The impact of digital transformation on circular economy practices and sustainable economic performance in Jordanian manufacturing firms

There is growing interest in the potential of digital transformation to advance sustainable economic practices in dynamic business environments. However, empirical evidence regarding the impact of digital transformation on sustainable economic practices remains limited. This study applies the resource-based view (RBV) to investigate the impact of technological and financial resources on digital transformation. It also draws on dynamic capability theory (DCT) to examine how digital transformation enhances circular economy practices and promotes sustainable economic performance in Jordanian manufacturing firms. A survey questionnaire was used to collect data from 176 managers of Jordanian manufacturing firms. Partial least squares structural equation modeling (PLS-SEM) was then applied to analyze the data and test the proposed hypotheses. The main findings provide empirical validation for all the proposed hypotheses. Specifically, our results indicate that both technological and financial resources positively impact digital transformation in manufacturing firms. The results also reveal that digital transformation has a positive effect on circular economy practices and sustainable economic performance. Lastly, sustainable economic performance was positively influenced by circular practices in manufacturing firms. This study contributes to existing literature by examining the role of technological and financial capabilities in enabling the successful implementation of digital transformation. It also extends prior research by exploring how digital transformation can be leveraged to promote circular economic practices and enhance sustainable economic performance in an emerging economy.