Integrating Circular Economy Practices and Industrial Symbiosis for Sustainable Firm Performance: A CB-SEM Approach with the Moderating Role of Institutional Pressure

Abstract

This study examines the impact of Circular Economy (CE) practices and Industrial Symbiosis (IS) on Sustainable Firm Performance (SFP), while exploring the moderating effect of Institutional Pressure (IP) in achieving Sustainable Development Goals (SDGs). Adopting a quantitative research design, data were collected through a structured questionnaire administered to managers (n = 321) in manufacturing firms involved in sustainability and operations. The proposed conceptual framework was analyzed using Covariance-Based Structural Equation Modeling (CB-SEM), with reliability and validity assessed through Cronbach’s alpha, Composite Reliability (CR), and Average Variance Extracted (AVE), and model fit evaluated using indices such as CFI, TLI, RMSEA, and χ2/df; mediation and moderation effects were tested. The findings reveal statistically significant positive associations between Circular Economy Practices, Industrial Symbiosis, and Sustainable Firm Performance. Institutional Pressure was found to strengthen these positive relationships. The study contributes to the literature by integrating circular economy and industrial symbiosis within a unified SEM framework, offering empirical evidence from a developing economy context, and extending Institutional Theory and the Resource-Based View (RBV) in sustainability research. Practically, the findings suggest that firms should adopt collaborative resource-sharing models, policymakers should reinforce regulatory and normative pressures, and industrial clusters should promote symbiotic networks to enhance waste-to-resource conversion.