Influence of Organizational Factors on Circular Economy Practices, Innovation, and Sustainable Performance in Jordanian SMEs

Abstract

The necessity of implementing a circular economy (CE) is critical for developing a sustainable economic environment with minimized adverse environmental impacts. Consequently, it is essential to identify the factors influencing the adoption and effectiveness of CE practices within businesses and SMEs. This study aims to address the knowledge gap regarding the integration of CE in Jordan’s business and management sectors. The research examines the impact of skills and competencies, inter- and intra-organizational factors, and corporate social responsibility (CSR) on innovation, and subsequently, how innovation influences the adoption of CE practices, ultimately leading to sustainable performance. A survey was conducted among employees of SMEs meeting specific criteria, and the collected data were analyzed. The results indicate that all the independent factors of skills and competencies, inter- and intra-organizational factors, and CSR—positively affect innovation. This finding supports the hypothesis derived from the literature review. Furthermore, innovation has a positive effect on the implementation of CE practices, which in turn significantly enhances sustainable performance.