Achieving Sustainability of SMEs Through Industry 4.0-Based Circular Economy

Industry 4.0 and circular economy are two energetic aspects of operations management and production economics. The current study extracts the factors for adopting an industry 4.0-based circular economy to measure sustainability in SMEs. Eight hypotheses are proposed by identifying one independent variable, four mediating variables and one dependent variable. Survey-based research is carried out, and the sample size for the current study is 296 from different SMEs. The structural equation modeling approach is utilized for testing the hypotheses. The construct identified is industry 4.0-based circular economy; the four mediating variables are: economic performance, environmental performance, social performance, and operational performance, and the dependent variable is sustainability. The mediating variables have a positive impact on the dependent variable. The study is unique as the joint adoption of industry 4.0 and circular economy is tested, and also it reveals the importance of sustainability achievement in the operating firms. The prior studies have not considered the joint adoption of industry 4.0 and circular economy.