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As global resource depletion and environmental challenges continue to intensify, the circular economy has emerged as a critical strategy for firms pursuing sustainable development. This study integrates the perspectives of circular economy, the resource-based view (RBV), and stakeholder theory, and incorporates a system dynamics approach to construct a causal feedback model of circular economy systems. First, through a comprehensive literature review and systems thinking, this study develops a causal loop diagram (CLD) that captures the dynamic interactions among key elements, including firms, resources, design, products, consumers, recycling, and waste, thereby illustrating the underlying mechanisms of circular economy operations. Subsequently, the CLD is transformed into a structural equation model (SEM), and empirical analysis is conducted using 134 valid questionnaire responses. The results indicate that significant and positive causal relationships exist among the constructs. In particular, resource-based design advantage is identified as the core driving factor of the system, influencing waste reduction through circular recycling and resource circulation mechanisms. Moreover, the interaction between reinforcing feedback loops and balancing feedback loops forms a dynamic equilibrium within the circular economy system. The findings not only validate the theoretical framework of circular economy systems but also provide practical implications for firms in terms of resource allocation, product design, and recycling management, thereby facilitating resource circulation and sustainable development.
Tsai et al. (Fri,) studied this question.