Top Management Commitment and Circular Economy Adoption: Institutional Pressures and Competitive Advantage in Emerging Manufacturing Firms
Keywords:
Circular economy, Competitive advantage, Institutional pressures, Sustainable practices, Top managementAbstract
This study explores the dynamic relationship between top management commitment (TMC), institutional pressures, and competitive advantage within the context of circular economy (CE) adoption in emerging manufacturing firms, focusing on firms in Indonesia and Vietnam. The research examines how TMC mediates the effects of coercive, normative, and mimetic institutional pressures on the adoption of CE practices and how this relationship, in turn, influences competitive advantage. A quantitative approach was used, collecting data from 280 manufacturing firms through structured surveys and in-depth interviews with top executives and sustainability managers. The findings highlight that TMC plays a significant mediating role in driving the adoption of CE practices, particularly under institutional pressures. Coercive and normative pressures were found to have a direct influence on CE adoption, while mimetic pressures exerted an indirect effect, especially when coupled with other pressures. Furthermore, TMC was shown to strengthen the link between CE adoption and competitive advantage, improving resource optimization, operational efficiency, and customer loyalty. The study underscores the critical role of leadership in navigating external pressures and integrating sustainability into the core business strategy, offering a competitive edge in the global market. The implications of these findings are particularly relevant for manufacturing firms in emerging markets, suggesting that top management’s strategic commitment to sustainability can drive long-term value and foster a competitive advantage through the adoption of circular economy practices. Future research should consider expanding the study to other industries and geographic regions to further understand the broader applicability of these findings.
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