Understanding whether, how and when circular supply chain management influences firm performance

Abstract Integrating circular economy (CE) principles into supply chain management (SCM) plays a key role in accelerating the transition to CE and realising its sustainability potential. This integration has recently attracted increased attention and emerged formally as circular SCM (CSCM). As with other business practices, economic feasibility is a major deciding factor with regard to CSCM adoption. Therefore, understanding whether, how and when firms can benefit from CSCM is of paramount importance for theory, practice and policy. However, the relationship between CSCM and firm performance and the underlying mechanisms and boundary conditions that could explain this relationship have received limited empirical attention. Drawing on multiple theoretical perspectives, this study examines the mediating role of employees' organisational identification in the relationship between CSCM and firm's operational performance and the moderating effect of employees' pro‐environmental attitude on this role. To achieve this, a multi‐respondent cross‐sectional research design was used in which data from managers and employees of 163 Jordan‐based manufacturing firms was obtained using two separately administrated surveys. The results reveal that CSCM has a positive impact on firm's operational performance. CSCM was also found to indirectly improve firm's operational performance through enhancing employees' organisational identification. Further, the results indicated that, unexpectedly, employees' pro‐environmental attitude does not amplify the positive relationship between CSCM and their organisational identification, or indeed the mediating effect of employees' organisational identification in the nexus between CSCM and firm's operational performance. These results have important implications for advancing the theory and practice of the CE.