to organizational and regulatory stakeholder groups in assessing how these
groups influence the adoption of circular economic principles. From the above argument, we
hypothesize that:
H1: The adoption of circular economy principles is positively and significantly correlated
with influences from organizational (a), regulatory (b) and community (c) stakeholders
Although firms mostly adopt circular economy principles in the quest to enhancing
competitiveness and sustainability performance [22], adopting circular economy principles
also robustly contribute to stakeholder satisfaction. According to Orlitzky [36], responding to
stakeholder demands or pressures creates a sense of trust and loyalty. The authors further
explained that high satisfaction and reputation from stakeholders are strategically advanta-
geous, in that, it has been shown to positively influence market and financial performance
[4–6, 35, 48]. Adoption and implementation of circular economy principles influence stake-
holder satisfaction from internal and external perspectives because orientation towards such
eco-effective initiatives positively aligns with stakeholder desires and interest which is pro-
tection and preservation of natural resources as well as the earth [4–6, 35]. Integrating circular
economy principles into business processes and practices will promote the recovery, reuse,
recycling and repurposing of materials and energy to benefit the natural environment. Such
firm practices as indicated by Yang and Wu [51] lead corporations to achieve green legitimacy
with stakeholders. It is worth noting that green legitimacy originates from high levels of
external stakeholder satisfaction as exposed under the institutional theory. According to
Deephouse [12], the institutional theory indicates that firms attain legitimacy when external
stakeholders are satisfied with or perceive that the practices and actions of the firm are
appropriate and acceptable. Green legitimacy in this context emanates when stakeholder
satisfaction is in relation to environmental or sustainable practices [51]. Particularly, few
studies have focused on how the adoption of circular economy principles influences internal
and external stakeholder satisfaction and legitimacy in developed countries and even the few
 Circular Economy and Sustainability

that expose the concepts do so conceptually. Thus, this study empirically seeks to contribute to
understanding the interactions between circular economy principles, internal and external
stakeholder satisfaction as well as not only legitimacy but specifically green legitimacy in
the context of an emerging economy. From the discourse, we hypothesize that:
H2: Adoption of circular economy principles will positively and significantly influence
internal (a) and external (b) stakeholder satisfaction as well as green legitimacy (c).
Based on the stakeholder and institutional theories, internal and external stakeholder
satisfaction which comes as a result of firms meeting the needs and demands of their
stakeholders enhances organizational legitimacy [12, 19]. Yang and Wu [51] further indicated
that the satisfaction that stakeholders derive from firms meeting their sustainable and envi-
ronmental needs led to what the authors referred to as environmental legitimacy. Martín-de
Castro et al. [32] explained that green legitimacy which was referred to as environmental
legitimacy by Yang and Wu [51] strategically positioned firms in terms of green value
creation, competitiveness and superior performance. The authors then indicated that although
internal stakeholders who are considered as organizational stakeholders are critical to achiev-
ing green legitimacy, external stakeholders which comprise regulatory and community stake-
holders robustly influenced green legitimacy. Stakeholder satisfaction in relation to sustainable
initiatives such as circular economy promotes green legitimacy because stakeholders based on
their high satisfaction levels perceive such firms as trustworthy, law-abiding and socially and
environmentally responsible [4–6, 35, 48]. Thus, stakeholders develop good reputation for
such firms which eventually earns the firm green legitimacy. Green legitimacy as captured by
Martín-de Castro et al. [32] and Yang and Wu [51] accrues market, social, moral and financial
benefits that create green value, reduces corporate risks and ultimately leads to superior
performance. From this argument, we propose the hypothesis:
H3: Green legitimacy is positively and significantly influenced by internal (a) and external
(b) stakeholder satisfaction.
Below is the research model of the study and the hypothesized relationships. Additionally,
the model adopts firm size measured by number of employees and ISO certification as control
variables for the adoption of adoption circular economic principles. Firm size and ISO
certification were used as control variables because these have been indicated by Jabbour
et al. [29] as very influential in shaping firm decisions towards green initiatives as indicated in
Figure 1.

Research Methodology

Sample, Data Collection and Common Method Bias (CMB)

Based on the review of extant literature, questionnaires were developed to solicit primary data
on a sample of three hundred and seventy-eight small and medium-sized enterprises (SMEs),
which were randomly chosen from a list of about two thousand SMEs obtained from the
Association of Ghana Industries using Krejcie and Morgan Sampling Technique. This empir-
ical study was based on manufacturing SMEs because of their rapid rise to form over 90% of
industries in emerging economies. This study developed questionnaires based on the theoret-
ical and conceptual framework of the study as indicated in the “Theoretical Framework and
Hypothesis Development” section. The developed questionnaires, which aimed at soliciting
primary data from management of SMEs, captured measurement items in relation to
Circular Economy and Sustainability

Figure 1 Research model showing hypothesized relationships

stakeholder influence, circular economy principles, internal and external stakeholder satisfac-
tion and green legitimacy. The questionnaires together with a cover letter expounding the
objectives of the study were sent to selected firms via e-mail in September 2019, and follow-up
phone calls were placed to show gratitude and serve as reminders for non-respondents after a
week to 2 weeks’ interval. From the three hundred and seventy-eight questionnaires shared
among of SMEs mostly manufacturing firms, two hundred and fifty-six questionnaires were
retrieved giving a response rate of about 68%. An inspection of the returned questionnaires
showed thirty had unsatisfying entries and, thus, were removed from the data analysis.
The inconclusiveness of the excluded questionnaires in addition to some highlighted
shortfalls of the survey method of data collection as captured by past studies [4–6, 37, 46]
motivated the need to test common method bias (CMB) using Harman’s one factor test. Thus,
following the guidelines of Podsakoff et al. [37], Harman’s one factor test was employed and
the results from the Exploratory Factor Analysis showed that the single factor explained
37.432% of the cumulative variance. This result being below the recommended threshold of
50% shows the study is free from issues of CMB. Specifically, the questionnaires were
structured in line with the recommendations of Podsakoff et al. [37], in order to resolve or
reduce issues of CMB. As such, the questionnaires presented well-structured separation of
measured items, promised anonymity to respondents and attained measures from different
sources. Additionally, the study employed Kaiser-Meyer-Olkin Measure of Sampling Ade-
quacy (KMO) and Bartlett’s test of Sphericity in determining the data is sufficient for factor
analysis and comparing the observed correlation matrix to the identity matrix, respectively.
The results showed that the KMO measure of sampling adequacy was 0.798 and acceptable.
The Bartlett’s test showed a significance value of 0.000 which is below the threshold of 0.005.
 Circular Economy and Sustainability

Hence, these conclusions show the adequacy of the sample for factor analysis as well as no
issues of high correlation. Table 1 reveals the profile of respondent SMEs.

Construct Measures, Reliability and Validity

Before sending out the questionnaires, six experts were invited to assess the questionnaire on
the basis of its content and measuring items. These experts initially indicated that the content
and questions measured their constructs and therefore deemed the questionnaire adequate for
its purpose with minor changes, which were mostly related to rewording and rephrasing some
of the contents. These invited experts consisted of three professionals from industry
(manufacturing sector) and three from academia. Thus, the final questionnaire was well
scrutinized in terms of content, validity, grammar and clarity. The study adopted a 5-point
Likert scale, where 1 represented strongly disagree to 5 strongly agree, to measure the extent to
which respondents agreed or disagreed to each item as is the case in their respective firms. The
study adopted a 5-point Likert scale based on the recommendation of Sachdev and Verma
[43], that it reduces respondents’ frustration level and increases response rate and quality. The
stakeholder construct was measured with regard to assessing the level of influence of organi-
zational, regulatory and community stakeholders. Circular economy principles were also
assessed by asking respondents as to the level of adoption in their respective firms. Both
internal and external stakeholder satisfactions were assessed by asking respondents about the
level of improvement in stakeholder relationship, quality, reputation, cost reduction and
revenue/profitability since orientation towards green and circular economy principles. Finally,
green legitimacy was assessed by asking respondents about how stakeholders perceive their
environmental initiatives and approaches.
Furthermore, we examined each measurement item during Confirmatory Factor Analysis
(CFA) to ensure the model has validity and reliability. According to Hair et al. [27], items that

Table 1 Profile of respondents (n = 226)

Firm characteristics Frequency (%)

Number of employees
< 10 32 (14%)
11–50 35 (16%)
51–100 29 (13%)
101–500 46 (20%)
501–1000 39 (17%)
> 1000 45 (20%)
Gender
Male 145 (64%)
Female 81 (36%)
Work experience (years)
1–5 35 (15%)
6–10 48 (21%)
11–15 42 (19%)
15–20 45 (20%)
Over 20 56 (25%)
Job qualification
Owner 68 (30%)
Manager 65 (28%)
Assistant manager 60 (27%)
Departmental heads/supervisors 33 (15%)
 Circular Economy and Sustainability
Table 2 Description of measurement items, reliability and validity

Construct Measurement item Factor Outer Mean SD

loadings VIFs

Organizational stakeholder ORG1: Customers 0.857 1.640 3.77 0.79

influence (ORG) ORG2: Employees 0.787 1.305 3.75 0.96
CA: 0.713 ORG3: Suppliers 0.741 1.440 3.98 0.94
CR: 0.838
AVE: 0.634
Regulatory stakeholder REG1: Government 0.891 2.112 4.24 0.71
influence (REG) REG2: Trade associations and unions 0.878 2.067 4.12 0.78
CA: 0.847 REG3: Media 0.856 1.975 3.94 0.94
CR: 0.907
AVE: 0.766
Community stakeholder COM1: Non-governmental organization 0.840 1.677 3.69 0.94
influence (COM) COM2: Local community members 0.849 1.507 2.97 1.10
CA: 0.773 COM3: Local environmental groups 0.794 1.612 3.43 1.01
CR: 0.867
AVE: 0.685
Circular economy principle CEP1: Our firm is gradually prolonging the duration of products and its usage 0.704 1.474 3.70 1.10
(CEP) CEP2: Our business is promoting reduction of waste and rework 0.809 1.975 4.16 0.76
CA: 0.823 CEP3: Our firm is aiming at reuse, recycling and remanufacturing initiatives with regards to product life cycles 0.819 2.015 3.94 0.97
CR: 0.884 CEP4: Our business is replacing current equipment and technologies with more modern and efficient ones 0.898 2.449 4.22 0.70
AVE: 0.656
Internal stakeholder INTSS1: Our relations with employees, customers, shareholders and suppliers among other internal stakeholders 0.827 2.298 2.84 1.20
satisfaction (INTSS) have continuously improved over the last 3 years
CA: 0.878 INTSS2: Our internal stakeholders are satisfied with improvements in firm reputation over the last three years 0.857 2.537 2.93 1.25
CR: 0.915 INTSS3: Our internal stakeholders are satisfied with cost reduction and profitability increment over the last 3 years 0.861 2.088 3.19 1.30
AVE: 0.730 INTSS4: Our internal stakeholders’ satisfaction has increased over the last 3 years in response to firms improved 0.871 2.006 3.45 1.19
product and services quality and duration
External stakeholder EXTSS1: Our relations with authorities, community and other society members have continuously improved over 0.728 1.861 4.12 0.86
satisfaction (EXTSS) the last 3 years
CA: 0.763 EXTSS2: Our external stakeholders are satisfied with improvements in firm reputation over the last 3 years 0.816 1.656 4.18 0.91
CR: 0.846 EXTSS3: Our external stakeholders are satisfied with cost reduction and profitability increment over the last 3 0.729 1.807 3.80 1.02
AVE: 0.579 years
0.768 1.465 4.07 0.70
Table 2 (continued)

Construct Measurement item Factor Outer Mean SD

loadings VIFs

EXTSS4: Our external stakeholders satisfaction has increased over the last 3 years in response to firms improved
product and services quality and duration
Green legitimacy (GL) GL1: Our company from stakeholder perspectives is committed to meeting the industry standards with sustainable 0.725 1.523 3.73 0.80
CA: 0.749 practices
CR: 0.833 GL2: Our business from stakeholder perspectives follows government regulations for green operating procedures 0.717 1.748 4.10 1.00
AVE: 0.555 in the industry
GL3: Our company from stakeholder perspectives has one of the highest rates of environmental orientation in the 0.760 2.119 3.95 0.95
industry
GL4: Most stakeholders approve and endorse our company’s responsiveness to environmental concerns 0.776 1.206 4.00 0.75

*CA Cronbach’s alpha; CR composite reliability; AVE average variance extracted; VIF variance inflation factor

Circular Economy and Sustainability

Circular Economy and Sustainability

Table 3 Correlations and HTMT ratio

Construct 1 2 3 4 5 6 7

1. CEP 1.000 0.767 0.774 0.880 0.333 0.831 0.659

2. COM 0.649 1.000 0.462 0.541 0.291 0.445 0.323
3. EXTSS 0.637 0.381 1.000 0.895 0.228 0.850 0.796
4. GL 0.787 0.507 0.722 1.000 0.345 0.898 0.775
5. INTSS 0.299 0.260 0.192 0.308 1.000 0.266 0.366
6. ORG 0.637 0.354 0.640 0.745 0.205 1.000 0.725
7. REG 0.563 0.284 0.630 0.645 0.304 0.559 1.000

*Construct correlation values are below the diagonal elements and HTMT values are above the diagonal
elements

have factor loadings above 0.70 should be maintained in a model and items below 0.70 should
be deleted. The authors indicated that deleting lower loading items strengthens the model path,
average variance extracted (AVE), R-squared (R2) and predictive relevance (Q2). Based on this
recommendation, measurement items that loaded below 0.70 were deleted from the model.
The measurement items retained in the model are presented in Table 2. The study being
quantitative employed partial least square structural equation modelling (PLS-SEM) in making
data analysis and interpretation. Specifically, the study being predictive and exploratory in
nature used SmartPLS software 3.0 to run the analysis, conduct CFA and test hypotheses
because of how reliable and well-suited it is when it comes to predictive research.
Additionally, structural model evaluation in PLS-SEM employs measurement criteria that
examine the model’s performance, quality and suitability. According to Henseler et al. [28], a
model’s reliability and validity which are assessed using Cronbach’s alpha (CA), composite
reliability (CR), AVE and heterotrait-monotrait ratio (HTMT) ratio should have ≥ 0.70, ≥ 0.70,
≥ 0.60, > 0.50 and < 0.90, respectively, in order to be considered satisfactory. As presented in
Table 2, the model achieves reliability and validity since it meets all the criteria thresholds.
Multicollinearity was also assessed and the results exposed by the outer and inner variance
inflation factors (VIF) indicated that all VIFs were below the recommended threshold of 3 and,
thus, the model has no issues of multicollinearity as suggested by Ringle et al. [40]. The results
of the outer VIFs are presented in Table 2.
Furthermore, discriminant validity was judged using HTMT ratio which is the current and
presents a more sophisticated examination of discriminant validity. The HTMT ratio uses the
correlation estimates attained from examination of hetrotrait-heteromethod correlations relative
to monotrait-heteromethod correlations, projects that a model has discriminant validity when
HTMT ratios are < 0.90. From Table 3, the model achieves discriminant validity since all
ratios were < 0.90. The correlations among the variables have also been captured in Table 3.

Table 4 Structural model’s R2 and Q2

Endogenous constructs R-squared (R2) R-square adjusted Stone-Geisser’s Q2

CEP 0.651 0.643 0.398

EXTSS 0.406 0.403 0.208
GL 0.707 0.703 0.327
INTSS 0.090 0.085 0.054
 Circular Economy and Sustainability

Table 5 Analysis of hypothesis

Hypothesis Coefficient T Statistics (|O/ P Effect size Decision Inner

(β) STDEV|) Values (f2) VIFs

H1a: ORG ➔ CEP 0.338 5.705 0.000 0.203 Supported 1.614

H1b: REG ➔ CEP 0.458 7.762 0.000 0.511 Supported 1.177
H1c: COM ➔ CEP 0.169 2.886 0.004 0.050 Supported 1.622
H2a: CEP ➔ 0.300 5.962 0.000 0.099 Supported 1.000
INTSS
H2b: CEP ➔ GL 0.526 9.863 0.000 0.531 Supported 1.780
H2c: CEP ➔ 0.637 16.399 0.000 0.683 Supported 1.000
EXTSS
H3a: INTSS ➔ GL 0.079 2.228 0.026 0.020 Supported 1.099
H3b: EXTSS ➔ 0.372 6.318 0.000 0.281 Supported 1.683
GL
Control Variable
ISO ➔ CEP 0.024 0.589 0.102 -- Not --
Supported
FS ➔ CEP 0.101 1.633 0.556 -- Not --
supported

Structural Model Evaluation

Next to confirming the model achieves reliability, convergent and discriminant validity, we
evaluate the structural model and test hypotheses by scrutinizing the R2, which is the variances
of endogenous variables explained by exogenous variables and the Stone-Geisser’s Q2, which
appraises the model’s predictive relevance. Also, path coefficients (β) and significance levels
(p values) are observed as suggested by Hair et al. [27]. Stipulated by Hair et al. [27], reporting
the R2 and Q2 in PLS-SEM is necessary especially in studies that are exploratory in nature. The
Stone-Geisser’s Q2 explains a model has predictive relevance when Q2 values are > 0.

Figure 2. Structural model showing path coefficients, R2 and factor loadings

Circular Economy and Sustainability

Presented in Table 4, the blindfolding procedure confirmed that CEP (Q2 = 0.398), INTSS (Q2
= 0.208), EXTSS (Q2 = 0.327) and GL (Q2 = 0.054) have predictive relevance since Q2 values
are > 0. Moreover, the structural model explained 0.651, 0.406, 0.707 and 0.090 of the
variances of CEP, INTSS, EXTSS and GL, respectively. The adjusted R2 of CEP, INTSS,
EXTSS and GL were also 0.643, 0.403, 0.703 and 0.085, respectively, as indicated in Table 4.

Result

Next, we discuss the results of the study after confirming the model achieves reliability,
convergent and discriminant validity. Analysis and scrutiny of the data showed that organiza-
tional, regulatory and community stakeholders had positive and significant influences on the
adoption of circular economy principles, thus supporting hypotheses H1a (β = 0.338, T =
5.705, f2 = 0.203), H1b (β = 0.458, T = 7.762, f2 = 0.511) and H1c (β = 0.169, T = 2.886, f2 =
0.050) as indicated in Table 5. Furthermore, the results indicated that adoption of circular
economy principles had positive and significant impacts on internal and external stakeholder
satisfaction as well as on green legitimacy, thus indicating support for hypotheses H2a (β =
0.300, T = 5.962, f2 = 0.099), H2b (β = 0.526, T = 9.863, f2 = 0.531) and H2c (β = 0.637, T =
16.399, f2 = 0.683). The study results also indicated that while external stakeholder satisfaction
positively and significantly influenced green legitimacy at the 0.01 significance level, internal
stakeholder satisfaction positively and significantly influenced green legitimacy at 0.05 sig-
nificance level, thus supporting hypotheses H3a (β = 0.079, T = 2.228, f2 = 0.020) and H3b (β
= 0.372, T = 6.318, f2 = 0.281) as indicated in Figure 2. The study adopted ISO certification
and firm size as control variables. From Table 5, it is evident that the effect of ISO certification
(β = 0.024, T = 0.589, p = 0.102) and firm size (β = 0.101, T = 1.633, p = 0.556) on the
adoption of circular economy principles were insignificant.

Discussion

Based on the stakeholder and the institutional theories, the results indicated that stakeholders
are potent forces in influencing the adoption of green initiatives [4–6, 26, 29, 47]. The study
results consistent with existing studies support the assertions of Zhu et al. [52] and Jabbour
et al. [29] that the adoption of sustainability strategies, principles and practices is context-
based. The results further exposed that regulatory stakeholders are most potent in influencing
the adoption and implementation of circular economy principles. Organizational stakeholders
were also found to be the next potent force in demanding orientation towards a circular
economy, and lastly, community stakeholders although had significant influence on adoption
of circular economy principles were the least potent force. Shubham et al. [47] indicate support
for the study findings by specifying that in emerging economies, regulatory stakeholders
among the diverse stakeholder groups critically motivate environmental orientation due to
the legislative and coercive powers they wield. However, in some developed countries,
community and organizational stakeholders are considered as most potent forces in driving
circular economy principles as indicated by Jabbour et al. [29]. This opposite scenario in
emerging economies or developing countries can be attributed to the fact that the lack of easy
access to sustainable technologies, weak social and environmental policies and huge invest-
ment cost associated with circular economy deters most firms from undertaking such green
 Circular Economy and Sustainability

initiatives. Although community stakeholders in recent times are demanding eco-effectiveness

in firm operations, their voices are easily ignored in emerging economies. Thus, it solely
depends on regulatory stakeholders to use their legislative and coercive powers to induce firms
to acknowledge and adopt green initiatives in order to avoid sanctions and bad reputation.
Moreover, the adoption of circular economy principles had the most robust effect on
external stakeholder satisfaction, followed by green legitimacy and internal stakeholder
satisfaction. From the perspective of the institutional theory as explained by Deephouse
et al. [13], the study findings are supported in that the adoption of practices that reflect the
norms, beliefs and values of an industry is considered as appropriate and acceptable and, as
such, creates satisfaction for external stakeholders. This satisfaction of external stakeholders
also leads to legitimacy as exposed by the institutional theory [12]. This study results confirm
the above by indicating that the adoption of circular economy principles as demanded by
stakeholders will robustly improve external stakeholder satisfaction while also enormously
improving environmental or green legitimacy. Internal stakeholder satisfaction although sig-
nificant was small in comparison with external stakeholder satisfaction and green legitimacy
because internal stakeholders are mostly involved in undertaking the demands of external
stakeholders, as such their satisfaction is minimal as compared to those of external stake-
holders. In addition, Baah et al. [4–6] supported the above findings by specifying that the
adoption of green practices in response to stakeholder demands creates value for firms in the
form of stronger stakeholder relations, trust and loyalty which ultimately result in improved
stakeholder satisfaction. Backer [7] further indicated that such benefits associated with
responding to green stakeholder concerns result in superior competitiveness and performance.
Jabbour et al. [29] also exposed that the adoption of circular economy principles allows firms
to achieve sustainable performance. This study further agrees with Jabbour et al. [29] in
espousing that adoption of circular economy principles prolongs raw material usage thereby
reducing raw material costs, allows enough time for raw material replenishment due to low
resource dependency, improves eco-effectiveness and ultimately ensures environmental
preservation.
Specifically, external stakeholder satisfaction had a robust influence on green legitimacy as
compared to internal stakeholder satisfaction which had a very low impact on green legitimacy. This
finding as explained on the basis of the institutional theory basically indicates that the satisfaction of
external stakeholders in relation to green initiatives lead to commendations which breeds green
legitimacy. According to Tsinopoulos et al. [49], numerous firms that purpose to attain green
legitimacy with external stakeholders follow ISO principles that indicate orientation to environmen-
tal practices. Hence, green legitimacy in most scenarios originates from external stakeholders and
not internal stakeholders, thus corroborating the findings of the study [4–6, 32, 51]. This is the case
because most internal stakeholders are involved in the daily running of the firm and hence are the
ones required to meet the expectations of those stakeholders who are external to the firm. In this vein,
external stakeholders’ perception of the firm is very critical than those of internal stakeholders
although both affect the survival of the organization. Furthermore, ISO certification and firm size,
which were modelled as control variables, were found to have insignificant influences on adoption
of circular economy principles.

Theoretical Implications

Grasping what pushes firms to be environmentally conscious and respond/adhere to stake-

holder environmental or green influence or demands to enhance eco-efficiency and eco-
Circular Economy and Sustainability

effectiveness has mostly been based on the stakeholder and institutional theories. Thus, using
these theories, the study examined the “stakeholder side” of the adoption of circular economy
principles. In detail, the study explores stakeholder influence on adoption and implementation
of circular economy principles and how it correlates with internal and external stakeholder
satisfaction as well as green legitimacy. In elucidating the adopted theories, it was exposed that
most firms have been pushed to adopt circular economy principles by stakeholders as
suggested by the stakeholder theory. In particular, all stakeholder groups adopted in this study,
namely, organizational, regulatory and community stakeholders, were found to have critical
influences on firms’ decisions to adopt circular economy influences. Next, the institutional
theory also underlined that organizations in relation to their industry adopt certain practices
because they are deemed as acceptable and are the norms of the industry. The institutional
theory further explained that adopting industry practices positively positions a firm with
external stakeholders and, thus, leads to attainment of organizational legitimacy. Yang and
Wu [51] and Martín-de Castro et al. [32] explained that favourable stakeholder perceptions that
originate from green initiatives such as the adoption of circular economy principles lead to
green legitimacy.

Managerial Implications

Although protecting the environment has taken centre stage in recent discussions, more needs
to be done in the effort to preserve the environment in terms of natural resources among others.
On this basis, firms are being called upon to intensify green initiatives by moving from linear
economy to circular economy (i.e. move from eco-efficiency to eco-effectiveness). Although
firms play the major role, diverse stakeholder groups also have a part to play in ensuring
environmental preservation. Ideally, stakeholders can assist manufacturing firms in this case to
have control of circular economy practices by setting subsidization policies that aid in
sustainable investments and technologies. Such enterprises will increase green responsiveness
as well as eco-effectiveness which will ensure better cleaner production systems especially
concerning raw materials usage and product usage, product novelty, product improvement,
recovering, recycling and repurposing in order to enhance resource replenishment and reduce
resource dependency. Besides, circular economy principles allow for decreases costs related to
raw material sourcing, resource dependency, pollution, waste generation, raw materials and
inventory storage, etc. In addition, policy makers in trying to promote circular economy
initiatives should support manufacturing SMEs to embrace circular economy principles to
encourage healthy and environmentally balanced societies branded by nontoxic consumer
products, safe work settings, superior stakeholder satisfaction and superior firm performance.

Conclusion

The alarming rate of resource scarcity and dependency coupled with other environmental
concerns have warranted the need for firms to engage in circular economy practices rather than
existing linear economy practices. This novel concept of circular economy, which promotes
eco-effectiveness rather than eco-efficiency, has mostly been considered and studied in the
contexts of developed countries while focusing on implications for firms. This study, thus,
looking from stakeholder perspectives considers internal and external stakeholder satisfactions
and how it leads to green legitimacy while also providing empirical evidence from the
 Circular Economy and Sustainability

perspectives of an emerging economy and from the standpoint of manufacturing SMEs. The
study results as exposed in the “Result” section indicates that regulatory, organizational and
community stakeholders (in that order) are critical and influential in the adoption of circular
economy principles. Thus, the results and discussions indicated that these stakeholder groups
positively and significantly correlated with the adoption of circular economy principles.
Although the adoption of circular economy principles in the study context is now gaining
grounds, the significant and robust influence of such circular economy principles and practices
on both internal and external stakeholder satisfaction and green legitimacy suggest it as very
important for superior competitiveness and performance.
The study further assessed the influence of internal and external stakeholder satisfaction on green
legitimacy, and as consistent with the institutional theory, the results exposed that external stake-
holder satisfaction robustly and significantly influenced green legitimacy as compared to internal
stakeholder satisfaction which had a positively low yet significant influence on green legitimacy.
From the above discourse, the study findings indicated support for all hypothesized relationships.
Specifically, while hypotheses H1a, H1b, H1c, H2a, H2b, H2c and H3b were supported at the 0.01
significance level, H3a was supported at the 0.05 significance level. Particularly, the study exposed
that regulatory stakeholders are the most potent force in fighting for environmental initiatives in
developing countries as previously captured by Shubham et al. [47]. Although organizational and
community stakeholders have been noted as robust influencers of green initiatives in developed
countries, organizational stakeholders followed regulatory stakeholders in terms of robust influence
and then community stakeholders in the context of an emerging economy. Furthermore, adoption of
circular economy principles was found to largely impact external stakeholder satisfaction and
crucially enhance green legitimacy as compared to internal stakeholder satisfaction. Also, external
stakeholder satisfaction was found as very enormous in influencing green legitimacy as compared to
internal stakeholder satisfaction which had a minimal influence on green legitimacy.
To further appreciate the broadening scope of the circular economy concept and stakeholder
influence, future should use longitudinal approaches to data collection and research design seeing
that this used a cross-sectional data. Additionally, future studies should reflect other dimensions of
these concepts to provide an in-depth perspective seeing this study focused on only stakeholder
aspects. The circular economy framework as developed by the Ellen MacArthur Foundation can
be employed in various industries to assess eco-effectiveness since environmental preservation is
globally demanded. Furthermore, future studies should study larger firms operating in emerging
economies as well. In addition to improving understanding various stakeholder groups and how
they influence circular economy principles, data can be collected over time to assist in
apprehending the long-term behaviours of stakeholder influences and green initiatives.

Abbreviation PLS-SEM, partial least square structural equation modelling; CMB, common method
bias; SMEs, small and medium-sized enterprises; KMO, Kaiser-Meyer-Olkin Measure of Sampling
Adequacy; CEP, circular economy principles; EXTSS, external stakeholder satisfaction; GL, green
legitimacy; INTSS, internal stakeholder satisfaction; ORG, organizational stakeholders; REG, regulatory
stakeholders; COM, community stakeholders; FS, firm size; ISO, ISO certification; CA, Cronbach’s alpha;
CR, composite reliability; AVE, average variance extracted; VIF, variance inflation factor; HTMT,
heterotrait-monotrait ratio

Authors’ Contributions All authors (BC, YA, EA and DOA) engaged in the discussion of the concept and
research plan. EA and DOA engaged in the data collection and BC and YA conducted data entry, data cleaning
and data analysis and came up with the article draft. All authors (BC, YA, EA and DOA) were significant
contributors in discussions that led up to the drafting of the article.
Circular Economy and Sustainability

Data availability Data used for this study will be made available upon reasonable request

Declarations

Ethics Approval and Consent to Participate Not applicable.

Consent for Publication Not applicable.

Competing Interests The authors declare that they have no competing interests.

References

1. Afum E, Agyabeng-Mensah Y, Acquah ISK, Baah C, Dacosta E, Owusu CS, Owusu JA (2021) Examining
the links between logistics outsourcing, company competitiveness and selected performances: the evidence
from an emerging country. Int J Logist Manag. https://doi.org/10.1108/IJLM-05-2020-0205
2. Agyabeng-Mensah Y, Tang L, Afum E, Baah C, Dacosta E (2021) Organisational identity and circular
economy: Are inter and intra organisational learning, lean management and zero waste practices worth
pursuing?. Sustain Prod Consump. https://doi.org/10.1016/j.spc.2021.06.018
3. Baah C, Jin Z (2019) Sustainable supply chain management and organizational performance: the interme-
diary role of competitive advantage. J Mgmt Sustain 9:119
4. Baah C, Jin Z, Tang L (2020a) Organizational and regulatory stakeholder pressures friends or foes to green
logistics practices and financial performance: investigating corporate reputation as a missing link. J Clean
Prod 247:119125
5. Baah C, Opoku-Agyeman D, Acquah ISK, Agyabeng-Mensah Y, Afum E, Faibil D, Abdoulaye FAM
(2020b) Examining the correlations between stakeholder pressures, green production practices, firm
reputation, environmental and financial performance: evidence from manufacturing SMEs. Sustain
Product Consump 27:100–114
6. Baah C, Opoku-Agyeman D, Acquah ISK, Issau K, Abdoulaye FAM (2020c) Understanding the influence
of environmental production practices on firm performance: a proactive versus reactive approach. J Manuf
Technol Manag 32:266–289
7. Backer L (2007) Engaging stakeholders in corporate environmental governance. Bus Soc Rev 112(1):29–54
8. Bag S, Gupta S, Foropon C (2019) Examining the role of dynamic remanufacturing capability on supply
chain resilience in circular economy. Manag Decis 57:863–885
9. Clarkson M, Starik M, Cochran P, Jones TM (1994) The Toronto conference: reflections on stakeholder
theory. Bus Soc 33(1):82
10. de Römph TJ, Cramer JM (2020) How to improve the EU legal framework in view of the circular economy.
J Energy Nat Resour Law 38(3):245–260
11. de Sousa Jabbour ABL, Luiz JVR, Luiz OR, Jabbour CJC, Ndubisi NO, de Oliveira JHC, Junior FH (2019)
Circular economy business models and operations management. J Clean Prod 235:1525–1539
12. Deephouse DL (1996) Does isomorphism legitimate? Acad Manag J 39(4):1024–1039
13. Deephouse DL, Newburry W, Soleimani A (2016) The effects of institutional development and national
culture on cross-national differences in corporate reputation. J World Bus 51(3):463–473
14. Dyer JH, Singh H (1998) The relational view: cooperative strategy and sources of interorganizational
competitive advantage. Acad Manag Rev 23(4):660–679
15. Ellen MacArthur Foundation, (2015). Growth within: a circular economy vision for a competitive Europe,
vol. 100.
16. Esposito M, Tse T, Soufani K (2018) Introducing a circular economy: new thinking with new managerial
and policy implications. Calif Manag Rev 60(3):5–19
17. Esposito B, Sessa MR, Sica D, Malandrino O (2020) Towards circular economy in the agri-food sector. A
systematic literature review. Sustainability 12(18):7401
18. European Commission, (2015). Closing the loop—an EU action plan for the circular economy. In European
Commission, n/a.
19. Freeman RE (1999) Divergent stakeholder theory. Acad Manag Rev 24(2):233–236
20. Friedman AL, Miles S (2006) Stakeholders: Theory and practice. Oxford University Press on Demand
 Circular Economy and Sustainability

21. Garcés-Ayerbe C, Rivera-Torres P, Suárez-Perales I, Leyva-de la Hiz DI (2019) Is it possible to change

from a linear to a circular economy? An overview of opportunities and barriers for European small and
medium-sized enterprise companies. Int J Environ Res Public Health 16(5):851
22. Geissdoerfer M, Morioka SN, de Carvalho MM, Evans S (2018) Business models and supply chains for the
circular economy. J Clean Prod 190:712–721
23. Genovese A, Acquaye AA, Figueroa A, Koh SL (2017) Sustainable supply chain management and the
transition towards a circular economy: evidence and some applications. Omega 66:344–357
24. González-Benito J, González-Benito Ó (2006) The role of stakeholder pressure and managerial values in the
implementation of environmental logistics practices. Int J Prod Res 44(7):1353–1373
25. González-Rodríguez MR, Díaz-Fernández MC, Biagio S (2019) The perception of socially and environ-
mentally responsible practices based on values and cultural environment from a customer perspective. J
Clean Prod 216:88–98
26. Govindan K, Hasanagic M (2018) A systematic review on drivers, barriers, and practices towards circular
economy: a supply chain perspective. Int J Prod Res 56(1-2):278–311
27. Hair JF, Ringle CM, Sarstedt M (2013) Partial least squares structural equation modeling: Rigorous
applications, better results and higher acceptance. Long Range Plan 46(1-2):1–12
28. Henseler J, Ringle CM, Sarstedt M (2015) A new criterion for assessing discriminant validity in variance-
based structural equation modeling. J Acad Mark Sci 43(1):115–135
29. Jabbour CJC, Seuring S, de Sousa Jabbour ABL, Jugend D, Fiorini PDC, Latan H, Izeppi WC (2020)
Stakeholders, innovative business models for the circular economy and sustainable performance of firms in
an emerging economy facing institutional voids. J Environ Manag 264:110416
30. Kassinis G, Vafeas N (2006) Stakeholder pressures and environmental performance. Acad Manag J 49(1):
145–159
31. Li D, Huang M, Ren S, Chen X, Ning L (2018) Environmental legitimacy, green innovation, and corporate
carbon disclosure: evidence from CDP China 100. J Bus Ethics 150(4):1089–1104
32. Martín-de Castro G, Amores-Salvadó J, Navas-López JE, Balarezo-Núñez RM (2020) Corporate environ-
mental reputation: exploring its definitional landscape. Business Ethics: Eur Rev 29(1):130–142
33. Miles S (2017) Stakeholder theory classification: a theoretical and empirical evaluation of definitions. J Bus
Ethics 142(3):437–459
34. Murray A, Skene K, Haynes K (2017) The circular economy: an interdisciplinary exploration of the concept
and application in a global context. J Bus Ethics 140(3):369–380
35. Orlitzky M (2011) Institutional logics in the study of organizations: the social construction of the relation-
ship between corporate social and financial performance. Bus Ethics Q 21:409–444
36. Orlitzky, M. (2015). The politics of corporate social responsibility or: why Milton Friedman has been right
all along. Annals in Social Responsibility.
37. Podsakoff PM, MacKenzie SB, Lee JY, Podsakoff NP (2003) Common method biases in behavioral
research: a critical review of the literature and recommended remedies. J Appl Psychol 88(5):879–903
38. Porter ME, Kramer MR (2006) The link between competitive advantage and corporate social responsibility.
Harv Bus Rev 84(12):78–92
39. Rincón-Moreno J, Ormazábal M, Álvarez MJ, Jaca C (2020) Advancing circular economy performance
indicators and their application in Spanish companies. J Clean Prod 279:123605
40. Ringle C, Da Silva D, Bido D (2015) Structural equation modeling with the SmartPLS. Bido, D., da Silva,
D., & Ringle, C.(2014), Structural Equation Modeling with the Smartpls. Brazilian J Market 13(2)
41. Ruf BM, Muralidhar K, Brown RM, Janney JJ, Paul K (2001) An empirical investigation of the relationship
between change in corporate social performance and financial performance: a stakeholder theory perspec-
tive. J Bus Ethics 32(2):143–156
42. Russell E, Kosny A (2019) Communication and collaboration among return-to-work stakeholders. Disabil
Rehabil 41(22):2630–2639
43. Sachdev SB, Verma HV (2004) Relative importance of service quality dimensions: a multisectoral study. J
Serv Res 4(1)
44. Sarkis J, Gonzalez-Torre P, Adenso-Diaz B (2010) Stakeholder pressure and the adoption of environmental
practices: the mediating effect of training. J Oper Manag 28(2):163–176
45. Sarkis J, Zhu Q, Lai KH (2011) An organizational theoretic review of green supply chain management
literature. Int J Prod Econ 130(1):1–15
46. Shashi, Centobelli P, Cerchione R, Singh R (2019) The impact of leanness and innovativeness on
environmental and financial performance: insights from Indian SMEs. Int J Prod Econ 212:111–124
47. Shubham, Charan P, Murty LS (2018) Organizational adoption of sustainable manufacturing practices in
India: integrating institutional theory and corporate environmental responsibility. Int J SustainDev World
Ecol 25(1):23–34
Circular Economy and Sustainability

48. Siegel DS, Vitaliano DF (2007) An empirical analysis of the strategic use of corporate social responsibility.
J Econ Manag Strateg 16(3):773–792
49. Tsinopoulos C, Sousa CM, Yan J (2018) Process innovation: open innovation and the moderating role of
the motivation to achieve legitimacy. J Prod Innov Manag 35(1):27–48
50. World Economic Forum. (2014). Towards the circular economy: accelerating the scale-up across global
supply chains. Retrieved August 2, 2015, from http://www3.weforum.org/docs/WEF_ENV_
TowardsCircularEconomy_Report_2014.pdf
51. Yang YK, Wu SL (2016) In search of the right fusion recipe: the role of legitimacy in building a social
enterprise model. Business Ethics: Eur Rev 25(3):327–343
52. Zhu J, Fan C, Shi H, Shi L (2019) Efforts for a circular economy in China: a comprehensive review of
policies. J Ind Ecol 23(1):110–118

Affiliations

Charles Baah 1 & Ebenezer Afum 1 & Yaw Agyabeng-Mensah 1 & Douglas Opoku
Agyeman 2
1
Transportation Engineering College, Dalian Maritime University, Dalian, China
2
Department of Marketing and Entrepreneurship, University of Ghana, Accra, Ghana