TY - GEN
T1 - Exploring Theoretical Perspectives on the Relationship Between the Reporting of Circular Economy Initiatives and Financial Performance in the German Context
AU - Marques-McEwan, Melissa
AU - Türnau, Jannik
N1 - Publisher Copyright:
© IFIP International Federation for Information Processing 2024.
PY - 2024/9/7
Y1 - 2024/9/7
N2 - The relationship between circular economy (CE) implementation and financial performance is an emerging field of study. CE aims to mitigate environmental impact and enhance sustainability. Despite its growing adoption, however, the link between CE implementation and financial performance remains underexplored and inconsistent in empirical literature. This research explores the relationship between the self-reporting of CE policies and practices and financial performance, contrasting neoliberalism and legitimacy theories, particularly within the context of German manufacturing firms. We used quantitative data from financial and environmental reporting databases, for 28 small and medium publicly listed manufacturers in Germany, as well as supporting secondary qualitative data for 6 companies. Our results reveal no significant correlations between CE scores and various financial measures, such as ROA and profitability growth, challenging the neoliberal assumption that CE engagement is financially motivated. This study contributes to empirical research by suggesting that legitimacy theory, rather than neoliberalism, better explains why companies report CE initiatives. However, we suggest that legitimacy theory can be refined by accounting for how different stakeholders can influence the need for a company to seek legitimacy. In this study, we observed that factors such as having shareholders, company location, or size did not fully explain firm engagement with CE reporting, and we proposed that other factors might be relevant. This study provides insights for scholars and practitioners, emphasizing the importance of nuanced, context-specific analyses of the relationships between CE and financial performance. Practitioners and policymakers should note that the relationship between CE practices and financial performance requires careful consideration and individualized efforts.
AB - The relationship between circular economy (CE) implementation and financial performance is an emerging field of study. CE aims to mitigate environmental impact and enhance sustainability. Despite its growing adoption, however, the link between CE implementation and financial performance remains underexplored and inconsistent in empirical literature. This research explores the relationship between the self-reporting of CE policies and practices and financial performance, contrasting neoliberalism and legitimacy theories, particularly within the context of German manufacturing firms. We used quantitative data from financial and environmental reporting databases, for 28 small and medium publicly listed manufacturers in Germany, as well as supporting secondary qualitative data for 6 companies. Our results reveal no significant correlations between CE scores and various financial measures, such as ROA and profitability growth, challenging the neoliberal assumption that CE engagement is financially motivated. This study contributes to empirical research by suggesting that legitimacy theory, rather than neoliberalism, better explains why companies report CE initiatives. However, we suggest that legitimacy theory can be refined by accounting for how different stakeholders can influence the need for a company to seek legitimacy. In this study, we observed that factors such as having shareholders, company location, or size did not fully explain firm engagement with CE reporting, and we proposed that other factors might be relevant. This study provides insights for scholars and practitioners, emphasizing the importance of nuanced, context-specific analyses of the relationships between CE and financial performance. Practitioners and policymakers should note that the relationship between CE practices and financial performance requires careful consideration and individualized efforts.
KW - Circular Economy
KW - Financial Performance
KW - Legitimacy Theory
KW - Manufacturing
UR - http://www.scopus.com/inward/record.url?scp=85204602957&partnerID=8YFLogxK
U2 - 10.1007/978-3-031-71622-5_10
DO - 10.1007/978-3-031-71622-5_10
M3 - Conference contribution
AN - SCOPUS:85204602957
SN - 9783031716218
T3 - IFIP Advances in Information and Communication Technology
SP - 142
EP - 156
BT - Advances in Production Management Systems. Production Management Systems for Volatile, Uncertain, Complex, and Ambiguous Environments. APMS 2024
A2 - Thürer, Matthias
A2 - Riedel, Ralph
A2 - von Cieminski, Gregor
A2 - Romero, David
PB - Springer
T2 - 43rd IFIP WG 5.7 International Conference on Advances in Production Management Systems 2024
Y2 - 8 September 2024 through 12 September 2024
ER -
