From Sensemaking to Circular Economy Practices: Role of Institutional Pressure and Environmental Sensemaking in SMEs of Developing Countries

Dr. Missal Khan; Prof. Dr. Abdul Majid; Shahid Farooq; Muhammad Adil Khan; Muhammad Tahir; Muhammad Sajid Asim

doi:10.63163/jpehss.v4i1.1669

Authors

Dr. Missal Khan Institute of Management Sciences, The University of Haripur. Email: missalkhan08@gmail.com Author
Prof. Dr. Abdul Majid Institute of Management Sciences, The University of Haripur. *Corresponding Author Email: abdulmajid@uoh.edu.pk Author
Shahid Farooq PhD Scholar Public Policy and Governance, Institute of Management Sciences, The University of Haripur. Email: chshahidFarooq@yahoo.com Author
Muhammad Adil Khan Chief Financial Officer, The National Radio Telecommunication Corporation (Pvt) Ltd. Email: adil.qau@gmail.com Author
Muhammad Tahir PhD Scholar Public Policy and Governance, Institute of Management Sciences, The University of Haripur. Email: mtahir@uoh.edu.pk Author
Muhammad Sajid Asim PhD Scholar Public Policy and Governance, Institute of Management Sciences, The University of Haripur. Emai: muhammadsajidasim05@gmail.com Author

DOI:

https://doi.org/10.63163/jpehss.v4i1.1669

Abstract

Purpose – Transition towards circular economy practices (CEP) is increasingly recognized as a critical approach to improving environmental performance. However, the transition towards the circular model, specifically concerning institutional pressures (IP) and environmental sensemaking (ES), has not been adequately explored. Therefore, this study is specifically designed to examine the impact of IP and ES on CEP among SMEs in Pakistan. Moreover, the mediating role of top management support to sustainability (TMSS) is also discussed to develop a comprehensive model of CEP in the context of developing countries.

Design/methodology/approach – A two-stage (T1 and T2) survey approach was employed to collect the data from the same respondents over a period of three months. Data were collected from 379 manufacturing SMEs (912 respondents, including procurement managers, HR Managers, production managers, and Finance Managers) through a questionnaire. The framework of the study was empirically tested using structural equation modeling.

Findings – The findings of the study clearly demonstrate a positive relationship between environmental sensemaking (ES), institutional pressure (IP), top management support for sustainability (TMSS), and circular economy practices (CEP). Additionally, the result of the study confirmed that TMSS mediates the relationship between ES-CEP and ES–CEP.

Practical implications – This study provides valuable insights to top management and decision makers to implement CEP and achieve sustainable development goals.

Originality/value – This study bridges the gap in environmental management by conducting a systematic review of the framework of CEP. The theoretical underpinning of this research is based on institutional theory and sensemaking theory, which helps us develop a comprehensive mediation model. This study suggests significant guidelines to SMEs to turn institutional pressures and environmental sensemaking into CEP.