An Investigation into Circular Economy Practices in the Traditional Wooden Furniture Industry

Despite the growing awareness about Circular Economy (CE) in production and supply chain management, there is little evidence linking CE practices to environmental and economic performances, especially within the traditional wood furniture industry in Indonesia. As with other management practices, implementation of CE can be supported by various factors. Among these factors are the so-called environmental-oriented supply chain cooperation (ESCC) practices. The study reported in this paper has three purposes. First, to investigate how the different levels of ESCC practices will affect the CE practices across the traditional wooden furniture industry in Central Java, Indonesia; second, to investigate the relationship between varying ESCC practices (which is grouped based on the implementation of CE practices) on the CE-targeted performances; and third, to examine the role of ESCC practices as a moderating variable in the relationship between CE practices and CE-targeted performances. This study uses primary data which were collected through closed questionnaires to 190 valid samples of wooden furniture SMEs across the cities of Jepara, Kudus, Rembang, Semarang, Blora and Surakarta. The data were processed using confirmatory factor analysis (CFA), K-means clustering analysis, Multivariate Analysis of Variance (MANOVA) and regression analysis. The results indicated that, depending on the levels of ESCC practices, the SMEs could be grouped into leaders, followers and laggard, which also determined the extent to which they practised the CE principles. The study also elaborated on the interactions between ESCC and CE practices, and how these might affect the CE-targeted environmental and economic performances.