Circular supply chain management in vietnamese manufacturing smes dynamic capabilities, practices and firm sustainabilit Quản lý chuỗi cung ứng tuần hoàn trong các doanh nghiệp sản xuất vừa và nhỏ ở Việt Nam năng động, thực tiễn và tính bền vững của doanh nghiệp
Circular supply chain management (CSCM)
The concept of "circular supply chain" (CSCM) emerged in 2006, as highlighted in a literature review by Farooque et al (2019b) Subsequent studies, such as those by Genovese et al (2017) and Nasir et al (2017), began to connect circular economy (CE) principles with supply chain management (SCM) However, it was not until Farooque et al (2019) that a formal definition of CSCM was articulated, describing it as the integration of circular thinking into supply chain management and its surrounding ecosystems This approach aims to systematically restore technical materials and regenerate biological materials, striving for a zero-waste vision through innovative business models and supply chain functions, encompassing the entire product lifecycle from design to end-of-life, while involving all stakeholders, including manufacturers, service providers, consumers, and users.
In a recent study, Zhang, Wang, Farooque, Wang, and Choi (2021) compared academic research with real-world applications to illustrate how Circular Supply Chain Management (CSCM) integrates multiple dimensions, such as closed-loop supply chain management, reverse supply chain management, remanufacturing supply chain management, recycling supply chain management, and industrial symbiosis.
The newly-developed Circular Supply Chain Management (CSCM) concept introduces three key advancements in supply chain sustainability Firstly, CSCM incorporates cycles that are restorative for technical materials and regenerative for biological materials, effectively applying the principles of the circular economy.
It signifies a paradigm shift in supply chain sustainability research from a "cradle-to-grave" to a "cradle-to-cradle" perspective of Genovese et al (2017) Second, the zero-waste concept of
Circular Supply Chain Management (CSCM) promotes the use of non-virgin materials through systematic resource circulation within supply chains, extending beyond traditional sustainable and green supply chain management approaches Unlike closed-loop supply chains (CLSCs), circular economy (CE) offers a broader perspective on sustainability, emphasizing value recovery from end-of-life (EOL) products In CSCM, the recovery of value is not confined to the producer's supply chain; businesses collaborate within and across various industry sectors to reclaim value from EOL products and waste These collaborations often involve secondary supply chain networks and new auxiliary actors, fostering a more integrated approach to sustainability.
Recent research highlights the importance of transitioning to a Circular Economy (CE), particularly in relation to conventional supply chain sustainability principles (Genovese et al., 2017; Li et al., 2020; Van Wassenhove, 2019) However, existing studies lack a unified approach to Circular Supply Chain Management (CSCM) Early efforts by Zhu, Geng, and Lai (2010; 2011) aimed to define CE activities at the company level but did not adequately address the circularity of assessment items for CE practices Their construct focused on measuring components of green supply chain management, as exemplified by Zhu and Sarkis (2004) Additionally, recent adaptations of CE practices have relied on the same measurement items (Edwin Cheng et al., 2022), indicating a need for new metrics that incorporate the circularity of relevant practices.
This study suggests three perspectives for analyzing CSCM, including CSCM practices, supply chain dynamic capabilities and firm sustainability performance.
Theoretical background and hypotheses development
Theoretical background
2.2.1.1 Circular supply chain management practices (CSCM practices)
This article introduces five key Circular Supply Chain Management (CSCM) practices: circular product design, circular procurement, circular production, and end-of-life (EoL) product and waste management A comparative analysis is provided in Table 2-1, highlighting how these practices align with existing constructs in the current literature.
Table 2-1:CSCM practices vs SCM sustainability practices
CSCM Practices Related construct (s) Key differences
Circular product design Eco-design
(Guang Shi, Lenny Koh, Baldwin, & Cucchiella, 2012;
(C Chen, Zhu, Yu, & Noori, 2012; Kleindorfer, Singhal, &
Principles, tactics, and methodologies used in circular product design and competing design concepts vary (for a complete examination, see Bocken,
De Pauw, Bakker, and Van Der Grinten (2016); Den Hollander, Bakker, and Hultink (2017)) The circular product design concept includes circularity and end-of-life considerations (Farooque et al., 2019b)
(Blome, Hollos, & Paulraj, 2014; Carter & Jennings,
(M Lo, 2013; Min & Galle, 1997; Zsidisin & Hendrick,
The current green and environmental purchasing processes do not include
CE principles (Farooque et al., 2019b) Circular procurement focuses on using non-virgin raw materials to create closed energy and material loops within supply chains (Commission, 2020)
CSCM Practices Related construct (s) Key differences
Carter, Ellram, & Ready, 1998; Carter, Kale, &
Ulgiati, 2016; Sousa-Zomer, Magalhães, Zancul, Campos,
(Gaustad, Krystofik, Bustamante, & Badami, 2018; Scarpellini, Valero‐
Current research on supply chain sustainability needs to place greater focus on manufacturing and production processes Ghisellini et al (2016) emphasize that cleaner production is vital for implementing circular economy (CE) principles at the company level Despite its importance, cleaner production is often treated as a separate sustainability practice rather than being integrated into a comprehensive supply chain sustainability strategy (Farooque et al., 2019; Sousa-Zomer et al., 2018) To effectively meet CE objectives, it is crucial to explore how circular production principles influence other processes within the circular supply chain management (CSCM) framework.
(Chin, Tat, & Sulaiman, 2015; Gao, Li, & Song, 2009)
Green distribution aims to reduce environmental harm and waste during transportation, significantly affecting its overall effectiveness (Gao et al., 2009) In contrast, sustainable distribution emphasizes the environmentally responsible transport of goods and services, striving to minimize negative impacts on the environment.
CSCM Practices Related construct (s) Key differences environmental impact from suppliers to manufacturers to final customers to achieve CSCM practices (Esty & Winston, 2009; Green et al., 2012b) EoL product and waste management
Kleindorfer et al., 2005; Van Hoek, 1999)
Mallidis, 2012; Lai & Wong, 2012; M Lo, 2013; Murphy
Environmental recycling and waste practices
The shift from traditional closed-loop recycling in supply chains to a comprehensive strategy for resource recirculation and value recovery involves collaborative efforts both within and beyond these supply chains and industrial sectors.
The transition to a circular economy (CE) necessitates a fundamental shift in design functions, significantly impacting the entire product value chain Research underscores the importance of design in minimizing environmental impacts throughout a product's lifecycle (Brezet, 1997; Cai et al., 2022; Zhu et al., 2007b) A key principle of circular product design is the cradle-to-cradle approach, which differs from traditional supply chain sustainability methods (Burke et al., 2021; Farooque et al., 2019b) This methodology focuses on enhancing products to create a continuous flow of resources while circular design techniques aim to extend product life and maintain integrity by preventing obsolescence (Den Hollander et al., 2017) Additionally, designing products for easy disassembly and reassembly supports the closed-loop resource system.
While green purchasing and environmental purchasing are viewed as eco-friendly methods for sourcing raw materials, they often overlook the principles of circular economy (CE) in procurement processes CE guidelines emphasize that raw materials should not harm the environment Circular procurement focuses on utilizing natural, renewable, biodegradable, and non-hazardous resources to effectively close energy and material loops within the supply chain Practically, circular procurement can lead to the development of sustainable resource flows, the introduction of new procurement channels, and cost savings through resource sharing and reuse.
Circular production, a key practice in circular economy (CE) strategies, focuses on transforming manufacturing systems to enhance resource efficiency and minimize waste generation through closed-loop processes This approach emphasizes the creation of products with extended lifespans that can be repaired, recycled, remanufactured, and refurbished Despite its importance, empirical studies on supply chain sustainability often overlook the impact of production-related activities To effectively integrate circular manufacturing into supply chain sustainability, a systems approach is essential Continuous improvement of manufacturing processes and significant investments in new machinery are crucial for achieving zero waste goals and enhancing energy and material efficiency within the context of Circular Supply Chain Management (CSCM).
Sustainable distribution aims to minimize negative environmental impacts by addressing key factors such as transportation, packaging, warehousing, and inventory control (Sarkis, 2006) It enhances environmental performance by reducing emissions associated with product transport throughout the supply chain (Green et al., 2012) Green packaging characteristics, including materials and design, significantly influence transportation and the overall carbon footprint (Zhu et al., 2008c) Improved packaging and optimized loading patterns can enhance warehouse space utilization, reduce material usage, and boost environmental performance for businesses (Esty & Winston, 2009) Additionally, the design of the logistics network, including options like centralized warehouses or distributed networks and various shipping methods, offers substantial environmental benefits (Lakshmimeera & Palanisamy, 2013).
Effective end-of-life (EoL) product and waste management practices are essential for promoting circular resource flow through strategies like waste-to-energy generation and anaerobic digestion for biological materials These practices also include the reuse, refurbishing, remanufacturing, and recycling of technical materials, which help recover residual value and establish circularity in supply chains Unlike traditional reverse logistics, which focus solely on the original supply chain, resource recirculation and value recovery extend beyond initial supply chains, fostering collaboration among businesses across various sectors to enhance utility Consequently, EoL product and waste management efforts encompass a comprehensive approach aimed at optimizing the entire production system for resource recirculation and value recovery, rather than merely managing reverse flows.
2.2.1.2 Supply chain dynamic capabilities (SCDCs)
The Resource Based View (RBV) theory posits that a firm's unique resources—such as assets, competencies, and knowledge—can create a competitive advantage and improve performance, provided they are valuable, rare, difficult to imitate, and non-substitutable (Barney, 1991) Research by Savino and Shafiq (2018) explored how sustainability resources affect production performance through the RBV framework, while Yu et al (2018) emphasized the importance of data-driven supply chain capabilities in relation to financial performance Additionally, Tseng et al (2019a) highlighted that enterprises can enhance their competitive edge by developing integrative capabilities The suitability of RBV for identifying essential characteristics of sustainable supply chain capabilities was further supported by Tseng et al (2019b), indicating that these capabilities can have complex interactions that either enhance or hinder performance (Black & Boal, 1994; Tseng et al., 2021; Turel et al., 2019) Ultimately, RBV assists firms in recognizing the unique skills vital for successful supply chain management.
The success of sustainability practices in supply chains largely hinges on a firm's sustainability capabilities (Dai et al., 2021) Enhancing Supply Chain Dynamic Capabilities (SCDCs) can significantly improve the effectiveness of Circular Economy (CE) implementation SCDCs encompass a firm's ability to identify, leverage, and adapt both internal and external resources for the benefit of the entire supply chain (Liao et al., 2017; Wu et al., 2006), including essential skills, knowledge, organizational processes, and competencies However, small and medium-sized enterprises (SMEs) in underdeveloped countries face challenges due to limited resources, such as technology, financial support, and technical expertise, which hinders their progress in adopting CE practices (Pereira et al., 2022).
Sustainable Circular Supply Chains (SCDCs) are gaining prominence as a crucial strategy for supporting small and medium-sized enterprises (SMEs) in adopting Circular Supply Chain Management (CSCM) Supply chain capability, defined as a company's proficiency in identifying, leveraging, and harmonizing internal and external resources to enhance supply chain operations, plays a vital role in this process (Liao et al., 2017; Wu et al., 2006) The successful implementation of a circular supply chain hinges on the accuracy and completeness of these resources.
This study derives four aspects to analyze SCDCs, including integration capabilities (IC), learning capabilities (LC), flexibility capabilites (FC), collaboration capabilities (CC)
2.2.1.2.1 Integration capabilities (integrative information technologies)
Ensuring effective integration throughout the supply chain is complex, requiring businesses to foster a shared understanding of sustainability issues among operational activities and logistical synchronization This involves engaging supply chain partners in co-developing innovative solutions and establishing an open, collaborative infrastructure for effective information sharing The adoption of integrative information technologies can significantly enhance the implementation of necessary changes in business activities and routines.
Industry 4.0 is driven by technologies such as big data, cloud computing, simulation, automated analysis, data visualization, artificial intelligence, and IoT solutions, which serve as foundational elements for enhanced interconnectivity and intelligence within manufacturing systems These technologies significantly impact supply chain management by improving performance and transforming processes, enabling the production, collection, and analysis of vast amounts of data across various stages of the value chain.
Numerous studies highlight learning capability as a crucial source of competitive advantage and a determinant of future firm performance (Chiva et al., 2007; Jerez-Gomez et al., 2005) Jerez-Gomez et al (2005) define learning capability as the organizational and managerial traits, routines, and abilities that support a firm's learning processes, including the generation, acquisition, dissemination, and integration of knowledge Additionally, Salim and Sulaiman (2011) emphasize the positive relationship between learning capability and the capacities and operational performance of SMEs, particularly in the context of implementing learning strategies.
Theoretical model
The conceptual framework is based on previous studies regarding circular supply chains and their capabilities, notably referencing the research conducted by Hsu, Kuo, Chen, and Hu (2013), Zhu, Geng, and Sarkis (2013), Den Hollander et al (2017), Esfahbodi et al (2020), and Tseng et al.
Recent studies on circular supply chain management (CSCM) practices in manufacturing SMEs highlight their significant impact on economic, environmental, and social performance (Farooque et al., 2021; Zhang et al., 2022; Agyabeng-Mensah et al., 2023) Researchers, including Kim (2017) and Hussain and Malik (2020), argue that prior capability research has been overly firm-centric and static, failing to address the dynamic nature of today's supply chains The integration of capabilities and CSCM practices enhances company adaptability, providing a competitive edge Del Giudice et al (2021) emphasize that aligning capabilities with CSCM practices is essential for maximizing competitive performance, while Dai et al (2021) assert that a firm's sustainability capabilities are crucial for the effective implementation of sustainability policies within the supply chain.
In 2022, the establishment of Sustainable Circular Distribution Centers (SCDCs) is shown to enhance the effectiveness of Circular Economy (CE) implementation across the supply chain This study explores the relationship among Circular Supply Chain Management (CSCM) practices, SCDCs, and corporate sustainability performance, aiming to develop a model that elucidates the interaction between these three elements The theoretical framework outlined herein serves as the foundation for this research.
In light of the underlying rationale, the following subsections present the detailed hypotheses related to the relationships of the research model.
Hypotheses development
2.2.3.1 CSCM Practices and Firm sustainability performance
Numerous studies have explored how CSCM practices enhance firm performance, though the effectiveness of these practices across economic, environmental, and social dimensions remains debated A survey by Hong, Zhang, and Ding (2018) involving 209 Chinese manufacturing companies indicated that SSCM practices positively influence all three sustainability performance dimensions Additionally, J Wang and Dai (2018) found that internal SSCM practices significantly enhance a firm's environmental and social performance, which in turn positively correlates with economic performance Esfahbodi and Zhang (2020) focused on environmental and economic aspects, revealing that while SSCM practices improved environmental performance among UK and Chinese manufacturers, their impact on economic performance was inconsistent, with sustainable procurement being the only factor that reliably boosted economic outcomes Recent research by Kamble et al (2021) and Jabbour et al (2020) further affirmed a strong positive link between CSCM practices and business sustainability performance, leading to the formulation of several hypotheses.
H1: CSCM practices are positively associated with firm sustainability performance
• H1a: CSCM practices are positively associated with economic performance
• H1b: CSCM practices are positively associated with environmental performance
• H1c: CSCM practices are positively associated with social performance
2.2.3.2 SCDCs and firm sustainability performance
Research indicates that existing capabilities significantly enhance business performance, with dynamic capabilities enabling companies to gain a competitive edge (Eriksson, 2013) To optimize supply chain processes and foster collaboration among partners, businesses should leverage integrative information technologies for effective data analysis (Gupta et al., 2019) Moreover, increasing flexibility is essential for rapid, cost-effective responses to market changes, thereby boosting supply chain and organizational competitiveness (Bai et al., 2020) Supply chain collaboration, characterized by information sharing, mutual trust, teamwork, joint problem-solving, and executive involvement, is a vital capability (Liao et al., 2021) Furthermore, employees' understanding of circular knowledge and skills related to key customers and suppliers contributes to improved firm performance and competitive advantage (Dibia et al., 2020) Thus, this study posits that:
H2: SCDCs are positively associated with firm sustainability performance
• H2a: SCDCs are positively associated with economic performance
• H2b: SCDCs are positively associated with environmental performance
• H2c: SCDCs are positively associated with social performance
2.2.3.3 The moderating effect of SCDCs
Short-term competitive advantages can be achieved through Supply Chain Management (SSCM), which can be further enhanced by the ongoing development of dynamic capabilities (Eriksson, 2013) Additionally, fostering customer orientation and engagement in SSCM practices is crucial, as highlighted by Khan and Qianli.
In 2017, it was emphasized that providing comprehensive information can enhance dynamic capabilities and boost sustainable performance Ernst and Kim (2002) explored how a company's competencies evolve and disseminate across a global supply chain, highlighting that access to resources and information from various supply chain participants is crucial for capability advancement Additionally, Prieto, Revilla, and Rodríguez-Prado (2009) underscored the importance of trust among supply chain partners in fostering a firm's dynamic capabilities.
Research indicates that Sustainable Supply Chain Management (SSCM) practices may not inherently provide a competitive advantage (Hazen, Cegielski, & Hanna, 2011) However, SSCM can enhance an enterprise's competitiveness by minimizing linkages (Dubey et al., 2017) From a resource-based perspective, dynamic capabilities are essential for managing sustainable resources to boost performance (Lin & Wu, 2014) Kim and Han (2012) explored whether dynamic learning capabilities can effectively mitigate the performance impact of SSCM practices Numerous studies have established a connection between SSCM practices, dynamic capabilities, and firm performance (Hong et al., 2018; Isnaini et al., 2020) These findings suggest that strong supplier relationships enhance production flexibility and product optimization, thereby improving overall firm performance, with dynamic capabilities serving as a crucial linking factor between SSCM practices and enterprise success.
This study focuses on the moderating effect of Supply Chain Dynamic Capabilities (SCDCs) on the relationship between Sustainable Supply Chain Management (SSCM) practices and firm sustainability performance, specifically within Vietnamese manufacturing SMEs We do not examine the linking effect of dynamic capabilities on SSCM practices and firm performance; rather, we utilize dynamic capabilities as a theoretical framework to support our hypothesis.
H3: SCDCs significantly moderate in the relationship of CSCM Practices and firm sustainability performance
• H3a: SCDCs significantly moderate in the relationship of CSCM Practices and economic performance
• H3b: SCDCs significantly moderate in the relationship of CSCM Practices and environmental performance
• H3c: SCDCs significantly moderate in the relationship of CSCM Practices and social performance
Contextual factors, including the influence of firm partners, can significantly impact the implementation of Collaborative Supply Chain Management (CSCM) As supported by Zhu et al (2007), international customers exert normative pressure on companies, compelling them to improve their environmental performance.
Adopting Circular Supply Chain Management (CSCM) can effectively enhance environmental performance for firms with a significant share of international clients, without compromising financial outcomes Wealthy nations impose stricter environmental certifications and regulations, prompting Vietnamese producers to adopt CSCM to mitigate trade barriers The demand from foreign consumers motivates businesses to implement more environmentally friendly strategies, including R&D initiatives Additionally, companies generating a larger portion of their revenue from international markets are likely to experience increased legal pressure to adopt sustainable practices.
H4: There are differences in the level of implementation of CSCM practices according to the firm partner
Variable measurement and questionaire design
This cross-sectional and correlational study focuses on Vietnamese manufacturing SMEs, investigating the relationship between supply chain management (SCM) practices, sustainable supply chain development capabilities (SSCDC), and business sustainability performance Utilizing a quantitative approach, data was collected through a self-administered questionnaire to analyze these associations effectively.
This study utilized existing literature to develop questionnaires that assess various variables related to Circular Supply Chain Management (CSCM) practices, modeled as a second-order construct comprising five first-order constructs: circular product design, circular procurement, circular production, sustainable distribution, and end-of-life product and waste management Respondents rated the implementation level of these practices in their organizations using a five-point Likert scale, from 1 (no implementation) to 5 (fully implemented) Additionally, four first-order constructs were used to measure Supply Chain Dynamic Capabilities (SCDCs), including integration capability, learning capability, flexibility capability, and supply chain collaboration The effectiveness of an organization's sustainability strategy was evaluated based on improvements in operations, market position, financial performance, environmental protection, resource utilization, and social responsibility Participants assessed their company's sustainability performance over the past year against industry competitors, with a one-year lag mitigating bias between practice introduction and outcomes For SCDCs and sustainability performance, a five-point Likert scale was employed, ranging from 1 (not at all) to 5 (significant).
Each survey section begins with a concise description of the three groups of items to help respondents navigate the two distinct five-point Likert scales without confusion For a detailed overview of the variable measurements, please refer to Table 3-1 below.
Table 3-1:Constructs and their measurements
Please indicate the extent to which you perceive that your company is implementing each of the following
(five-point scale: 1 = no implementation; 2 = planning to consider implementation; 3 = currently considering implementation; 4 = initiating implementation; 5 = implementing fully)
Circular product design Brezet (1997); Zhu et al
• We design our products for reduced consumption of material/energy
• We design our products for reuse, recycle, recovery of material, component parts
• We design our products for longevity and durability
• We design our products to avoid or reduce use of hazardous of products and/or their manufacturing process
Circular procurement Carter and Carter
• We require our main suppliers to use materials that are used (non-virgin), repaired, refurbished, remanufactured or recycled
• We require main suppliers to use environmentally- friendly packaging (e.g., non- hazardous and recycled, etc.)
• We consider water and energy savings in product use when purchasing products
• We prefer renewable energy sources when selecting energy providers
• We consider the amount of waste production in product use when purchasing products
• We consider the impact of transportation emissions when selecting suppliers
Circular production Scarpellini et al (2020),
Gaustad et al (2018), Ghisellini et al (2016)
• We use the discarded product which is still in good condition and fulfils its original function again (e.g., second hand, sharing of products)
• We repair and maintain the deficient or damaged products and their parts so products can be used longer
• We revive old products to give them new life so, products are transformed into updated products
• We make new product by using a second hand or discarded products with their former attributes
• We redeem used/waste materials or resources to reuse the materials again for the production with the highest possible value
Sustainable distribution Esfahbodi et al (2020);
• We cooperate with customers for using less energy during product transportation
• We cooperate with customers for green packaging
• We use of renewable energy in any mode of products transportation
• We use of renewable energy in the process of products packaging
• We upgrade freight logistics and transportation systems (either software or hardware such as minimising empty miles, reducing container weight, improving refrigeration, etc.)
• We tracking and monitoring emissions caused in products distributions (e.g., carbon footprint)
Carter and Ellram (1998); Hsu et al
• We collect expired/unsold products from distribution network
• We collect used/end-of-life products from customers
• We return products to suppliers
• We require your main suppliers to collect their packaging materials from our firm (i.e., packaging materials of supplied materials or components)
• We collect packaging from customers
Please indicate the extent to which you perceive that your company has achieved each of the following during the past year
(five-point scale: 1 = not at all; 2 = a little bit; 3 = to some degree; 4 = relatively significant; 5 = significant)
Integartion capability Campos et al (2020)
Dev, Shankar, and Qaiser (2020); Hidalgo et al (2020); Hussain and Malik (2020)
• We use computerized production systems such as ERP, MRP or MRP II for planning, tracking and ordering component and products through manufacturing operations
• We monitor, trace and automate reverse flows by big data
We leverage the Internet of Things to enhance circularity, utilizing data to optimize waste collection processes This approach not only reduces costs but also increases the value generated from recovery efforts, promoting a more sustainable and efficient waste management system.
We leverage Industry 4.0 technologies to enhance value chain coordination, utilizing globalized information technology that facilitates the storage of vast amounts of data in a global cloud system This allows for easy access and retrieval of information by various players across the supply chain, improving efficiency and collaboration.
Learning capability Lisi, Zhu, and
• We have established a strong capability in understanding circular knowledge and skills of our major customers and suppliers
• We constantly learn better ways to work with our major suppliers and customers to jointly deal with environmental issues
• We have learnt new environmental management abilities from our major supplier and suppliers
• We can acquire important environmental protection information from our major suppliers and customers
Flexibility capability Chirra, Raut, and
Kumar (2020), Bai and Sarkis (2020), Esmaeilikia et al (2016)
• We respond to changes in green product changes
• We have the availability of recycled resources
• We quickly respond to changes in market demand toward circularity
• We collaborate with supply chain partners within and beyond the immediate industrial boundaries to enable circular supply chain
• We enhance information sharing and technological support within the value chain
• We can effectively coordinate the interests and promote effective cooperation among members of the supply chain
• We enable relationships among actors in terms of the collaboration element of cross-functional activities Firm sustainability performance
Please indicate the extent to which you perceive that your company has achieved each of the following during the past year
(five-point scale: 1 = not at all; 2 = a little bit; 3 = to some degree; 4 = relatively significant; 5 = significant)
Economic performance Bhatia et al (2020);
• We reduce products’ costs drives firms to deal with circular supply chain
• We implement circular supply chain to advance the long-term revenue generation by efficient recycling and remanufacturing activities
• We implement sustainable manufacturing practices assure competitive advantages for firms in the market
• We adopt circular supply chain as a way to position firms to react to the market, strengthens sustainable business and growth
• We adopt circular supply chain management results in waste generation reduction
• We adopt circular economy arising from the demand to decrease adverse environmental impacts
• We adopt 9-Rs principle to contribute substantially to the resource conservation and energy saving
Social performance Bhatia et al (2020);
• We supply healthy and safe working conditions and accomplish social welfare responsibility to find
Constructs Variables References Items enhanced support from each employee to fulfil the objective
• We pay properly wages and benefit to employees related sustainable employment issues
• We execute remanufacturing practices to reinforce green image and reputation
• We face intense and radical competition in the environment to perform CSCM which increase our potential to achieve competitive advantage
The survey items were meticulously crafted following an extensive literature review to ensure high content validity To enhance the measurement scale, insights from a supervisor with 20 years of experience in supply chain management were incorporated Following the collection of diverse opinions, the items were refined to develop the final questionnaire.
Sample data collection
This study focuses on small and medium-sized enterprises (SMEs) implementing circular supply chain management (CSCM) practices in emerging markets, specifically Vietnamese manufacturing SMEs According to the OECD (2021), organizations are classified based on employee count, with small businesses having 10 to 49 employees and medium-sized firms having 50 to 249 employees SMEs are crucial for national economic development (Manzoor et al., 2021), but they also contribute significantly to adverse environmental impacts in their supply chain operations (Lewis, Cassells, & Roxas, 2015) The industrial sector is particularly relevant, as it plays a major role in environmental degradation (Sundaram et al., 2017) Therefore, this paper aims to identify effective circular strategies to enhance the economic, social, and environmental performance of manufacturing enterprises.
Firm Industry Basic metals/Metal product
Automotive/Transport equipment/Vehicle Electrical appliances/Household appliances Pharmaceutical/Treatment
Food/Beverage/Wine/Tobacco Building material/ Building & decorative Coke/Petroleum
Electronics/Communication Textile/Apparel/Leather Rubber/Plastics
Paper/Printing/Publishing Wood/Furniture
State-owned Joint venture Foreign owned Collective Limited company
R&D manager Production manager Operation manager Employee
The survey targets senior workers, managers, and directors in Vietnamese manufacturing SMEs who possess a comprehensive understanding of their supply chain and company success To ensure robust findings, the researcher aims to exceed the minimum respondent requirement of 30, as established by Hair (2009), by leveraging connections with industry professionals and utilizing their own network to gather additional insights.
The sampling process adhered to established criteria to enhance sample eligibility and quality, focusing on SME associations within the manufacturing sector The researcher distributed an open letter via the associations' communication channels, inviting firms to participate in this legitimate scientific study aimed at understanding how Vietnamese manufacturing SMEs engage with the circular supply chain Emphasizing the importance of honest responses, the researcher assured participants that their information would remain confidential and used solely for research purposes Utilizing a non-random sampling method, consistent with previous studies (Zhu et al., 2011; Zhu and Sarkis, 2004), the researcher addressed challenges in data collection related to organizational practices in the Vietnamese manufacturing industry By calculating mean responses on a 5-point Likert scale regarding the implementation of circular supply chain management practices, the study confirmed that all values exceeded 3, indicating that the firms qualified for the target population, resulting in 53 eligible samples for the primary survey.
Measurement model
The measurement model was assessed using various indices, including Cronbach's Alpha, composite reliability (C.R), correlation coefficient, factor loading, average variance extracted (AVE), Fornell and Larcker criterion, and the heterotrait-monotrait ratio of correlations (HTMT) This evaluation focused on the convergent validity, discriminant validity, and reliability of the scales Following the recommendations of Hair et al (2019), a scale is deemed reliable if it has a Cronbach's Alpha and C.R values exceeding 0.7, and a correlation coefficient above 0.3 In this study, all Cronbach's Alpha and C.R values were found to be greater than 0.7, while the correlation coefficient also surpassed 0.3, confirming the scale's reliability.
The study's findings reveal that factor loading and Average Variance Extracted (AVE) values exceed 0.7 and 0.5, respectively, confirming convergent validity as per F Hair Jr, Sarstedt, Hopkins, and G Kuppelwieser (2014) Supporting evidence for scale validity and convergent validity is presented in Table 4-1 Furthermore, discriminant validity was assessed using Fornell, Larcker, and HTMT criteria, with results indicating that discriminant validity is confirmed; specifically, the square root of AVE values, highlighted in bold at the top of each column in Table 4-2, is greater than the correlation coefficients, as established by Fornell & Larcker (1981).
According to Henseler, Hubona, and Ray (2016), discriminant validity is established when the Heterotrait-monotrait ratio of correlations (HTMT) is less than 0.85 The HTMT analysis conducted confirms this, as the results presented in Table 4-3 indicate that all values are below the 0.85 threshold, thereby supporting the presence of discriminant validity.
Table 4-1 : Reliability and convergent validity analysis
The whole scale The whole reliability 36 0,889
Table 4-2: Fornell and Larcker Criterion for Discriminant Validity
CSCM Practices EP EnP SCDCs SP
Table 4-3: Heterotrait-Monotrait Ratio of Correlations (HTMT)
CSCM Practices EP EnP SCDCs SP
Structural model: structural equation analysis
Direct effect analysis
To test the hypotheses, we utilized PLS-SEM with SmartPLS 4.0, evaluating the R² values for three dependent variables: economic performance, environmental performance, and social performance The R² values were found to be 0.616, 0.457, and 0.409, respectively, while the Q² values were 0.551, 0.404, and 0.304 These results, as shown in Table 4-4, demonstrate the model's substantiality.
Table 4-4: Predictive Relevance and R2 of the Model
Table 4-5: Results for structural model evaluation
Hypotheses Path direction Path coefficient
H2c SCDCs à Social Performance 0.226 1.934 0.057 Not supported
We evaluated the significance and relevance of the structural model relationships using the bootstrapping technique, as illustrated in Figure 4-1 By bootstrapping the constructs, we analyzed the significance of the path coefficients, detailed in Table 4-5 The results show that the p-values for hypotheses H1a, H1c, and H2b are highly significant, while H1b also demonstrates significance with a p-value below 0.05, thus supporting H1a, H1b, H1c, and H2b Conversely, the p-values for H2a and H2c exceed 0.05, indicating a lack of significance and leading to the conclusion that H2a and H2c are not supported.
Indirect moderating effect analysis
Figure 4-1 : The structural model relationships using bootstrapping technique
The research model hypothesizes that the relationship between supply chain management (SCM) practices and sustainability performance in Vietnamese manufacturing SMEs is influenced by supply chain dynamic capabilities A two-stage computation approach, as recommended by Ching and Moreira (2014), was employed to assess the significance of the moderating effect on this relationship.
41 exogenous and endogenous variables This study has employed Ha and Tran (2018) criteria to assess if the moderation condition is present to examine the moderation hypotheses
According to the moderation study's results (see Table 4-6), SCDCs are thought to moderate the association between CSCM practices and economic performance ( = 0.239, p-value
The findings indicate that Sustainable Community Development Councils (SCDCs) play a significant moderating role in the relationship between Circular Supply Chain Management (CSCM) practices and various measures of sustainable performance, including economic performance (p-value = 0.000), environmental performance (p-value = 0.008), and social performance (p-value = 0.007).
Hypotheses Path direction Path coefficient
H3b CSCM Practices*SCDCs àEnvironmental Performance 0.112 2.950 0.008 Supported
The non-parametric Kruskal-Wallis test was utilized in this study to evaluate H4, following the methodology of Hong et al (2018) The results indicate significant differences in the implementation of Customer Supply Chain Management (CSCM) practices based on the type of firm partner, confirming H4 Specifically, firms that serve foreign partners demonstrate higher levels of CSCM practice implementation, while those working with domestic partners exhibit lower levels, as detailed in Table 4-7.
Table 4-7: CSCM practices implementation level by firm partner
Note: The values represent the mean answers with regard to the level of implementation of CSCM practices on a 5 point Likert scale
Previous studies (Esfahbodi & Zhang, 2020; Farooque et al., 2022; J et al., 2018; Z et al., 2013) had documented numerous instances of SSCM enhancing firm performance in numerous nations
In line with their conclusions, recent research (Agyabeng-Mensah et al., 2023; Farooque et al.,
The literature review highlights the impact of implementing Collaborative Supply Chain Management (CSCM) practices, which offer a variety of benefits These advantages include tactical-level operational improvements aimed at boosting economic gains, as well as strategic values that may take longer for businesses to fully achieve (Kurnia, 2022).
Implementing Circular Supply Chain Management (CSCM) practices is essential for businesses aiming to maintain leadership in the sustainability market, increase market share, and enhance profitability (Tseng et al., 2021) Beyond operational benefits, CSCM provides strategic advantages that enable companies to meet their responsibilities to society, the environment, and stakeholders (Lahane et al., 2020; Tseng et al., 2023) In the context of Vietnam's supply-side reform, selecting downstream enterprises for CSCM implementation can effectively eliminate highly polluting and energy-inefficient products, ensuring compliance with environmental protection regulations and improving overall environmental performance (Tseng et al., 2021).
A study indicates that Sustainable Supply Chain Decisions (SCDCs) have a notable impact on environmental performance, but do not significantly influence economic or social performance Similarly, Esfahbodi, Zhang, and Watson (2016) found that while Sustainable Supply Chain Management (SSCM) enhances environmental performance in emerging economies, it primarily leads to ongoing improvements in cost performance This notion is further supported by various research studies.
The dynamic capability of supply chains significantly enhances environmental performance, as highlighted by Green et al (2012) and Zhu et al (2007) By strengthening overall dynamic capabilities, key firms within the supply chain can increase their innovativeness and effectiveness in environmental monitoring, leading to improved business sustainability and comprehensive environmental oversight Recent successful initiatives in China, such as those by the Sustainable Development Alliance in collaboration with Chinese partners and supported by the Walmart Foundation, exemplify efforts to bolster environmental protection and social sustainability among local businesses.
Furthermore, Winter (2003) contends that the expense of ad hoc problem-solving is why
SC dynamic capability has little impact on economic performance According to Jeroen (2010), externalities and sustainability are related, and the impact of sustainable capacities on corporate
The emphasis on the triple bottom lines can lead to increased costs, making it essential for businesses to focus on input-output efficiency to achieve sustained performance As highlighted by Pagell and Wu (2009), firms must balance profitability with success across these dimensions However, many manufacturers in emerging economies face challenges in implementing sustainable supply chain management (SSCM) due to the slow responsiveness of supply chain dynamic capabilities affecting economic performance (Paulraj et al., 2008) When aligned with financial objectives, SSCM can enhance organizational performance and support long-term strategies (Carter & Rogers, 2008) It is important to note that developing and implementing dynamic capabilities in social management may require a longer timeframe for performance gains compared to static capabilities (Klassen & Vereecke, 2012).
This study reinforces the moderating role of supply chain dynamic capabilities (SCDCs) in the relationship between supply chain management (SCM) practices and business sustainability performance, particularly in Vietnamese manufacturing SMEs Building on the work of Defee and Fugate (2010), which highlights how SCDCs can foster sustained competitive advantage, the findings suggest that higher levels of SCDCs significantly enhance the impact of SCM practices on sustainability performance This research replicates earlier studies indicating the strong indirect influence of supply chain dynamic skills on improving sustainability through sustainable supply chain management (SSCM) activities Consequently, these insights encourage managers to adopt SCM practices, providing a framework for enhancing organizational sustainability and boosting overall competitiveness and performance.
This study reveals that each company partner exhibits different levels of implementing Circular Supply Chain Management (CSCM) practices Supporting this conclusion, research by X Chen, Chen, Jiang, and Yan (2021) indicates that the adoption of green Supply Chain Management (SCM) methods differs among firm partners Consequently, firm-level characteristics play a crucial role in influencing the extent of CSCM practice implementation.
Theoretical contributions
This paper makes significant theoretical contributions by addressing a research gap regarding the moderating role of Supply Chain Disruptive Capabilities (SCDCs) in the relationship between Circular Supply Chain Management (CSCM) practices and firm sustainability performance, an area previously overlooked in literature Additionally, it emphasizes the need for more empirical research on circular supply chain management in developing and emerging economies, where existing studies have predominantly focused on developed nations This study serves as a foundational exploration of CSCM practices in underdeveloped countries, providing empirical evidence that highlights the potential for improved CSCM performance in these regions, thereby filling a crucial gap in the current body of research.
Managerial implications
Our study highlights the practical implications of the moderating role of supply chain (SC) dynamic capabilities in enhancing the relationship between circular supply chain management (CSCM) practices and firm sustainability performance By integrating dynamic capability theory with the resource-based view, we demonstrate how companies can achieve and sustain competitive advantages in a rapidly changing environment Furthermore, the rise of digital technologies, including big data analytics (BDA) and blockchain, is facilitating information-driven collaborations among supply chain participants to implement circular economy (CE) and CSCM initiatives Consequently, businesses must enhance their supply chain dynamic capabilities (SCDCs) to effectively adapt to environmental changes, foster sustainable competitive advantages, and evaluate their practices in relation to the triple bottom line across the supply chain.
Managers should view Circular Supply Chain Management (CSCM) as a cohesive system rather than a series of isolated tasks within the company and its supply chain In circular supply chains, products are intentionally designed for circularity throughout their life cycle, ensuring that no waste is generated This approach emphasizes that materials used in production are not meant to be discarded after their useful life, with a significant portion of the resources for these circular products sourced from sustainable practices.
Circular supply chain management (SCM) plays a vital role in promoting sustainability by focusing on circular product design and end-of-life (EoL) waste management Businesses should prioritize circular procurement by selecting products that facilitate closed loops of energy and materials, thereby minimizing waste and reducing negative environmental impacts Additionally, adopting eco-friendly production techniques can enhance material efficiency, conserve energy, and lower waste and emissions, contributing to a more sustainable future.
Circular Economy (CE) is a complex field that necessitates collaboration among various stakeholders, including governments, industries, local businesses, NGOs, and consumers Effective resource management relies on these groups working together Companies should focus on building systemic sustainability partnerships aimed at enhancing business processes and outcomes, particularly within supply chains For example, businesses can strategically partner with stakeholders like retailers or waste management agencies to improve end-of-life product handling and waste management, ultimately addressing significant challenges such as resource consumption.
Limitations and future research
This quantitative study is limited by a small sample size, which affects the universality of the results despite minimal impact on the structural equation model's goodness of fit index A larger sample would reduce measurement errors in latent variables and allow for an exploration of how factors like industry background and geographic distribution influence the findings Due to this sample size limitation, the study does not address the effects of these background factors on the relationship between circular supply chain management practices, supply chain dynamic capabilities, and firm sustainability performance Future research aims to enhance and expand upon these findings.
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Appendix: Survey on Circular supply chain management of Vietnamese manufacturing SMEs: Dynamic capabilities, Practices and Firm sustainability performance
I would like to invite you to be an information provider for my ongoing research with the topic
"Circular supply chain management of Vietnamese manufacturing SMEs: Capabilities, Practices and Firm sustainable performance." , supported by Dr Tran Cong Thanh - Lecturer at
The International School, Vietnam National University, Hanoi
I kindly invite you to take a moment to participate in this survey, as your responses are crucial for the success of my research project Each completed survey not only provides valuable data but also serves as a significant source of encouragement and support Thank you for your valuable time and contribution.
I promise that the information you provide will only be used for research purposes
Thank you very much for your contribution!
63 o Private o State-owned o Joint venture o Foreign owned o Collective o Limited company
Respondent’s position o CEO o R&D manager o Production manager o Operation manager o Employee
Firm partner o Foreign partner o Domestic partner
Please indicate the extent to which you perceive that your company is implementing each of the following
(five-point scale: 1 = no implementation; 2 = planning to consider implementation; 3 = currently considering implementation; 4 = initiating implementation; 5 = implementing fully)
• We design our products for reduced consumption of material/energy
• We design our products for reuse, recycle, recovery of material, component parts
• We design our products for longevity and durability
• We design our products to avoid or reduce use of hazardous of products and/or their manufacturing process
• We require our main suppliers to use materials that are used (non- virgin), repaired, refurbished, remanufactured or recycled
• We require main suppliers to use environmentally-friendly packaging
(e.g., non- hazardous and recycled, etc.)
• We consider water and energy savings in product use when purchasing products
• We prefer renewable energy sources when selecting energy providers
• We consider the amount of waste production in product use when purchasing products
• We consider the impact of transportation emissions when selecting suppliers
• We revive old products to give them new life so, products are transformed into updated products
• We make new product by using a second hand or discarded products with their former attributes
• We redeem used/waste materials or resources to reuse the materials again for the production with the highest possible value
• We use the discarded product which is still in good condition and fulfils its original function again (e.g., second hand, sharing of products)
• We repair and maintain the deficient or damaged products and their parts so products can be used longer
• We cooperate with customers for using less energy during product transportation
• We cooperate with customers for green packaging
• We use of renewable energy in any mode of products transportation
• We use of renewable energy in the process of products packaging
• We upgrade freight logistics and transportation systems (either software or hardware such as minimising empty miles, reducing container weight, improving refrigeration, etc.)
• We tracking and monitoring emissions caused in products distributions
• We collect expired/unsold products from distribution network
• We collect used/end-of-life products from customers
• We return products to suppliers
• We require your main suppliers to collect their packaging materials from our firm (i.e., packaging materials of supplied materials or components)
• We collect packaging from customers
Please indicate the extent to which you perceive that your company has achieved each of the following during the past year
(five-point scale: 1 = not at all; 2 = a little bit; 3 = to some degree; 4 = relatively significant; 5 = significant)
• We use computerized production systems such as ERP, MRP or MRP
II for planning, tracking and ordering component and products through manufacturing operations
• We monitor, trace and automate reverse flows by big data
We leverage the Internet of Things to enhance circularity, utilizing data to streamline and optimize waste collection processes This approach not only reduces costs but also boosts the value generated from waste recovery efforts, promoting a more sustainable future.
We leverage Industry 4.0 technologies to enhance value chain coordination through advanced global information systems These systems facilitate the storage and retrieval of vast amounts of data in a global cloud, accessible by all participants in the supply chain from any location.
• We have established a strong capability in understanding circular knowledge and skills of our major customers and suppliers
• We constantly learn better ways to work with our major suppliers and customers to jointly deal with environmental issues
• We have learnt new environmental management abilities from our major supplier and suppliers
• We can acquire important environmental protection information from our major suppliers and customers
• We respond to changes in green product changes
• We have the availability of recycled resources
• We quickly respond to changes in market demand toward circularity
• We collaborate with supply chain partners within and beyond the immediate industrial boundaries to enable circular supply chain
• We enhance information sharing and technological support within the value chain
• We can effectively coordinate the interests and promote effective cooperation among members of the supply chain
• We enable relationships among actors in terms of the collaboration element of cross-functional activities
Please indicate the extent to which you perceive that your company has achieved each of the following during the past year
(five-point scale: 1 = not at all; 2 = a little bit; 3 = to some degree; 4 = relatively significant; 5 = significant)
• We reduce products’ costs drives firms to deal with circular supply chain
• We implement circular supply chain to advance the long-term revenue generation by efficient recycling and remanufacturing activities
• We implement sustainable manufacturing practices assure competitive advantages for firms in the market
• We adopt circular supply chain as a way to position firms to react to the market, strengthens sustainable business and growth
• We adopt circular supply chain management results in waste generation reduction
• We adopt circular economy arising from the demand to decrease adverse environmental impacts
• We adopt 9-Rs principle to contribute substantially to the resource conservation and energy saving
• We supply healthy and safe working conditions and accomplish social welfare responsibility to find enhanced support from each employee to fulfil the objective
• We pay properly wages and benefit to employees related sustainable employment issues
• We execute remanufacturing practices to reinforce green image and reputation
• We face intense and radical competition in the environment to perform
CSCM which increase our potential to achieve competitive advantage
SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom - Happiness
EXPLANATORY REPORT ON CHANGES/ADDITIONS BASED ON THE DECISION OF GRADUATION THESIS COMMITTEE
FOR UNDERGRADUATE PROGRAMS WITH DEGREE AWARDED BY VIETNAM
Student’s full name: Nguyen Thi Nga
Graduation thesis topic: Circular Supply Chain Management in Vietnamese manufacturing SMEs: Dynamic capabilities, Practices and Firm sustainabilty performance
In accordance with VNU-IS’s decision no …… QĐ/TQT, dated … / … / ……., a Graduation Thesis Committee has been established for Bachelor programs at Vietnam National University, Hanoi The thesis underwent defense and modifications in the specified sections.
No Change/Addition Suggestions by the Committee Detailed Changes/ Additions Page
1 Unclear questionnaire in the research
2 Reason for choosing SMEs instead of large companies
• SMEs made up a large proportion of all businesses in Vietnam so they are the engine for the nation’s economic development 35
3 Unclear report on the companies in the sample
This research employed a non-sampling method due to challenges in acquiring data on organizational practices of firms implementing Collaborative Supply Chain Management (CSCM) within the Vietnamese manufacturing sector To validate the eligibility of the sample, the author calculated the mean responses concerning the level of adoption.