Circular economy practices and industry 4.0 technologies: A strategic move of automobile industry

Abstract The fourth industrial revolution (IR4.0) toward automation and digitalization is the new trend among automobile production systems. Indubitably, the automobile industry has been scurrying in this revolution due to investment and governmental support availability. The current study examines the role of industry 4.0 on circular economy practices and supply chain capability to improve firm performance. Cross‐sectional data were collected from 286 respondents through a closed‐ended questionnaire. The adoption of circular economy practices improves the economic and operational performance of the firm. Also, industry 4.0 has the potential to make significant improvements in business operations. The empirical results confirm that industry 4.0 plays a positive role in implementation of circular economy practices and supply chain capability. Furthermore, circular economy practices provide evidence to have positive nexus with operational and economic performance. On the other hand, supply chain capability has a positive relationship with operational performance and has an insignificant association with economic performance, whereas operational performance improves economic health. Thus, the current research work provides the guidelines for the participating enterprises that can achieve sustainable goals by assimilating industry 4.0 in manufacturing systems.