Journal
BUSINESS STRATEGY AND THE ENVIRONMENT
Volume 31, Issue 5, Pages 2603-2617Publisher
WILEY
DOI: 10.1002/bse.3046
Keywords
circular economy; economic return; firm competitiveness; sustainable production
Categories
Funding
- Italian Ministry of Education, University and Research under the 'Departments of Excellence' programme
- Universita degli Studi di Ferrara within the CRUI-CARE Agreement
- Universita degli Studi di Ferrara
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This study aims to assess the relationship between circular economy practices and economic returns, which is crucial for policy making. The findings suggest that adopting circular economy related innovations in isolation is unlikely to lead to economic gains in the short term, especially for small and medium-sized enterprises.
Assessing the economic consequences of sustainable production choices aimed at reducing negative environmental externalities is crucial for policy making, in light of the increasing interest and awareness experienced in recent EU policy packages. This assessment is one of the goals of the current work, which tries to provide new empirical evidence on the economic returns of circular economy practices, drawing on previous literature on the underlying determinants of greener production choices, which are stated to differ from standard technological innovations as they are subject to a knowledge and an environmental externality. Using an original dataset on approximately 3000 Italian manufacturing firms, we provide evidence on the relations among innovations related to the circular economy concept and economic outcome in the short run. The evidence shows that in the short run, it is difficult to obtain economic gains from circular economy related innovations when taken in isolation, especially for Small and medium-sized enterprises (SMEs), who may also experience negative returns.
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