Effect of eco-innovation on green supply chain management, circular economy capability, and performance of small and medium enterprises

The social structures in organisations constitute essential enablers for the betterment of small and medium enterprises' (SMEs) performance. Our paper explores such enablers in the context of SMEs' contribution to the Circular Economy (CE), through the lens of institutional and dynamic capability view theories. We focus on the relationships between institutional pressures, eco-innovation, green supply chain management (GSCM) practices, CE capability, big data driven supply chains (BDSC), and performance for CE supply chains. We used a survey to collect data (n = 240) from people working in SMEs in the manufacturing sector in South Africa. Drawing from institutional theory, we find that coercive, normative, and mimetic pressures have a positive relationship with eco-innovation. Furthermore, eco-innovation is positively associated with GSCM, with these two concepts significantly related to the building of CE capability. The final element in our framework shows a positive relationship between GSCM and CE capability. Our findings reveal some nuances in terms of the relationships between the concepts. For example, whilst BDSCs have a moderating influence on the relationship between CE capability and firm performance for the CE supply chain, no such influence is evident for the relationship between GSCM practices and performance. Further work needs to focus on explaining this and other findings and on validating our theoretical framework.