Relationship Between Micro‐Level Circular Economy and Sustainable Performance in the Metalworking Industry

ABSTRACT The large multinational metalworking industry has increasingly adopted micro‐level circular economy (MLCE) practices; however, the extent to which these initiatives translate into sustainable performance remains insufficiently understood. This study examines the relationship between MLCE and economic, environmental, and social performance using survey data from more than 200 large multinational firms, analyzed through partial least squares structural equation modeling (PLS‐SEM). The findings reveal statistically significant relationships between MLCE practices and performance outcomes, particularly in terms of operational efficiency, cost reduction, and selected social improvements such as occupational safety and inclusion. While the observed effects are modest in magnitude, the results provide consistent empirical evidence of incremental contributions of MLCE to sustainable performance. Rather than suggesting strong direct effects, the findings indicate that MLCE operates as an enabling mechanism whose impacts depend on implementation maturity, complementarities across ReSOLVE dimensions, and broader organizational and contextual conditions. These results also highlight potential temporal lags and measurement constraints that may limit the immediate observability of performance gains. Overall, the transition toward circular models emerges as a promising and context‐dependent pathway for enhancing competitiveness while supporting the Sustainable Development Goals related to decent work and economic growth (8), industry innovation and infrastructure (9), and responsible consumption and production (12).