Examining the Influence Extent of I4 Technologies and Circular Economy Practices on Firm Organizational Effectiveness: Ecological Modernization Theory and Practice-Based View

Industry 4.0 (I4) technologies are primarily focused on addressing the issue of limited resources and enhancing productivity by offering solutions to maximize the use of rare resources and identify alternative raw materials. The explanation for the mounting pressure on environmental rules, resource price instability, and supply unpredictability is the circular economy (CE); however, the connection between I4 technologies, CE, and organizational performance (OP) has not yet been fully analyzed. To understand how I4 technologies promote the change in CE practices and what impact they have when combined with OP, a deeper conceptual and experimental examination is required. Using a survey of 351 Saudi industry experts, the study examines the mediating and moderating role of CE practices in the connection between I4 technologies and OP. Seven items pertaining to the I4 technologies’ current state of implementation were covered, (cloud computing, big data analytics, IoT, augmented reality, cyber-physical systems, 3D printing, and robotic systems). The measurement scale for CE practices utilized in this study has sixteen items on it that were divided into three categories: microenvironment management, eco-design, and investment recovery. The measurement items for OP were divided into two categories: economic performance (8 items), and environmental performance (6 items). The results show that Industry 4.0 (I4) technologies have a significant direct impact on OP, Industry 4.0 (I4) technologies have a significant direct impact on CE, CE has a significant direct impact on OP, CE practices are mediated the relationship between I4 technology and OP, and CE practices have not moderated the relationship between I4 technology and OP. Moreover, the results show that establishing a CE environment is not necessary before adopting I4 technology. In general, the results demonstrate that Industry 4.0 has increased circular economy practices, in turn boosting businesses’ economic and environmental performance and enhancing their organizational performance. Thus, this study has prepared the framework for participating countries or businesses to use Industry 4.0 to implement circular economy practices and achieve both economic and environmental goals. The study includes ramifications for professionals as well as guidelines for future research.