Industry 4.0 and Circular Economy for Emerging Markets: Evidence from Small and Medium-Sized Enterprises (SMEs) in the Indian Food Sector

Abstract

The linear economic business model was deemed unsustainable, necessitating the emergence of the circular economy (CE) business model. Due to resource scarcity, increasing population, and high food waste levels, the food sector has been facing significant sustainability challenges. Small and medium-sized enterprises (SMEs), particularly those in the food sector, are making efforts to become more sustainable and to adopt new business models such as the CE, but adoption rates remain low. Industry 4.0 and its associated technological applications have the potential to enable CE implementation and boost business competitiveness. In the context of emerging economies facing significant resource scarcity constraints and limited technology availability, CE principles need to be adapted. CE could create a new job economy in emerging economies, bringing scale and a competitive advantage. This study explores the enablers of and barriers to Industry 4.0 adoption for CE implementation in fruit and vegetable SMEs in India from a resource-based perspective. The purpose is to develop an evidence-based framework to help inform theory and practice about CE implementation by SMEs in emerging economies. Fifteen semi-structured interviews were conducted with experts in food SMEs. The interview transcripts were first subjected to thematic analysis. The analysis was then complemented with sentiment and emotion analyses. Subsequently, hierarchical cluster analysis, k-means analysis, and linear projection analysis were performed. Among others, the findings suggest that Industry 4.0 plays a key role in implementing CE in SMEs in emerging economies such as India. However, there are specific enablers and barriers that need to be considered by SMEs to develop the resources and capabilities needed for CE competitive advantage.