Enhancing circular supply chain performance through proper design: role of sustainability culture and absorptive capacity

Purpose The study investigates how and why manufacturing firms enhance their circular supply chain (CSC) design. Drawing on the tenets of the natural resource-based view (NRBV), the study empirically investigates a framework and a set of hypotheses that demonstrate how sustainability culture and firms’ absorptive capacity influence their CSC design for enhancing CSC performance. Design/methodology/approach The framework and the associated hypotheses are evaluated using a partial least squares structural equation modeling approach. The study is based on responses from 221 professionals from the Indian manufacturing sector collected via a structured questionnaire survey. Findings The findings revealed that CSC design significantly improves the CSC performance of firms, providing a solid reason for designing a CSC. The findings also showed that sustainability culture serves as an antecedent to CSC design, which improves CSC both directly and indirectly via absorptive capacity. Moreover, the result confirms the direct role of absorptive capacity in improving CSC design and its mediating role in the relationship between sustainability culture and CSC design. Research limitations/implications The study uses cross-sectional data from India’s manufacturing sector, limiting its geographical generalizability. Hence, the findings should be used cautiously. Practical implications Utilizing sustainability culture and absorptive capacity, the current study provides a solid understanding of the mechanisms of CSC design and, hence, CSC performance. The findings of the study can assist managers in the manufacturing sector in transitioning to CSC. Originality/value The study extends the NRBV in the CSC context. Moreover, to the best of the authors’ knowledge, this is among the first to demonstrate a causal relationship between sustainability culture and absorptive capacity and their roles in enhancing CSC design.