Eco-innovation and the circular economy in the automotive industry

Circular economy is emerging as a new sustainability paradigm. Similarly, eco-innovation is being recognized as one of the most important mechanisms that allow the transition from a linear to a circular economy in production processes, as there is a strong relationship between eco-innovation (eco-innovation of products, processes and management) and circular economy activities. However, the relationship between eco-innovation and circular economy is an issue that has been isolated and little analyzed in the academic literature. Therefore, this research fills this gap by exploring the interdependence between eco-innovation and circular economy. The research is conducted through an extensive literature review from where a research framework consisting of 2 measurement scales, 18 items and three hypotheses were developed. A self-administered questionnaire was distributed and 460 responses were obtained from companies in the automotive and auto parts industry in Mexico. The data obtained were analyzed through confirmatory factor analysis, descriptive statistics and Structural Equation Modelling. The results suggest that eco-innovation of products, process and management has a significant positive impact on the circular economy of companies in the automotive and auto parts industry. The findings of this research can inform managers in the automotive sector and policy makers when formulating and deploying environmentally sustainable strategies. This paper fills a research gap by expanding the limited body of knowledge that relates eco-innovation and circular economy and providing some evidence of their relationship. The research also allows the unique characteristics of eco-innovation and the circular economy to be understood within a particular context, growing in this manner the body of knowledge on this field.N/