Which economic drivers influence firms to execute circular economy?

Abstract

Circular Economy is a method to make best use of the available resources. There are some economic drivers may influence firm to execute a Circular Economy. These are Utilization Rate of Fixed Assets (URFA), Average Fixed Assets (AFA), Return on Investment (ROI), and Earnings Before Interest and Taxes (EBIT). This paper aims to investigate which economic drivers influence firm to execute Circular Economy. Using a sample of 100 Forbes firms from 2009 to 2018, this paper finds that the lower URFA, the more actively the firms should execute Circular Economy; and the higher AFA, the more actively that firms should execute CE, since CE and make best use of the available resources can help them get rid of the inefficient situations. This study put emphasis on the specific methods, how to “produce more with less”. These specific methods are defined as “high efficiency” methods in this paper. They can be used to help firms make best use of available resources.