**The Circular Economy Challenge: Towards a Sustainable Development**

Editor

**Alessia Amato**

MDPI • Basel • Beijing • Wuhan • Barcelona • Belgrade • Manchester • Tokyo • Cluj • Tianjin

*Editor* Alessia Amato Department of Life and Environmental Sciences (DiSVA) Universita Politecnica of Marche ` Italy

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This is a reprint of articles from the Special Issue published online in the open access journal *Sustainability* (ISSN 2071-1050) (available at: https://www.mdpi.com/journal/sustainability/ special issues/Circular Economy Challenge).

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## **Contents**

## **About the Editor**

**Alessia Amato** is a non-tenured Assistant Professor in Theory for the Development of Chemical Processes at the Department of Life and Environmental Sciences (DiSVA) of the Polytechnic University of Marche, Ancona, Italy (UNIVPM). She graduated in Environmental Sustainability and Civil Protection at the DiSVA in 2013 after attaining a bachelor's degree in Chemistry and Technologies for the Environment and Materials (Bologna University, 2011). Her scientific career proceeded with a PhD in Environmental Sciences at DiSVA, with a thesis concerning "Innovative and sustainable strategies of urban mining" (2017). She was a post-doc research fellow from 2017 to 2020.

She works in the fields of environmental sustainability, circular economy, and waste exploitation. Her main lines of research include the development of bio/hydro metallurgical processes for metal recovery from waste (mainly electric and electronic equipment waste) and the enhancement of different kinds of residues. The study of environmental impacts via a life cycle assessment approach represents a fundamental tool of her research, allowing the development of sustainable processes.

Her scientific output is documented by 1 patent and 40 indexed publications, with an H-index = 13, and total citations = 641 (source SCOPUS, February 2022).

She has taken part in several grants (national and international).

## *Editorial* **The Circular Economy Challenge: Towards a Sustainable Development**

**Alessia Amato**

Department of Life and Environmental Sciences-DiSVA, Università Politecnica of Marche, Via Brecce Bianche, 60131 Ancona, Italy<EMAIL_ADDRESS>
As it is now known, we have only one earth available for our life and it is our duty to preserve it.

The more recent manifestations in the squares worldwide confirm the increase of people's awareness of this subject. Nevertheless, the forecast is not promising to describe a resource consumption equal to three planets by 2050 [1] and the effects are in front of our eyes, just think of the biodiversity loss, the water stress and the climate change. Furthermore, the effect on the environment is often translated into economic impacts, the increase of the social gap and the poverty growth [2,3].

In this context the conversion of our economic system, from linear to circular, represents a challenge to overcome, no longer postpone.

Although the circular economy term is often reduced to the simple recycling concept, it represents a complex strategy which aims at the achievement of many ambitious targets. Among these: the increase of product life cycles, the implementation of the industrial symbiosis, the conversion of products into services, the reduction of waste production, the creation of secondary raw materials market [4]. The four main actors of the circular change are the institutions, the industry, the consumers, and the scientific research. Their actions must be closely linked to push the global markets toward the sustainability. Policies can dynamizing the low impact production and drive the consumers towards sustainable choice. On the other hand, the research could supply innovative solutions to the industries, increasingly interested in low impact technological innovation.

In this regard, the COVID-19 pandemic has given us an important lesson proving the resilience of our global market and its conversion rate to respond to the sudden change of consumer demand. The pandemic has proved the capability of consumers, companies and researchers to act on the product design for example for the production of disinfectants from residual products and face masks from textile leftovers for hospitals [5]. COVID-19 has tested the ability of countries to provide solutions (in a very short time) able to combine all the circular characteristics: repairability, reusability, and potential for remanufacturing, proving the relevance of secondary raw materials stocks and the competitiveness of countries [5].

Considering the results achieved in the most critical period of COVID-19 crisis, we should be able to transform the crisis into a chance. The current step of world recovery from pandemic must be the opportunity for the removal of barriers (bureaucratic, technical and economical) that often slow down the conversion to an effective circular economy [6].

The possibilities offered by the post-pandemic period to match the targets of circular economy and the Grean Deal are discussed by Bucea-Manea-Toni¸s et al., in the first contribution of Special Issue. They have carried out an analysis of competitiveness and innovation focusing on Romania and Serbia, an emerging country from the EU and EU accession country, respectively. They have proved a correlation between the eco-innovation index and the research and development sector, using a dual comparative analysis. The authors have demonstrated the essential role of research and human resources that, stimulated through innovative teaching in the circular economy field, produce positive effects for both society and market levels. In this transition towards a sustainable system, policies

**Citation:** Amato, A. The Circular Economy Challenge: Towards a Sustainable Development. *Sustainability* **2022**, *14*, 3458. https://doi.org/10.3390/su14063458

Received: 9 March 2022 Accepted: 11 March 2022 Published: 16 March 2022

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2022 by the author. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

can make the difference by economic support and the monitoring of the best available technique use (Contribution 1).

Zhang et al. have analyzed another geographical area, considering the manufacturing sector of Pakistan. They have deepened the concept of circular economy implemented in a developing country. They have studied the connection between the constructs of total quality management and organizational sustainability with the mediating effect of knowledge management by the implementation of a structural equation modeling. The authors have proved that the transition towards the circular economy is not a very quick process and that it does not include only an industrial restructuring. There is the necessity of a structural shift and a change in the mindset, behavior, and priorities stakeholders involved in the market. They have concluded the paper discussing the necessity of the transition from a linear to a circular economy as opportunity to increase the competitiveness of companies in Pakistan (Contribution 2).

The implementation of an effective circular economy could have positive effects on several goals identified by The United Nation within the 2030 Agenda for Sustainable Development. In addition to the most obvious Target 12, related to the responsible consumption and production. In this regard, Buch et al. have proposed the circular economy as solution to address the issue of waste pickers in developing countries. They have described a cooperative system able to maximize the collection and the waste sorting (mainly plastic fraction), with an environmental gain in emission terms and an increase of landfilling site lifespans. Furthermore, the designed solution could alleviate several issues including in the 2030 Agenda, such as poverty, hunger, gender equality, and social inequality (Contribution 3).

It is evident that circular economy means new opportunities and Ili´c et al. have chosen to analyze the European indicator of competitiveness and innovation considering both investments and patents related to the circularity field. The regression model performed by authors has identified the investment as the most crucial factor that stimulates the new patents. However, they have concluded that other elements should be added to the model for a sustainable economy, such as creating new jobs in the green field, the policy support, green public procurement, education for understanding, and the implementation of digital and transferable knowledge and competencies. The paper represents the starting point for the development of successful strategies for the overcoming of the old linear model in Romania (Contribution 4).

The availability of sustainable processes which respect the principles of circular economy represents an urgent need. In this regard, Almeida et al. have compared different strategies for the exploitation of tailings from Panasqueira mine, located in Portugal and classified as the largest Sn-W deposit in Western Europe. As reported by authors, the extractive industry needs technological innovations to increase its sustainability level and decrease the resulting environmental burdens and waste to manage. The implementation of a life cycle approach has allowed to estimate the benefit of an innovative approach able to combine the recovery of raw material, with the removal of hazardous As and the H2 recovery which could drive the mine towards a clean energy transition (Contribution 5).

An interesting reflection is proposed in the Contribution 6, where authors have discussed about construction and building sector, one of the key value chains reported in the European circular economy action plan [4]. They have analyzed the vernacular architecture in Egypt, the oldest civilization in the world, identifying the compliance with the principles of circular economy (i) Refuse, Reduce, Reuse, Repurpose and Recycle, (ii) Reduce by design, (iii) Repair, Refurbish and Remanufacture. Starting from the case study analysis, Debaieh et al. have suggested to draw inspiration from vernacular architecture to considerably reduce the impact of modern buildings (Contribution 6).

A connection with key product value chains could be recognized also in Contributions 7 and 8 (in particular Batteries and vehicles and Electronics and ICT), which have addressed issues related to end-of-life batteries and printed circuit boards, respectively. As reported by Giosuè et al. the self-sufficiency in the battery sector is one of the most ambitious European targets. Indeed, the demand of raw materials for battery manufacturing is expected to increase due to the growing diffusion of electric vehicle, in response to the Green Deal objective of reduction of the transport emissions [7]. The relevance of this topic has pushed the authors to undertake the study of regulations on end-of-life batteries in different European countries. The paper has allowed the identification of strength and weaknesses of policies, highlighting the necessity of a creation of a homogeneous reference schema for waste collection, able to improve the further recycling. The results have identified the need of specific regulations dedicated to Li-ion batteries to avoid loss of valuable materials to send to exploitation (Contribution 7).

The development of urban mining strategies, where the waste becomes a resource of secondary raw materials in agreement with the circular economy pillars has been discussed in the Contribution 8. The choice of printed circuit boards as waste to treat has been due to a double reason: the availability of high quantities of this kind of equipment (for its use in many applications) and its metal concentrations, higher than that the ores. Therefore, the identification of sustainable processes is essential to reduce the waste flows to manage and to create relevant stocks of valuable elements. In this regard, Becci et al. have developed a biotechnological approach able to extract copper from printed circuit board with high efficiency, using the fungal strain Aspergillus niger, avoiding the use of both high temperatures and high impact chemicals which characterize the most common hydrometallurgical treatments. In the perspective to maximize the eco-design of the process authors have suggested the use of milk whey as substrate for the fungal growth (Contribution 8).

The results described in Contribution 9 seem almost a provocation, encouraging the readers to a critical analysis of the solutions proposed in the circular economy field. The other authors, and me, have carried out a critical review of the scientific literature about the exploitation of agriculture by-products for the manufacturing of secondary products. The impact due to each process has been estimated by a life cycle assessment approach and compared to that of the corresponding traditional product (from virgin material). The results have proved that recycling is not always the most sustainable choice and that the development of innovative solutions should be always combined with a sustainability assessment, able to evaluate the real convenience of applications. These observations do not want to discourage the research of innovative recycling but want to sensitize the stakeholders to a more critical view of the available circular options (Contribution 9).

The development of the circular economy strategy has the great responsibility to face the current crisis of earth. As reported in the European action plan, the new strategy must contribute to the climate neutrality by 2050 and decoupling economic growth from resource use [4]. Innovation means opportunities so the environmental gain should be translated into the competitiveness of the EU and developing countries, as discussed in several contributions of the present special issue.

Although the topic of circular economy is a very popular topic in the current scientific literature, this special issue offers the possibility to broach the subject from different point of views. Authors belong to very different Department allowing a holistic overview that should be the foundation of an effective circular economy. The papers combine economical, scientific, engineering, mathematical approaches to face the challenge of circular economy in different corners of globe each one with specific criticalities.

#### **List of Contributions**

**Conflicts of Interest:** Declares no conflict of interest.

#### **References**

## *Article* **Untapped Aspects of Innovation and Competition within a European Resilient Circular Economy. A Dual Comparative Study**

**Rocsana Bucea-Manea-T, oni¸s 1, Aleksandar Ševi´c 2, Milena P. Ili´c 3,\*, Radu Bucea-Manea-T, oni¸s 4, Nevenka Popovi´c Ševi´c 3 and Larisa Mihoreanu 5**

**Abstract:** The paper aims to develop—based on a particular dual comparative analysis that follows the current European concerns—the concepts of competitiveness and innovation as pillars uprighting companies' resilience, creating ecoinnovative jobs and social inclusion. In their struggle to meet the Circular Economy principles and Green Deal objectives, the countries chosen for analyses— Romania and Serbia—have started implementing added-value blockchain concepts in their societies to thrive in the resilient European market and build empowered societies. According to the World Economic Forum Global Sources of Competitiveness, skills considered in our study refer to businesses' versatility and societies' innovation capability. Based on specific data provided by Eurostat, the results showed a correlation between the ecoinnovation index and R&D personnel by sector and helped design a regression model. Hence, we demonstrate that R&D creativity, once stimulated through innovative teaching, blooms, having positive effects at society and market levels as reflected in the ecoinnovation index. Furthermore, cluster analysis within E.U. innovation helped identify strengths and weaknesses, provided new grounds in applying innovation, and led to further recommendations.

**Keywords:** circular economy; innovation capability and resilience; business dynamics; ecoinnovation index; R&D personnel by sector

#### **1. Introduction**

The European Union has placed a clear emphasis on the recovery of E.U. members from the COVID-19 pandemic in the Annual Plan for Sustainable Growth in 2021. It is envisaged that within the national strategies, member states will take special measures to support the following postulates: productivity, environmental sustainability, equity, and macroeconomic stability. All the stated goals ensure the full implementation of the Green Agreement mentioned above and lay the basis for revitalizing the European economy and society after the appearance of the SARS-CoV-2 virus. In line with these goals, the E.U. budget for 2021 is planned to be 672.5 billion Euros, including nonrefundable aid to all member states to "green recover". In this way, the importance of economic growth and preservation of the environment is further emphasised through sustainable investments based on saving resources and maximising the use of available materials (Annual Sustainable Growth Strategy, 2021). In addition, there is a "need to encourage a larger contribution of scholars from the Business and Economics area to explore the viability and profitability of CE strategies and related managerial practices to overcome akin issues" [1].

**Citation:** Bucea-Manea-T, oni¸s, R.; Ševi´c, A.; Ili´c, M.P.; Bucea-Manea-T, oni¸s, R.; Popovi´c Ševi´c, N.; Mihoreanu, L. Untapped Aspects of Innovation and Competition within a European Resilient Circular Economy. A Dual Comparative Study. *Sustainability* **2021**, *13*, 8290. https://doi.org/ 10.3390/su13158290

Academic Editor: Alessia Amato

Received: 17 June 2021 Accepted: 20 July 2021 Published: 24 July 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

The circular economy (CE) represents a compelling management topic of the last decades. Expected and designed as a regenerative system, it subsists of effective and efficient utilisation of all resources of the ecosystem to optimise performance [2]. However, the scientific literature developed outside of management is mainly focused on defining innovative models to be adopted and implemented by companies [3].

This paper successfully investigated how Romania and Serbia, emerging country from the E.U. and E.U. accession countriy, acknowledge and adopt CE principles and Green Deal objectives, focusing on the CE Fourth Indicator—Competitiveness and Innovation. A regression model and a K-means cluster analysis showed a correlation between the ecoinnovation index and R&D personnel by sector, under the assumption that innovative teaching can stimulate the R&D creativity, as reflected in the ecoinnovation index increase. The K-means cluster analysis based on the PPIE subcriterion emphasises the (non) E.U. countries, showing specific week points that are to be acknowledged and corrected.

Regarding the motivation of the research, the authors motivated for their home countries to follow other countries in their transition from linear to circular economies reached the agreement that their purpose and tasks have been demonstrated and achieved. Sustainability is not a race, but there should be a shared interest among scientists, experts, national authorities, and society regarding the considerable expense in assisting countries lagging due to insufficient investment, knowledge, or other constraints. The research aims to help Serbia and Romania to choose the right path.

This article intended to measure innovation and competitiveness within the circular economy model by focusing on Romania's and Serbia's national elements and comparing each country's leadership and position with those of other countries. In this way, progress on Romania's and Serbia's paths to a circular economy and resilient development would be quantified based on current positions, representing the innovative contributions of the research. The paper touched its purposess, the primary findings indicate a lack of investment in Serbia and Romania, the critical importance of additional research and development investments, the use of new technologies (such as blockchain), and the importance of benchmarking.

One of the significant challenges is the absence of comparable data specific to the E.U. member countries, since Serbia is not a E.U member yet and compatible data is not available. This, however, is offset by other types of data and qualitative research. Regarding the study structure, after the introduction, chapter two presents the theoretical background of the research, prepared with document analysis. Chapter three outlines the data, variables, and research process and provides the results of the regression analysis and cluster analysis. The fourth chapter discusses the study results and divides the narrative into two separate subchapters: Romania and Serbia. Finally, the fifth chapter, the conclusion, summarises the most important research results, while chapter six addresses the study's limitations, mainly the lack of comparative and empirical data. Results achieved, based on the initial purposes of the research show that assumptions have been overpassed and goals achieved.

#### **2. Theoretical Background**

Innovation and competition within the circular economy are of growing interest for countries, companies, stakeholders, and civil society. CE is a unique system of achievements of efficient economies by narrowing and slowing different energy flows [4]. We introduce here the two socioeconomic terms of resilience and sustainability to better define the need for robustness and to point the value of innovative structural transformation. Hence, while sustainability defines the methods or process of harvesting by using resources that do not use up or destroy natural resources or permanently damage the environment, resilience represents the ability to create, adopt, and absorb new assets as energy; to translate knowledge into new types of behaviour and versatile policies; and give to the society a more comfortable shape after structural changes.

Sustainability or circularity means continuous changes towards the way firms generate their business and values. Researchers are still analysing these fields as a synergy of economic performance and environmental resilience, bringing apparent benefits to future generations [4,5].

In 2015, the European Commission regulated the investment framework, affecting it with alterations favouring competitiveness and innovations and leading countries to foster their growth in the future. On 11 December 2019, the same organisation earmarked the so-called European Green Deal as an essential work priority in the next decade. This program is the basis for fulfilling the signed goals from the Paris Agreement, which means reducing CO2 emissions to 50% by 2030. The idea is for the European continent to become the first carbon-neutral territory and a world leader in the circular economy. The described set of economic measures concentrates on reducing and eliminating waste, taking better care of it, but also on saving energy by 2030 [6]. By 2030, it is estimated that the possible potential economic gain emanating from the transition to a circular economy would amount to 1.8 billion Euros [7]. Within the circular economy, creativity and innovation are essential pillars that support intelligent, resilient companies in their struggle to lead the market by creating new ecoinnovative jobs and social inclusion. The organisation model needs to be transformed to production–consumption–reuse as all stakeholders must be represented within the model [8].

The paper emphasises also the fact that companies need to rethink circular economy principles and processes by using resilient solutions and, for example, blockchain technologies in solving environmental problems [9,10]. Once understood and accepted, CE will drive sustainable behaviour. Blockchain technology is a practical solution that all countries can use to reduce waste management costs, ecological footprint, and fraud in green procurement as well as to enhance the green economy [11,12]. Nevertheless, the most critical impact that blockchain has is a significant, resilient change in the life-chain of different industries, with a positive impact on changing human mindset and sustainability [13,14]. Analysing the January 2021 model of innovation in teal and pluralistic organisations within CE (Figure 1), we noticed that blockchain facilities for the entire value-added life-chain infrastructure would create new opportunities for sustainable ecoinnovation within companies. Furthermore, many studies emphasise that blockchain technologies provide the secure implementation of CE R-Strategies (reduce, reuse, recycle, recover, repair, remanufacture) which is also our fulfilled intention [15,16].

**Figure 1.** Innovation process in teal and pluralistic organisations in the context of circular economy.

Blockchain infrastructure will ensure material certification (expanding the use of nonpolluting materials), smart contracts, and asset tracking (ensuring traceability, transparency, security of information for all the entire life cycle assessment (LCA)); nudge ecological behaviour and reward green employees through cryptocurrency, badges, and tokens; and stimulate corporate responsibility through credit rating trust mechanisms, and distributed

ledger [17]. Furthermore, the decentralised ledger will facilitate information flux regarding the materials and their sources [15].

Thus, blockchain technology will also ensure security and privacy, effectiveness, cost reduction/profitability, decentralisation, new business models, and streamlining/automation [18]. For these reasons, blockchain may be a good solution in surpassing the challenges of CE [19]. Digitalisation (networks that provide real-time information about materials and ensure supply chain transparency and traceability) will be translated into resilient actions such as circular resource flows and waste management. Human resources have to develop new ideas for practical innovation [19]. Tracking all the activities in an LCA from a distance and blockchain safety proved to be an appropriate solution in the time of the COVID-19 pandemic.

The development of information technologies-conditioned changes in business models, especially the innovations brought by the digital revolution, concerning the fusion of technologies and their potentials in enabling changes in business and social spheres [20,21], have had a similar impact on new business models. Companies (especially) need to innovate within their business ecosystem networks. The authors of this paper present a model monitoring the entire life cycle of a product/service (awareness and training, analysis, product design, communication/certification) and the supply chain for the large companies and state institutions, based on blockchain technology, to invest in an open innovation platform and licenses. All companies with a new idea of a product/service can become members of the ecosystem (Figure 1) [22–24]. Similarly, Gassman et al. believe that the most significant innovation potential lies not in products or processes but innovative business models [25]. The Figure 1 shows innovation process developed by the authors of this paper as an adaptation after [26]).

Many researchers have already studied the impact of CE on the growth and development of environmental protection [27,28]. At the same time, others have focused on studying the impact of CE on progress in ecology and analysed the importance of its sustainability and the ramifications for the country's economic development as a whole [8,29]. The main pillars of sustainable implementation of CE principles are innovative and creative human resources, which can benefit from the hardware and software support of blockchain technology in developing green products using innovative green methods. These products can be easier to dismantle and convert into green raw materials, mitigating the energy expenditure and the ecological footprint. Waste management and averting pollution is also the responsibility of human resources departments in their struggle to implement CE strategies [30–32]. Referring to the CE sphere, there is a direct link to the workforce, investment, employment, and innovation [33]. Other studies have also argued that innovation in, for instance, the recycling sector is the basis for GDP growth [34]. Innovation is usually considered the most effective tool to achieve a certain standard of living and overcome environmental problems. However, production and service innovations in the field of CE are mainly observed from a long-term point of view. They are not always easy to generate, and therefore more researchers in this field deal with efficient business models that represent innovation through strategic business policies [35].

Schiederig et al. define ecoinnovation as "an object that is defined by its market orientation as well as its environmental benefit over its entire life cycle and that establishes a new innovation or green standard for the company, regardless of whether its primary objective is environmental or economic" [36]. Literature shows many types of ecoinnovation, such as [24,26,27,35,37–39].

1. Product innovation—involves significant improvements in the capabilities, characteristics, and utility of goods and services, or the design of completely new goods and services. Improvements are observed in the technical specifications, functional characteristics, components and materials from which products are made, product software, and utility and ergonomics in use. Examples include new car models and Tesla batteries [24].

2. Process innovation—involves important improvements in production or delivery methods. Innovation is based on significant changes in technologies, equipment

and/or software (AI, machine learning, chatbot, blockchain, IoT, 5G, XR, robots, etc.). Process innovation creates new jobs and eliminate some of those based on functionally outdated technologies.

3. Marketing Innovation—involves important improvements in marketing methods or even the discovery of new methods such as neuroscience or VR/AR (virtual reality/augmented reality) technologies used with great success in marketing. Innovations in marketing include 7P + 1G (price, product, promotion, placement, process, people, physical environment/location, green marketing). This innovation can be seen in: (a) product design and packaging (based on information provided by neuro-marketing/market surveys, focus groups have proved to be quite ineffective in market research; large companies choose the best advertising, packaging, presentation, etc. after analysing their impact on an experimental group by monitoring brain and emotional activity); (b) new promotion methods (e.g., with VR/AR you can place the customer in another time and space); placing products (e.g., moving a car showroom to the city centre, in very small spaces, where the customer experiences all the sensations of VR driving); (c) methods of pricing goods and services (e.g., online prices changing constantly depending on the number of product/service and web traffic requests and on the principle of auctions); (d) communicating with employees and customers on the basis of new discoveries in neuroscience; (e) the use of recyclable materials for production, in ecolabelling, etc. The goal of these innovations is to better meet the needs of customers and educate them by creating new needs and opening up new markets [2,7,35,37–39].

4. Organizational innovation—refers to the implementation of new organizational methods. In this context, leadership has a very strong impact on the modern management of the company. Large companies like Google invest in relaxation, leisure (meal breaks), kindergartens specially designed within the company, etc. to provide comfort to employees at work and stimulate innovation and productivity. Organizational innovation also includes the implementation of the concepts of corporate responsibility, a circular sustainable economy and one-health [24,26].

5. Management innovation—refers management principles and processes that ultimately change managerial practice. This is done through project management. Modern managers use new business resource management methods such as Six-Sigma and new management methods such as Agile. Outstanding results in human resources have been achieved in management. Neuroscience has shown that the most innovative and productive companies present are those that are directly concerned with the health and happiness of employees, materialised by methods of motivating mindfulness [26,33].

Summarising, the concept of ecoinnovation is important for both business and society. Correctly approached, it becomes a useful tool for policy makers to fully apply innovations for the benefit of the market and the environment. The value of ecoinnovation is higher if its analysis is holistic and serviceable, with environmental benefits. Defined by international bodies (e.g., OECD, European Commission) as a tool in measuring "the creation or implementation of the new", the qualities of ecoinnovation are in line with the most important book of innovation and quality—the Oslo Manual.

In connection to direct measurement—number of innovations, descriptions of individual innovations, data on sales of new products—inputs like R&D or patents help the indirect measurement of changes in resource efficiency and productivity using decomposition analysis. This approach, less explored, require a particular attention as it may enlarge and accelerate the knowledge base [40]. At the E.U. level, only two types of innovations are standardised with indicators: product and process innovation, which are measured through enterprises that introduce innovation (product and process innovative enterprises, PPIE). Thus, we choose to analyse PPIE in our paper and see which factors influence it.

Having these concerns in mind, we moved further and designed a research methodology to evaluate the relationship among ecoinnovation, R&D, and PPIE in E.U. countries. We analysed two primary skills: businesses' versatility and societies' innovation capability (World Economic Forum Global Sources of Competitiveness). Then we expanded/deepened our study on a detailed comparison of two partner countries, one from the E.U. (Romania) and one not (Serbia), dedicated to implementing CE principles. The purpose of this comparison was to see how the two countries (one with the support of the E.U. and the other without) perform in the context of the circular economy.

#### **3. Experimental Data Complex Analysis and Significant Results**

#### *3.1. Data and Variables*

The article used data published about Serbia and Romania by WEF and Innovation Balanced Scorecards. In addition, Eurostat databases were consulted to analyse the factors and degree of innovation in both countries, and three variables were included in statistical interpretations. The variables included in the initial conceptual framework were:

We chose to analyse the ecoinnovation index because it brings a holistic perspective of economic, environmental, and social performance, in accordance with CE principles of sustainability. It is composed of 16 subindexes, grouped into five categories: (1) ecoinnovation inputs (related to socioeconomic objectives and HR in science/technology and investments); (2) ecoinnovation activities (related to certification in innovation); (3) ecoinnovation outputs (related to patents, academic publication, and media coverage); (4) resource efficiency outcomes (GDP, domestic material consumption, freshwater abstraction, primary energy consumption, and greenhouse gas emissions); and (5) socioeconomic outcomes (exports of products from ecoindustries and employment/revenue in ecoindustries and the circular economy) [42]. At a closer look, we may observe that all these subindexes are in strong correlation with or depend on HR. As the index emphasises that ecoinnovation depends on research and development, we decided to analyse R&D personnel by sector. The literature review shows that innovation can be associated with product, processes, marketing, management, and organization. From Eurostat we can extract information regarding only two types of innovation (process and product); thus, we decided to include this PPIE indicator in our research.

#### *3.2. Research Process*

Our previous research regarding innovation within a network business environment [44] urged us to check if there is a relation between ecoinnovation and R&D. Innovation can be the result of many factors, including product and process innovative enterprises. Also, the market experience and other international studies provided by OSCE, WEF, CGI led us to the same assumption. In this regard, we decided to collect data from Eurostat. Having in mind the opportunities brought by introducing blockchain technology into the L.C.A. to gain a sustainable economy we collected data from Eurostat to ground our study on very specific elements that can have an impact on innovation, such as PPIE and R&D. Literature review and our model (Figure 1) prove that a sustainable economy is facilitated by using blockchain technology for the entire L.C.A. Also, other studies show that there is a relation between ecoinnovation and smart working [21]. We applied, in this study, a more profound analysis to verify how ecoinnovation is influenced by R&D personnel by sector and PPIE (Product and process innovative enterprises which introduced innovation by type of innovation, and innovation developer), having the support and security offered by blockchain technology. Thus, our study evaluates if there is any relation between ecoinnovation, R&D, and PPIE. In addition, our study evaluates the impact of R&D, and PPIE (and their subindexes) on the ecoinnovation index. In order to deepen our analysis, we designed a cluster analysis to find out where innovation potential comes from.

**Hypothesis 1 (H1).** *R&D and PPIE have no influence on ECO\_INNOV*.

**Hypothesis 2 (H2).** *R&D has a strong and positive correlation with ECO\_INNOV, emphasising the importance of stimulating the creativity, motivation, cooperation, and communication of human resources, which in turn positively impact ecoinnovation resilient development*.

**Hypothesis 3 (H3).** *Product and process innovative enterprises (PPIE) have a significant impact on the ecoinnovation index*.

In the first stage, our research purpose was to choose what kind of data can be analysed to achieve our aim, based on our previous findings from the literature review: ecoinnovation, R&D, and PPIE. Different analytical tools were applied to Eurostat data for the 2013–2019 period [41–43]. A forecast for 2020–2021 was added. The data gathered was inserted in tables and graphs (Table 1, Figure 2). After correlating data, the variables were introduced into a regression model assuming that the ecoinnovation index depends on R&D personnel by sector and PPIE.

**Figure 2.** Product and process innovative enterprises that implemented innovation in Romania and Serbia, by type of innovation (polynomial regression).

In the second step of our analysis, a K-means cluster analysis was implemented to understand the data better and see where Romania and Serbia are situated vis-à-vis the E.U. from the point of view of competitiveness and innovation. This analysis grouped the countries by product and process innovative enterprises. which introduced innovation PPIE subcriteria (Table 1). PPIE represents the criterion for introducing the data into groups and the countries into a certain particular cluster.

#### *3.3. Results*

The results of the study are divided into separate subchapters. The first subchapter discusses the results of conducted regression analysis, and the second discusses the results of the cluster analysis.

#### 3.3.1. The First Stage—Regression Analysis Results

The ecoinnovation, R&D, and PPIE variables were introduced into a regression model. The Pearson correlation coefficient (0.847) shows a strong positive correlation between the percentage of the active population employed in R&D (R&D variable) and innovation by circular economy principles (ECO\_INNOV variable), with minimal probability of mistake (Sig. = 0.000 < 0.01), as seen in Table 2. We may assume that the H1 (null hypothesis) was rejected and H2 (alternative hypothesis) was accepted. Product and process innovative enterprises, PPIE, had a moderate influence, but an ANOVA test excluded this factor from the model. Thus, the H3 hypothesis was partially confirmed. We may explain this partial influence with the fact that innovation in marketing, management, and organizations are not included in PPIE. For this reason, the PPIE was analysed separately and represented a criterion in our cluster analyses.

**Table 2.** Correlation, regression model, coefficients, and ANOVA.

Our regression model well estimated data series, having an R2 = 0.718 with a Sig. = 0.000 < 0.01. The R2 value empowers us to say that 71% of the variance of the dependent variable (ECO\_INNOV) is explained by the variance of the independent variable (R&D), emphasising the importance of human resources in ecoinnovation. The companies have to support the creativity and motivation of human resources and stimulate cooperation and communication between clusters, to gain highly skilled employees. Durbin–Watson's statistic confirms this assumption by being very close to the interval 1.5–2.5, where there is

no autocorrelation between variables. The value of Durbin–Watson's statistic =1.4 shows that the residuals might have a very small linear autocorrelation.

Since the adjusted R2 value is close to the value of R2, this allows the extension of the proposed regression model assumptions to the entire population. In this case, the variance of the dependent variable decreases with the difference between the two coefficients (0.718 − 0.703 = 0.015). This difference can be seen to be below 1%. The *t*-test for a constant and R&D variable validates the model and contributes to the predictive power of regression. The significance threshold (Sig.) of the variables is less than 0.01, meaning that the coefficients are very well estimated.

SPSS statistics offer us the regression equation coefficients with a very small probability of error. This fact was confirmed by ANOVA analysis. On the other hand, the F-statistic offers arguments in supporting or rejecting the null hypothesis (H1). As the F-statistic has a low value (0.00), the probability of making a mistake if H1 was rejected was very small; thus, H2 (that R&D personnel influence the ecoinnovation index) was accepted.

Regression equation: ECO\_INNOV = 31.052 + 48.614 × R&D

#### 3.3.2. The Second Stage—K-Means Cluster Analysis Results

In the second step of our research, the analysis focused on product and process innovative enterprises that implemented innovation PPIE subcriterion because statistics showed a moderate influence. We observed some differences between Serbia and Romania. When it comes to R&D performers in Serbia, more enterprises tend to innovate independently or in collaboration with other enterprises or organisations, or to adapt or modify products and/or processes developed initially by other enterprises or organisations, than in Romania. When talking about non-R&D performers, both countries have the same behaviours (Figure 2).

Designing clusters on these criteria, Italy formed cluster 1, and France cluster 3, by themselves, with the highest centre values (Appendix A). These countries appear to have many innovative enterprises, either independently or in collaboration with others, in both cases: performers and nonperformers of R&D. They make relatively few adaptations or modifications to products and processes developed by other businesses (Table 3—Final cluster centres). Italy is known for the high spirit of entrepreneurship. In Italy, there are regions, such as Bassano, where the number of SMEs is higher than that of families. Cluster 4 is formed by Belgium and the Netherlands, and Cluster 5 comprises Austria, Spain, Poland, Switzerland, the Czech Republic, and Portugal. Belgium and the Netherlands are very innovative countries [36], but they innovate within consolidated hubs and consortiums. This is the reason for the lack of many enterprises that innovate by themselves. In cluster 5, there are innovative countries, but in this cluster, the category "other enterprises or organisations" seems to have a higher weight than other cluster structures. Cluster 2, which contains Serbia and Romania, is the least innovative across all criteria. The software allocated countries to clusters. The main criteria were ANOVA and F-test, confirming that the cluster was chosen to maximise the differences among cases in different clusters.

**Table 3.** Cluster analysis.

#### **4. Discussions and Further Recommendations**

Our study started from the innovation process model in teal and pluralistic organisations in the circular economy proposed by January 2021 [26] (Figure 1). To adapt it to the opportunities opened by the COVID-19 pandemic, we propose a model that includes the facilities brought by a blockchain infrastructure for the entire value-added life-chain infrastructure (raw material identification and management to reduce the ecological footprint; data transparency, traceability, and security; human resources training for stimulating innovation and creativity, rewarded by virtual currency, badges, and tokens; product (re)design, reengineering, and R-strategies; communication/certification through smart contracts; and new business models adapted to the digital circular economy.)

Numerous studies and case studies demonstrate that the life-cycle value added in the circular economy (CE) can be implemented using blockchain technology, thereby securing CE R-Strategies (reduce, reuse, recycle, recover, repair, remanufacturing) in a variety of activity fields, including information technology/electronics/industries, construction, agriculture and food, manufacturing, and plastics [15,16]. The ingenuity and creativity of human resources, as well as the hardware and software support for blockchain, are the primary foundations of blockchain deployment in the CE. Human creativity is critical in developing innovative methods for designing green products that are easier to disassemble, recycle, consume less energy, and have a smaller ecological footprint. The creativity of human resources is also important in the waste management process and in preventing environmental pollution. Human innovation is required in R strategies; in transforming waste into new raw materials, products, or energy; and in saving resources and energy [30–32].

This model is strengthened by the regression model, which shows a positive relation between ecoinnovation and R&D, meaning that investments in R&D and new innovative methods of stimulating creativity ensure greater ecoinnovation, which can lead to a sustainable economy. In the second step, a deeper K-means analysis was done on the subcriteria of PPIE. The graphs (Figure 2) and analysis (Table 3) show that both Serbia and Romania were included in cluster 2, with the smallest values for all innovation subcriteria. Therefore, we continue with a detailed discussion on Romania and Serbia. The novelty and valuable contribution to the field of sustainable development might be observed after introducing blockchain facilities in LCA, implementing the innovation model developed by us and presented in Figure 1.

#### *4.1. Discussion on Romania*

According to recent data on European innovation calculated by European Innovation Scoreboard (https://ec.europa.euodest Innovators group—June 2020), based on 27 major indicators, the E.U. countries fall into four groups—Innovation Leaders, Strong Innovators, Moderate Innovators, and Modest Innovators. Romania ranks the last group together with Bulgaria, demonstrating long-term policy and national strategy misconduct. Romania has some achievements and good results in the field of "innovation-friendly environment" and "sales impacts", while the "innovators", "firm investments", and "human resources" are the weakest. "Broadband penetration" and "medium- and high-tech product exports" are the only two indicators showing close to EU average performance.

In Romania, technological innovation is based primarily on R&D and knowledge development from a highly skilled young working force driven by experienced specialists in different fields. These factors are associated with highly populated countries' economies [45,46]. Romania exports medium- and high-tech products with outstanding productivity and have "high performance on knowledge generation—both R&D-based and nontechnological—and are very successful in attracting money (R&D funding, FDI, ESIF funds, new enterprises), talents, and people into the region. They also have the most educated workforce and are experiencing positive population change". Private enterprises accessed most FP7 funds, demonstrating a direct correlation between innovation and the R&D system in Romanian enterprises [47]. Universities in Romania became a pillar in stimulating this cooperation, responsible for nudging creativity and "interests in knowledge, technology, and innovation transfer", contributing to a robust economy [48]. Furthermore, in Romania, heritage tourism brings important economic capitalization [48,49]. Green procurement sustained in Romania depends on market participants' level of knowledge and skills [50]. Companies that apply agile management and foster the working force's motivation through innovative organisational culture have high productivity rates with a low footprint on the environment [51,52].

Our regression model's close relation between ecoinnovation and R&D personnel includes Romania. Romania holds innovation capability, but the overall business dynamism is not very relevant because of the very long time needed to start a business and a very high insolvency rate. A smoother procedure to set up a business, more governmental support, consultancy, and knowledge technological transfer support are needed for sustainable innovation. Romania also has to improve its entrepreneurial culture.

#### *4.2. Discussion on Serbia*

The Serbian legal framework in the field of innovation started to develop after the adoption of the Law of innovation in 2010. This law enables the formation of establishments supports for innovative activities and technological transfers, the setup of intellectual property rights, and the Serbian Innovation Fund. If ten years ago there were no bodies effectively tracking the key metrics to evaluate the innovation capacity of companies in need to assess particular sectors of interest to foreign direct investors, today the situation is totally different and shows people and market versatility as well as the desire to provide a strategic and legislative framework for innovation. [53–61].

Infrastructure and support for high-tech research expand academic applicative programs, create venture/private equity investment, and channel R&D entrepreneurship to preserve the environment. Serbia has the ability to absorb new knowledge and adapt imported/purchased technologies—an essential capability to grow and innovate within an official service enabled to advertise competences and capacities to foreign investors, learn metrics and innovation auditing, and create a set of key metrics to track for each industry group [53–61].

Thanks to the analysed effects of competitiveness and innovation in the field of CE in Serbia, it is certain that the introduction of the circular economy would move the country from the manufacturing industry to an innovative industry that would automatically have a higher value of finished products—this would assume a much faster transition from manufacturing to services. Multiple connections would be established with foreign companies and potential investors, so Serbia would become more competitive in offering products and services in the circular economy. The latter would mean automatic access to several financial sources that would significantly support innovation processes and improve relations with those countries that support CE through cooperation programs. All of the above would inevitably lead to technological and educational independence and reduce the economic gap between Serbia and other highly developed countries in the region and beyond. It is important to emphasise that Serbia will not be admitted to the European Union unless it changes the way it uses existing resources; the implementation of CE is a unique opportunity for accelerated accession to this community [53–61].

#### **5. Conclusions**

We conducted an analysis of competitiveness and innovation in the E.U. based on Eurostat data: ecoinnovation index, R&D personnel, and PPIE (with its subcriteria). A regression model on innovation and a K-means analysis proved that investments in human resources and proper management of LCA, based on blockchain technology, will create new models of business and innovation that will ensure a sustainable economy. Our analysis revealed that R&D stimulates HR creativity, innovation, and collaboration, which in turn have a positive impact on ecoinnovation and sustainable development. Secondly, product and process innovative enterprises (PPIE) have a relatively moderate impact on ecoinnovation. Cluster analyses on this criterion grouped the E.U. countries from the point of view of ecoinnovation. This revealed that Serbia and Romania are weak innovators.

Innovations in a business organisation can be stimulated and initiated, so they can also be managed, keeping in mind that good ideas may also come from the environment and the company itself. Wisdom is to recognise which ideas are good, realistic, achievable, and profitable enough to turn into innovations. It is much easier to copy a product than an organisation with unique people, ideas, and values. A part of an organisation's "magic" reflects its ability to be new, different, and better than the competition, thanks to new ideas. Combined with other abilities, innovation gives companies a competitive advantage, depending on how revolutionary the innovation is and how long it takes the competition to copy it or develop an equally revolutionary idea. The market race never stops.

In implementing these activities, it is desirable to actively involve representatives of the employees who are part of the team changes that are necessary to implement to achieve betterment in society. The importance of involving all actors identified through a particular working group for CE should not be emphasised. Additionally, intensive capacity-building and training for the economy and public administration are needed in order to be ready to prepare project proposals for available transitional E.U. grants. It is necessary to actively monitor E.U. policy regarding the coherent framework of production policies for different sectors and the measurability of their contribution to CE, but also to monitor the use of best available techniques in the context of CE. It is also essential to actively raise the capacity of the economy for the transition to the CE model. It is imperative to harmonise the time frames for activities in the waste management sector following the new policies and the needs of CE implementation.

#### **6. The Limitations of the Study and Future Research Agenda**

The main limitation of this study is that we based our analysis mainly on Eurostat, WEF, OSCE, and CGI data in the absence of strong contact with the business field (we got information only from our universities and their partners, their entire value-added life cycle). Another problem lies in the fact that Serbia does not have a comparative CE methodology as a non-EU country. We have already developed a survey that contains questions regarding (1) entrepreneurial and hybrid university capabilities and characteristics, (2) blockchain platform implementation case studies and future recommendations, (3) green procurement, green methodologies, and policies within the economic–social environment, and (4) future sustainability pillars regarding ecoinnovation and R&D, especially in relation

with human resources. This survey will be promoted through the U.S.H. Pro-Business Centre, the Wallachia Hub Consortium, CERMAND (Centre for Renewable Energy on the Black Sea and the Danube), the DANUBE Furniture Cluster, the DANUBE Engineering Hub Bio Concept Valea Prahovei Cluster, and the Smart eHub Consortium in Romania.

As part of the Annual Sustainable Growth Strategy for 2021, the E.U. has focused on the mechanism for recovery and resilience. With national plans, recovery measures are expected in the context of a Sustainable Growth Strategy that contains environmental sustainability, productivity, equity, and macroeconomic stability [61]. The concept of the circular economy and CE business models, which are increasingly discussed in Serbia, could create conditions for faster recovery of the national economy. Such a transition in the industry is possible with a clearly defined public policy of green recovery and financial support. This document presents the regulatory and economic directions designed to recover from the economic and social crisis caused by the COVID-19 pandemic through the transition to a business based on CE principles. The "green recovery" and sustainable ways of doing business constitute the path that the E.U. has traced and dedicated significant financial resources to, the latter of which have been made available to both the member states and the countries of the Western Balkans.

**Author Contributions:** Conceptualization, R.B.-M.-T, . (Rocsana Bucea-Manea-T, oni¸s) and L.M.; methodology, R.B.-M.-T, . (Rocsana Bucea-Manea-T, oni¸s), M.P.I. and A.Š.; software, R.B.-M.-T, . (Rocsana Bucea-Manea-T, oni¸s); validation, R.B.-M.-T, . (Radu Bucea-Manea-T, oni¸s), L.M. and M.P.I.; formal analysis, N.P.Š.; investigation, R.B.-M.-T, . (Rocsana Bucea-Manea-T, oni¸s), L.M. and M.P.I.; resources, R.B.-M.-T, . (Rocsana Bucea-Manea-T, oni¸s), and M.P.I.; data curation, R.B.-M.-T, . (Radu Bucea-Manea-T, oni¸s) and N.P.Š.; writing—original draft preparation, R.B.-M.-T, . (Rocsana Bucea-Manea-T, oni¸s), L.M. and M.P.I.; writing—review and editing, R.B.-M.-T, . (Radu Bucea-Manea-T, oni¸s), A.Š., N.P.Š. and L.M.; visualization, M.P.I. and A.Š.; supervision, R.B.-M.-T, . (Rocsana Bucea-Manea-T, oni¸s) and A.S.; project administration, L.M. and M.P.I. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Data Availability Statement:** Data supporting the reported results (model) can be found at the link: https://drive.google.com/file/d/1PNJ51diA5x8sGSQd8M3QUxxVh5loKnyF/view?usp=sharing (access on 22 July 2021).

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **Appendix A**

**Table A1.** Cluster statistics.

**Table A1.** *Cont.*

#### **References**

## *Article* **Unleashing the Importance of TQM and Knowledge Management for Organizational Sustainability in the Age of Circular Economy**

**Boyao Zhang 1, Ubaldo Comite 2, Ali Gokhan Yucel 3,4, Xintao Liu 5,\*, Mohammed Arshad Khan 6, Shahid Husain 6, Muhammad Safdar Sial 7, József Popp 8,9 and Judit Oláh 9,10**

**Abstract:** Despite the growing importance of the concept of circular economy, the case of developing countries remains under-explored. Against this backdrop, the present research aims to examine the association between the constructs of total quality management (TQM) and organizational sustainability (OS) with the mediating effect of knowledge management (KM) from the perspective of a circular economy. The data were collected from the manufacturing sector of a developing economy (*n* = 510) to serve the purpose of the current research through a self-administered questionnaire (paper-pencil technique). Structural equation modeling (SEM) was employed for hypothesis testing of the current survey. Six TQM dimensions were drawn from the Malcolm Baldridge National Quality Award (MBNQA) model. OS is composed of economic, social, and environmental sustainability, and KM is composed of four dimensions including acquisition, creation, sharing, and application of knowledge. The empirical examination suggests that TQM positively relates to OS, with KM playing a partial mediation role between this association. This study provides important insights for the management of the manufacturing industry of Pakistan on how to ensure organizational sustainability in the age of a circular economy by using the constructs of TQM and KM.

**Keywords:** organizational sustainability; knowledge management; total quality management; sustainable development; circular economy; linear economy

#### **1. Introduction**

Due to the technological, social, political, and environmental changes that emerged over the past few decades, sustaining a viable and competitive organization has become a real challenge [1]. These changes not only create more opportunities for consumers but also change their needs and wants patterns [2]. It also aims to reduce consumers' unnecessary usage of natural resources including, water, air, and soil [3], and encourage

Yucel, A.G.; Liu, X.; Khan, M.A.; Husain, S.; Sial, M.S.; Popp, J.; Oláh, J. Unleashing the Importance of TQM and Knowledge Management for Organizational Sustainability in the Age of Circular Economy. *Sustainability* **2021**, *13*, 11514. https:// doi.org/10.3390/su132011514

**Citation:** Zhang, B.; Comite, U.;

Academic Editor: Alessia Amato

Received: 22 September 2021 Accepted: 14 October 2021 Published: 18 October 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

companies to improve their environmental footprint through the use of environmentfriendly activities. Currently, companies like to follow several methods simultaneously and continue to support their strategic guidelines to achieve sustainable development objectives [4].

According to a report by the United Nations Brundtland Commission, if businesses sense the requirements of upcoming generations without compromising their ability to fulfill their specific business needs, such businesses are referred to as "businesses with sustainable development practices" [5]. This information applies to individuals who value and share concerns for future generations, especially for the non-renewable natural resources, so that the goal of sustainable development may be achieved. Organizational sustainability (OS) is three-dimensional. That is, it comprises social stability, which implies a stable economy that focuses on people, society, a stable environment, i.e., the natural resources, and is also focused on the economic growth of the enterprises [6]. Previous studies have also used the term triple bottom line (TBL) for these measurements [6–8].

With the rise of sustainability concerns and sustainable development, the notion of a circular economy has been receiving a lot of attention from scholars and policymakers in recent years [9]. When businesses embrace the essence of circular economy, it benefits not only the environment but the organization as a whole, as reducing the level of wastage is one of the primary objectives of such an approach [10]. Perhaps this is the reason that in the current age, many corporations are striving to incorporate sustainability and practices relevant to the notion of a circular economy. Undoubtedly, embracing the concept of a circular economy not only benefits organizations by mitigating the level of waste but also helps an economy to improve its environmental footprint [11].

The words "reduce, reuse, and recycle" are at the heart of the philosophy of circular economy and sustainability [12]. This implies that corporations need to incorporate such strategies through which they can reduce not only their wastage but also can incorporate such practices that can enable them to reuse and even recycle their wastage for further manufacturing processes. Central to the concept of circular economy is the concern for waste reduction [13]. To do this, businesses are required to conduct a waste audit to identify defects in business operations that are producing more waste than necessary. In this scenario, the importance and relevance of total quality management (TQM) are selfexplanatory as one of the basic concerns of TQM is cost reduction through waste reduction. Therefore, one of the objectives of the current research is to investigate the relationship of TQM and organizational sustainability (OS) from the perspective of circular economy.

Given the large business competitive market landscape, regulated environment, customer care, quality products, and authorized incentive, companies believe in wellestablished modeling methods including TQM and knowledge management (KM). TQM recognizes the method of improving organizational and individual performance to enhance competitiveness [14]. This not only improves business economic health but also increases customer and employee satisfaction [15]. The goal of TQM is to focus on sustainable performance, using the least resources to maintain a well-functioning working environment [16]. In addition, the effective implementation of TQM, a key component of sustainability, will have a significant influence on OS [17]. As Abbas, [18] noted, activity-focused companies (one of the critical factors of TQM) can offer an eco-friendly product or service.

Specifically, the implementation of the concept of circular economy is not an easy task as this includes a shift from a linear economy (the traditional one) to an iterative economy (circular) [19]. This requires specific capabilities and KM abilities of an organization. More specifically, from the perspective of a circular economy, a close knowledge-related collaboration from all stakeholders and continuous improvement in the specific business processes are preconditions for OS and for a circular flow of manufacturing processes [20]. Moreover, the process of circular value creation is imperative for improving ecosystems [21], implying that KM has a significant place in all these processes. Therefore, another objective of the current research is to investigate the mediating effect of KM between the relationship of TQM and OS from the perspective of a circular economy.

The proposed relationships were tested in the manufacturing sector of Pakistan. This sector was taken into consideration purposefully. Firstly, the majority of the manufacturing sector of Pakistan follows the linear economy pattern which results in an inefficient resource management approach [22,23]. The approach of circular economy is more holistic to extract value from the waste to achieve sustainability objectives [24]. In the current context, along with other issues, inefficient management, poor knowledge, and quality standards are the critical factors that restrict this sector's adoption of a circular economy. Thus, the findings of the current study will be helpful for this sector towards a circular economy by considering KM and TQM practices. Secondly, Pakistan produces approximately 90,000 tons of solid waste daily. The contribution of the industrial sector to this huge solid waste is critical [25]. To address this discouraging situation, an approach of the circular economy characterized by proper knowledge-based and quality management approaches may improve the current situation. Hassan and Daud [26] argue that the OS can be achieved through efficient KM activities. Despite the importance of these ideas, researchers have paid limited attention to the relationships between the "key operating structures" of TQM KM and OS.

The current study offers some significant contributions to existing knowledge. To begin with, this is one of the pioneering studies from the perspective of developing economies that attempt to bring to focus the importance of circular economy. Specifically, the current study has a special focus on the manufacturing sector of Pakistan. Notably, the adoption of the concept of circular economy is still in its evolving stages in most manufacturing cases in the country [22]. To further aggravate the issue, the concept of a linear economy still prevails and the full potential of the concept of circular economy has yet to be analyzed [27–29]. Moreover, the bulk of literature on circular economy has largely focused on sectors from developed economies [9,11,30], whereas the case of developing countries is still underexplored, which clearly highlights the dire need to conduct more research in this area. Especially, in the case of Pakistan, almost every sector follows the concept of the linear economy (take → make → waste), rather than adapting to a circular economy. Given that there is no synergic approach between different industries for a cyclical sharing of resources. This has led Pakistan to a situation of scarce resources along with different environment-related issues. Poor waste management including unmanaged dumps has placed Pakistan on the list of the countries with high solid wastages. The country, on average, wastes more than 3 million rupees of plastic each year [31]. With the current approach of the linear economy, it will not be possible for Pakistan to achieve a sustainable future. Clearly, the circular economy model is at the heart of a sustainable approach. In this regard, the scientific knowledge-related capabilities and TQM practices may be helpful for enterprises of Pakistan to achieve sustainable manufacturing practices along with achieving the circular economy objectives.

Moreover, the current study also enriches the available literature by introducing KM as a mediator between the relationship of TQM and OS which has barely been discussed from the perspective of a circular economy in the context of developing countries, though there have been some studies highlighting the importance of KM from the perspective of a circular economy [32,33]. However, these studies did not consider developing economies. In this context, it is to be stated that, due to the environmental complexity which changes from sector to sector and region to region, it is not possible to generalize the findings of previous studies in the context of an emerging economy. In line with the above arguments, the current research study investigates the effect of TQM practices on OS with the intervening effect of KM practices in the manufacturing sector of Pakistan.

The remainder of the current work is divided into four major divisions. The coming section deals with the related theories, literature, and hypotheses followed by the methodology section in which we discuss the sample, data collection, and instrument-related discussion. The last two sections are relevant with the analysis of the data and discussion of the results along with the implications.

#### **2. Literature and Hypotheses Development**

The current research seeks support from the concepts of knowledge management, sustainability management, and the concept of TQM. The perspective of corporate sustainability management stresses how corporations and communities, together, can thrive environmentally and socioeconomically in the long run [34].

More specifically, this theory asserts that by embracing sustainability practices, corporations not only improve their environmental footprint but also can thrive with economic efficiency as at the heart of sustainability management is the use of the least resources to produce the greatest good. Meanwhile, in recent years, the importance of TQM has also been emphasized on all grounds. As a full-fledged organizational philosophy, TQM intends to grow across all departments of the organization [18]. This component is strongly associated with organizational stability [35]. The TQM spectrum can expand economies to a broad-based perspective ranging from a social to an environmental perspective. Likewise, to accomplish this objective, enterprises must accept the concept of quality management by selling valuables to consumers, even after the sale [36]. KM is generally regarded as a process of knowledge-creating, utilizing, sharing, storing, and managing by an organization in order to achieve its business objectives [37]. During the past couple of decades, different studies reported on the relevance of KM with sustainable development [38–40]. The general argument in this perspective is that contemporary organizations are likely to lose their competitive position if they do not incorporate sustainability into the core of their business operations. To this end, sustainability management requires an extensive and continuous learning orientation from organizations based on several trial and error interventions to prepare a solid organizational knowledge for decision making and problem-solving [41]. In a nutshell, all these perspectives seem helpful to develop the theoretical framework of the current research.

#### *2.1. TQM and Organizational Sustainability (OS)*

The European Foundation for Quality Management (EFQM), the Swedish Quality Award (SIQ), and the Malcolm Baldridge National Quality Award (MBNQA) describe the basic TQM based on its key themes. The American MBNQA model combines the strengths and weaknesses of TQM with a focus on regulatory governance in both public and private enterprises. The sample model includes six variables, i.e., strategic planning, leadership, process management, customer focus, information and analysis, and human resource focus [42]. Because of the integrity of this model, this study used it to examine the relationship between TQM, OS, and KM.

Manufacturing companies are quickly utilizing natural resources to increase their profits; they produce more products. Compared to the services sector, manufacturing organizations utilize more natural resources which cause environmental mutilation in the form of pollution, especially water and air contamination [43]. Such practices have now led to a constant increase in the temperature of the planet and a decrease in natural resources. In response to this problem, many environmentalists, including several international organizations and NGOs are attempting to raise awareness on environmental issues. Enterprises of the recent era focus on stability, diversity, and cost savings [44].

The natural resource-based view (NRBV) focuses on organizational resources and capabilities as a way of integrating its operations along with a sustainability perspective. Moreover, NRBV provides a basis for determining the relationship between TQM and organizational sustainability [35]. These characteristics are related to the conditions that allow companies to achieve sustainable development to attain a long-term sustainable competitive advantage, in line with NRBV. This method is similar in the manufacturing and service industries [45]. From the stand of green organizational practices, it is important to discuss the three dimensions of the survival of an organization [46]. Companies that invest in organizational sustainability perform better, sell more to their consumers, and are more competitive in their maneuvers [47]. The theme of a sustainable environment focuses on the steps taken by corporations to preserve nature for future generations. It also

examines the environmental effect of business activities, the utilization of natural resources, and preservation [48].

Saving resources and energizing a sustainable environment is essential for the survival of future generations. Organizations cannot neglect their moral responsibilities for society and the environment in the current age. Thus, different stakeholders, particularly government, communities, and consumers expect enterprises to participate in societyenvironment-enhancing initiatives to balance the negative effect of their operations [49]. Companies that take steps to protect the environment have a constructive effect on their customers and a satisfied workforce as well. Unlike economic stability, which is more abstract and numeric, environmental and social stability are more theoretic and conceptual [50]. In the social landscape of sustainability, organizations have moral programs for social welfare that go beyond their financial and economic well-being [51], for example, organizations' contributions to community development programs, such as contributions to NGOs and participating in public awareness programs, including information on improving products and quality responsibilities [52].

This dimension of OS also takes into account the effect of the organization's social actions on social structures, health protection, work ethics, etc. [53]. In this context, TQM focuses on continuous improvement while striving for optimal performance; there is a long-standing association with longevity, which is important for OS. TQM and OS are one of the priorities of many organizations—their practice is crucial for the production and service businesses [54]. As a result, many companies claim their environment is kind and sustainable in their operations. Since TQM is a process, it can be lengthened to contain all aspects of the OS, as TQM aims not only to improve performance planning but also to make better use of resources. Poor products or services not only lower the economy but also deplete natural resources, resulting in an unsustainable environment. Therefore, we propose the following hypothesis.

#### **Hypothesis 1 (H1).** *TQM positively relates to organizational sustainability*.

#### *2.2. Knowledge Management and Organizational Sustainability*

Knowledge is an inimitable asset for enterprises to base their competitive position on a solid foundation. KM is the process of ensuring that a company's representatives have accurate information at the right time and place to make an efficient decision [18]. Companies based on KM foundations have a high level of quality and efficiency. Efficient management and understanding processes of new products rely heavily on the KM system [55]. As a result, KM has been considered as a solid foundation for companies to become more competitive in the various industries in the current age. Moreover, KM has every potential to improve the company's innovative potential which is a critical factor of competitive advantage for an organization. According to Zizakov et al. [56], for the ability of a company to develop new products, the process of workflow is highly dependent on efficient KM practices. Thus, KM creates a footing for enterprises to become more advanced and competitive in the market.

With the help of KM practices, organizations translate tacit knowledge into a clear idea so that it could move freely within the organization [57]. KM, through the knowledge workers, leads to knowledge-based economics and companies can receive knowledgeable insights to improve their process [58] and be able to produce new products and services. Commitment to leadership and organizational repute are key factors in shared knowledge. Enterprises can only use KM efficiently and effectively when they use knowledge from diverse foundations. The company should use the knowledge gained from customers, employees, and other shareholders to improve the overall operation of the company.

There are different research studies in which the relationship between TQM and KM has been established. For example, scholars like Stewart and Waddell [59] asserted that enriching the intervention of quality to a wide range of business process including product specifications, customer needs, and continuous improvement indicate a clear relationship between TQM and KM. Moreover, KM practices of organization support in establishing a quality culture which is essential for an organization's success in a competitive landscape [60]. Likewise, the work of Lin and Wu [61] also indicated that there exists a positive relationship between TQM and KM. The study of Colurcio [62] showed that the TQM orientation of an organization positively influences the KM capabilities of an organization, especially for successful knowledge creation and dissemination. To sum, companies that successfully implement TQM include KM in their operations earn a high-profit share. Therefore, the following hypothesis is proposed.

#### **Hypothesis 2 (H2).** *TQM positively relates to knowledge management*.

#### *2.3. TQM, Knowledge Management, and Organizational Sustainability*

Relating KM with OS has become a critical business imperative for present organizations to achieve business goals and objectives effectively. Knowledge is essential for the development of an individual, an organization, and a nation. Ashraf [63] and Abbas [18] argue that KM is an important factor in the development of a sustainable organization. Knowledge-based companies are more innovative as compared to other organizations, as they can see new signs of organizational stability [64]. Companies that incorporate knowledge management activities into their business operations are responsible for sharing information with the community [65]. KM helps organizations to develop sustainable use of information resources, social considerations, and environmental and economic issues [66]. Organizations involved in KM activities encourage the sharing of information within and outside the organization. Organizational strengths focus on the efficient organization of KM across all organizational strategies to achieve sustainability in all areas [67]. KM activities support an organization in achieving its sustainability objectives. Thus, the following set of hypotheses is framed. Figure 1 shows the conceptual framework of the current study.

**Figure 1.** Research model of the current analysis: TQM (X) = the independent construct, OS (Y) = the outcome construct, KM (M) = the intervening construct.

**Hypothesis 3 (H3).** *KM positively relates to organizational sustainability*.

**Hypothesis 4 (H4).** *KM mediates the relationship between TQM and OS*.

#### **3. Methodology**

#### *3.1. Data Collection*

We collected the data from manufacturing organizations in Lahore city, Pakistan. It is to be mentioned here that Lahore city is the industrial hub of Pakistan which constitutes a population of several million. We intentionally selected this city to serve the purpose of the current survey. The specific reason for this intention lies in the fact that during recent years, the city has been declared more than one time as the most polluted city in the world [68]. In this regard, industrial malpractices have been regarded as one of the major reasons for this poor environmental situation [69,70]. Mainly, we visited the Quaid E Azam industrial estate and the Sunder industrial zone of Lahore to collect the data. We only contacted ISO-certified organizations because these ISO-certified organizations are ready to apply environmental certification and social responsibility (for example, ISO 14000 and 26000). In this regard, we formally contacted the selected organizations to support us in the data collection process in the larger interest of academia and the industry. After receiving their formal approval, we then planned a detailed schedule indicating the timing and frequency of our visits in different organizations.

We included low, middle, and senior executives in our dataset, as they responded positively to the survey. Not only did they understand their organizational policies, but they were able to understand different concepts like TQM, KM, and sustainability. Moreover, before starting the data collection phase, we ensured that the ethical guidelines given in the Helsinki Declaration [71] were met accordingly. For example, informed consent from each respondent was obtained to participate in the survey voluntarily. For this purpose, a separate sheet was attached with every questionnaire. Likewise, each respondent was given an equal opportunity to quit the survey at any stage if he/she felt uncomfortable disclosing the information during this process. The instrument for collecting the data was a questionnaire (self-administered) which was given to each participant. Initially, we distributed 800 questionnaires to different organizations. As happens in most data collections through surveys, we did not receive back in full what we distributed. Of those 800 (initial distribution), some questionnaires were incomplete, thus, we could not include them in the final dataset. In this regard, we received 510 valid responses that were processed to analyze the data. This method of data collected is also supported by different scholars [72,73]. The data were collected between December 2020 and March 2021.

#### *3.2. Measures*

The questionnaire consisted of three parts. The first part included 36 items based on six TQM dimensions adapted from the MBNQA model. Specifically, the items of TQM were taken from the studies of Saraph et al. [74], Samson and Terziovski [75], Kaynak [76], and Sila [77]. The second part included 14 OS-related items, taken from Turker [78] and Kaynak [76]. Finally, part 3 included 22 items of the KM construct which were taken from Darroch [79] and Lee and Wong [80]. All items were rated on a 5-point Likert scale ranging from 1 = strongly disagree to 5 = strongly agree. To confirm the reliability and validity of the questionnaire, we conducted a pilot study and collected 42 responses from companies located in Lahore. Preliminary analysis showed an internal consistency of 0.89 for TQM, 0.90 for OS, and 0.82 for KM, which met Hair et al. [81] guidelines of a 0.70 cut-off value.

#### **4. Results**

#### *4.1. Common Method Bias*

The general approach to detect a common method bias issue is suggested by Podsakoff et al. [82]. Thus, we followed several sequential steps. For instance, the respondent was told that the questions must be answered honestly and that there are no "good" or "bad" answers. This strategy attempts to reduce the fear in practice and prevents them from giving important social responses. (2) The structure of the instrument was designed very carefully to avoid any possible ambiguity. This is why the instrument had short, simple, and straightforward questions. (3) The importance of the study and the responses from the respondents' participation were explained to them in details. We also initiated a singlefactor analysis as recommended by Harman [83]. All items of the instrument were loaded on a single factor using exploratory factor analysis. The results confirmed that there is no single dominant factor that explains more than 50% variance which means there is no issue of common method bias. The above information shows that the general bias of our research does not indicate a major problem [84,85].

#### *4.2. Structural Equation Modeling (SEM)*

SEM is an advanced-level data analysis technique that has some significant advantages over conventional multivariate techniques. For example, SEM provides an explicit assessment measurement error. It also enables a researcher to estimate a latent variable through observed variables [86]. In addition, SEM helps an analyst carry out a simultaneous evaluation of the complex models, especially models with mediators or moderators, which was not possible through the conventional data analysis techniques. On a final note, a fully developed model can be tested against the data using SEM as a conceptual or theoretical structure or model and can be evaluated for the fit of the sample data. This is why researchers in the current age prefer to analyze the data by employing SEM [87–89]. According to Chin, Peterson, and Brown [85], SEM is suitable for analyzing the cause and effect analysis of complex models, as is the case with the current study. Similarly, SEM is useful when used to evaluate the implementation of multiple modeling, multiple paths, and/or multi-segment models for each structure. For these reasons, we felt SEM was a useful technique for data analysis of the present study.

To test the hypothesized model, we used a two-step SEM analysis, for all parameter estimations, we used the maximum likelihood method using AMOS. Similarly, to measure the modeled constructs and evaluation, we used confirmatory factor analysis (CFA). With the help of CFA, we were able to examine convergent and discriminant validities along with a reliability analysis of the measurement model. The values of average variance extracted (AVE) were examined to assess convergent validity and composite reliability (CR) values were analyzed to evaluate the reliability of the instrument. Similarly, the discriminant validity was established by taking the square root of AVE. The results of AVE and CR are presented in Table 1, and the results of discriminant validity are shown in Table 2. According to these results all variables have acceptable CR values greater than 0.6. Similarly, the values of AVEs were also within the acceptable range as each construct showed a variance greater than 50%, which means that captured variance by the variable is greater as a result of measurement error [90]. All these results indicate that our proposed model has good internal validity and reliability. As a matter of fact, convergent validity is a measure of association between two observed factors measuring the same construct. Factor loadings more than 0.5 are considered significant loading in the context of convergent validity [90]. In this regard, all factor loadings in our final measurement model exceeded the cut-off level of 0.5. We had to delete some standardized factor loadings due to their weak loading on the respective latent construct. Finally, we examined the discriminant validity of our data by observing square root values of each construct and comparing them to correlation values among other constructs. The rule of thumb is that if the square root of AVE exceeds the correlational values, it means there is evidence of discriminant validity. These results are shown in Table 2.

**Table 1.** Convergent validity and reliability.

**Note:** b FL, factor- loading; α, Cronbach's α coefficient; CR, composite reliability; AVE, average variance extracted.

**Table 2.** Discriminant validities and correlations.

**Note:** \*\*, significant at 95 % level. CF = customer focus, SP = strategic planning, PM = process management, HR = HR focus, IN = information and analysis, LD = leadership, KP = knowledge process, KS = knowledge sharing, KC = knowledge creation, KA = knowledge application, ES = economic sustainability, SS = social sustainability, EN = environmental sustainability.

*4.3. Hypotheses Testing and Measurement Model*

We tested the hypotheses of the present study using the maximum likelihood method in AMOS. Firstly, we tested our measurement model for data fit. For this purpose, we examined different model fit indices such as CFI, IFI, GFI, RMSEA, NFI, and AGFI. All values of model fit indices showed statistical evidence of a better model fitting to the data. We also tested the χ2/df ratio for less than 5 in order to accept the model for data fit. The findings are shown in Table 3.

**Table 3.** Model fit indices.

\* within the acceptable range.

#### *4.4. Structural Model Testing*

In order to take the analysis to a further level, we tested our hypothesized relations through SEM in AMOS software with the help of beta values and associated *p*-values. The results are shown in Table 4. According to these results, all hypotheses of the present study showed significant results, which means that all hypotheses were in an acceptable range. From the statistical results, it is evident that TQM significantly predicts KM (beta = 0.351, *p* < 0.05) and KM significantly predicts OS (beta = 0.47, *p* < 0.05); therefore, H2 and H3 are accepted.

Furthermore, we tested the mediation effect of KM in the relationship of TQM and OS with the help of Bootstrapping option in AMOS. The results showed that the indirect effect is 0.166, *p* < 0.05. BootLLCI = 0.127 and BootULCI = 0.439. Neither ULCI nor LLCI include zero, which means zero falls outside of ULCI and LLCI which means the indirect effect is significant and positive. Hence, KM is a significant mediator in the relationship between TQM and OS, so H4 is supported. Similarly, the direct effect of TQM on OS is also significant and positive 0.493, *p* < 0.05, which means that TQM significantly predicts OS, implying that H1 is also accepted. It is notable that the effect size is reduced (direct effect-C) from 0.493 to 0.166 (indirect effect -C') but remained significant which is indicative of the fact that KM is a partial mediator in the relationship of TQM and OS. On a final note, the mediation effect explains more than 25% of the total variance in OS. This effect can be calculated from the formula given in Equation (1). The structural relationships are shown in Figure 2.

$$\text{Proportion of median} = \frac{\text{Indirect effects}}{\text{Total effect}} \tag{1}$$

**Table 4.** Hypotheses testing.

**Note:** \*\*\* *p* < 0.000.

**Figure 2.** The structural model.

#### **5. Discussion**

The current study was carried out to serve two main objectives. Firstly, the study intended to investigate the relationship between TQM and OS from the perspective of a circular economy. To this end, the results of the current study validated that there is a direct relationship between TQM and OS. Successful use of TQM practices in an organization can lead to an enhanced level of OS. These results are in line with the study by Abbas [18], which found a significant impact of TQM on corporate sustainability. However, our results show a contradiction with the findings of Li et al. [91] in the context of Chinese enterprises, in which they indicated TQM does not affect the green performance of the organization. It can now be argued that the basis of TQM is a set of action strategies related to the sustainable development of enterprises.

Altogether, TQM not only reduces economic inefficiency but also protects the environment and nature by transporting them to the environmental permanence of the organization. Improving the level of customer satisfaction, reducing the error rate, and improving key performance indicators of the TQM program can be directly linked to the economic sustainability of enterprises.

The enterprises that are more aware of the impact of their work on the environment seem to be more interested in incorporating the TQM orientation in their business operations [92]. As TQM and environmental management share the same landscape, as they both focus on the efficient use of resources to reduce the level of waste during the value creation processes of a business; they are similar in terms of philosophy. In order to improve its environmental footprint, an organization should implement a TQM program core to its business operations. By combining quality with a competitive environment, a sustainable organization focuses on sustainable development. Moreover, TQM strengthens not only

the organizational environmental initiatives but also boosts organizational repute and market share value which ultimately enhances the overall performance of the organization. Additionally, by applying the TQM approach to a wide range, companies can ensure the impact of green systems, such as low levels of harmful gases and minimal use of natural resources in order to be environmentally friendly. According to the results of Kang et al. [93], TQM had a significant and positive impact on a sustainable social environment. However, compared to economic and environmental sustainability, many companies have neglected social stability in their policies due to the low stability of the triple bottom line (TBL) model [94]. To sum, socially sustainable organizations aim to recognize the impact of their actions on society and the environment in order to take steps, to improve their environmental footprint, and to improve their community. Although social sustainability is complex to understand, it is easy to detect. Thus, the enterprises that understand the importance of social sustainability give prime importance to the initiatives that can reduce their negative impact on the environment. These results are in line with the findings of Andrade Arteaga, Rodríguez-Rodríguez, Alfaro-Saiz, and Verdecho [16], Chen et al. [95], and [96].

Another objective of the current survey was to investigate the mediating effect of KM between the relationship of TQM and OS. In this regard, the statistical findings of the current survey validated the mediating role of KM in the proposed relationship of TQM and OS. It is stated that if organizations implement the TQM program effectively, they will improve their performance of KM and this will also have a significant impact on OS. Moreover, our study confirmed that TQM leads to a higher level of KM activity in the organization. Intelligent organizations see TQM and KM as elements of collaboration, emphasizing the importance of individual employees for knowledge sharing, acquisition, and dissemination in an organization. The results have shown the efficacy of KM to enhance OS, i.e., social, environmental, and economic well-being. The analysis of the mediation role of KM between TQM and OS yielded significant implications and shows that the inclusion of KM in the proposed model is imperative to enhance the overall sustainability performance of an organization. On a further note, both TQM and KM share the same values in many ways; for example, one of the core value of TQM is continuous improvement for which the knowledge repository of an organization is of utmost importance. Likewise, to reduce the error rate, the role of the knowledge worker of an organization is critical. This line of reasoning can be seen in the work of Mendes [97]. In brief, our study brings it to the fore that to attain OS, the role of KM is of paramount importance, as our results proved that when KM is introduced in the model, it explained a significant amount (more than 25%) of the total variation in OS. Thus, the mediating role of KM between the relationship of TQM and OS is proven as per the statistical findings of the current survey.

#### *Implications*

TQM and environmental management have a common orientation for long-term goals as both of these concepts emphasize reducing resource utilization, reducing waste, and improving customer satisfaction. To achieve such long-term goals, organizations must focus on integrating good standards of quality system management and environmental management. By combining quality with the environment, a capable organization will be able to induce its continuous improvement in all three areas of sustainability (environmental, social, and economic). As TQM promotes environmental management practices, it can strengthen the organizational image and market share. In addition, by following TQM practices in a broader context, organizations can ensure the benefits of green manufacturing practices, such as low greenhouse gas emissions and wastewater and low consumption of energy and natural resources, making it a more environmentally friendly organization. These results are also in line with the findings of Green et al. [98] and Sriyakul et al. [99].

Similar to the sustainable environment, TQM has shown significant and positive effects on social sustainability in previous studies [93,100]. However, in comparison to the economy and the environment, many organizations have neglected social stability in their policies, due to the low level of stability in the TBL model. Smart organizations continue to recognize the impact of their actions on society, both positive and negative, and take steps to improve the quality of interaction with primary and secondary partners. Although it is difficult to classify activities for social care, they are easy to identify. Some of the generalizations develop a general policy for workers, consumer rights and workers' rights, rest of employment, volunteering, living standards, health and safety, welfare, community involvement, contributions, or participating in public development programs. Organizations that understand customer experience and relationships recognize the importance of maintaining relationships and being part of their business plans. Thus, a well-planned TQM philosophy not only considers environmental sustainability but also takes care of the social aspect of sustainability.

Our findings also show a positive relation between TQM and economic sustainability. These findings are consistent with various studies, such as García-Alcaraz et al. [101]. According to the results, TQM practices are also helpful in improving the economic health of an organization as the philosophy of TQM stresses efficient management of resources at each level which undoubtedly improves the overall economic efficiency of an organization. One of the main reasons for these results is that both TQM and KM systems improve company performance, such as time management, efficient use of equipment, training, and development, which has an impact on employees and customer satisfaction. Another important reason for improving the economic efficiency of organizations through TQM is that TQM systems reduce the cost of operations and inefficiency of operations, resulting in better and more stable services. While the quality of a product or service can build a brand and competition, firms need to ensure the quality of their operations and services. It is important to note that TQM practices are interdependent, and in order to receive the maximum benefit from them, organizations must supplement the entire process with proper knowledge management practices. In this regard, leadership can play an important strategic role, as leaders have a responsibility to plan and implement organizational plans.

The study has some important social implications, which we will explain one by one. For example, the findings of the current study highlight the importance of TQM and KM in achieving sustainability objectives. Specifically, the study unveils the importance of TQM and KM from the perspective of a circular economy. The notion of circular economy is at the heart of sustainable manufacturing in different developed countries. However, the situation in the context of the developing countries is very different because most of the developing countries (including Pakistan) do not have sufficient resources and knowledge to properly execute the crux of a circular economy. In this context, the current study adds to the discussion of a circular economy by arguing that a well-planned TQM approach supplemented by KM practices may be helpful for sustainable manufacturing. More specifically, the current study adds to the findings of Perey, et al. [102], who acknowledged the usefulness of TQM for waste management and sustainable practices but ignored the importance of KM in this process. Thus, the leadership and management of businesses should increase their commitment to implement TQM programs in the enterprises to ensure not only the achievement of financial stability but also the social and sustainable environment in line with the concept of TBL.

Moreover, it is central to implement the TQM mechanism in all enterprises that can adhere to one of the standard benchmarks such as MBNQA, EFQM, and SQA. However, in Pakistan, many ISO-certified companies only have Lean Manufacturing, Kaizen, Juran Training, and other quality management standards that do not properly acknowledge the philosophy of sustainable development and circular economy. The policymakers of the enterprises have to realize that in the absence of a comprehensive TQM program, achieving organizational sustainability will be a difficult task. The current study supports the basic fundamentals of the MBNQA model and leads to improved quality in organizational decision-making. The results show that TQM practices are important in the manufacturing sector; this study provides a guideline that the TQM philosophy along with KM

should be fully applied in the manufacturing sector of Pakistan in order to get better and sustainable results.

Especially from the perspective of a circular economy, the findings of the current survey have some specific implications. To begin with, it is to be noted that the current pattern in most of the manufacturing organizations in Pakistan is a linear production pattern that follows the philosophy of 'take, make, and waste' without any significant consideration of the concept of a circular economy which is an antonym of linear economy. Although some organizations are striving to incorporate the concept of the circular economy into their business operations, up until now, such organizations could not reap the full benefits of a circular economy. For such organizations, realizing the importance of TQM and KM from the perspective of a circular economy is of utmost importance. More specifically, Pakistan is one of the nations in the world that is ranked high for waste production, as the country has been reported to generate more than 70,000 tons of solid waste on daily basis. In the given scenario, if the manufacturing sector of Pakistan assumes its responsibility and makes it a priority to follow the essence of a circular economy, there is every possibility to think of a better and sustainable future for the country. To that end, the findings of the current survey may be helpful as currently, several industries in Pakistan are ISO certified, but there is a need to shift the way the current organizations follow TQM philosophy in order to think of it as an enabler for a circular economy.

#### **6. Conclusions**

The current study is helpful for the manufacturing sector of Pakistan to achieve the sustainability perspective, especially from a viewpoint of a circular economy. It is to be noted that economic transformation is not an overnight process, nor does it depend solely on industrial restructuring. It is, in reality, a change in the mindset, behavior, and priorities of all the concerned stakeholders. Further, to achieve sustainable manufacturing, the circular economy is a way forward for Pakistani businesses. This view can also be seen in some recent studies. For example, the studies of Rahman and Kim [29] and Umer and Abid [103] are some relevant cases in this regard. Furthermore, the industries in Pakistan have to realize the potential of TQM to achieve sustainability and for a transition from a linear economy to a circular economy. Presently, different businesses in Pakistan have ISO standards (14000, 26000, and others); however, most businesses follow such standards to satisfy state laws or as a requirement imposed by the client organization. This is the time to assume TQM from a proactive approach, as the full potential of TQM is not just to satisfy state laws or clients, but beyond that, it can place an organization in a better competitive position through circular production. Similarly, the businesses in Pakistan need to realize the importance of a knowledge resource for achieving a successful transition towards a circular economy. More specifically, proper creation and acquisition of knowledge are critical for its successful application from the perspective of a circular economy [21]. There are some theoretical considerations of the present study as well; first, it enriches the gap between TQM and OS, especially in manufacturing companies of Pakistan. This supports TQM's position that effective implementation of TQM activities can significantly improve an organization's sustainable performance. This study emphasizes the importance of the KM role in the relationship between TQM and CS and confirms KM's principle that good governance not only has a positive impact on personal and organizational activities but also increases their ability to excel in a competitive landscape.

In sum, we have to think green before we can act green and ultimately go green. It is high time to start reimagining the relationship between resources in both our daily lives and the corporate sector and, as a result, reimagine the future we are creating for our next generations. On a final note, our study may generate the same findings in similar economies such as India and Bangladesh. However, in other economies, due consideration and care are necessary before implementing the findings of the current survey.

There are some limitations to the current research. First, the information collected does not include any operational staff. Their opinion may add important insights to the

present research study, so future researchers are required to include operational staff as well in order to get better insights.

In addition, the information was based on the understanding of the participants and not on the financial statements provided in organizational documents, so the actual performance was not measured in the present study. Therefore, in addition to self-understanding, the real data of the organization, such as annual reports, may also provide other evidence of the impact of TQM activity on OS. Data were only collected from industries located in the Quaid E Azam industrial state and Sundar industrial zone of Lahore so the generalizability of the present study is under question. In order to better address the issue, future researchers are required to include more cities in Pakistan.

**Author Contributions:** All of the authors contributed to conceptualization, formal analysis, investigation, methodology, and writing and editing of the original draft. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Informed consent was obtained from the respondents of the survey.

**Data Availability Statement:** The data will be made available on request from the corresponding author.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**

## *Article* **From Waste Pickers to Producers: An Inclusive Circular Economy Solution through Development of Cooperatives in Waste Management**

**Rajesh Buch \*, Alicia Marseille, Matthew Williams, Rimjhim Aggarwal and Aparna Sharma**

Rob and Melani Walton Sustainability Solutions Service, Arizona State University, Tempe, AZ 85287, USA<EMAIL_ADDRESS>(A.M<EMAIL_ADDRESS>(M.W<EMAIL_ADDRESS>(R.A<EMAIL_ADDRESS>(A.S.)

**\*** Correspondence<EMAIL_ADDRESS>
**Abstract:** The world's global plastics waste crisis demands policy coordination and technological solutions to improve waste management systems, and organizations worldwide have created momentum around the concept of a circular economy. This paper advances a holistic, inclusive circular economy framework that aims to empower waste pickers with the following basic pillars: (1) build collaborative networks of stakeholders to enable inclusion of waste pickers; (2) establish cooperative enterprise models to integrate waste pickers into the formal economy; (3) build waste pickers' technical skills and capacity for entrepreneurship; and (4) provide access to technologies and markets that enable waste pickers to manufacture upcycled products.

**Keywords:** circular economy; inclusiveness; stakeholders; capacity building; entrepreneurship; cooperative business models; collaborative networks

#### **1. Introduction**

The world faces a global plastics waste crisis that demands policy coordination and technological solutions to improve waste management systems at every stage, including the collection, transport, sorting, treatment, and final disposal or reprocessing of waste. International organizations, governments, and the private sector have created momentum behind rethinking the after-market plastics economy through a circular economy, defined as "keeping materials and products in circulation for as long as possible through practices such as reuse of products, sharing of underused assets, repairing, recycling and remanufacturing . . . [and] restoring natural systems, designing out waste, and substituting non-renewable materials with biological and renewable ones" [1]. Circular economy solutions have the potential to drive economic growth [2] and create between 9 and 12 million new jobs worldwide [3] in addition to alleviating the environmental and economic consequences of plastic waste. Critically, circular economy solutions, if designed and implemented with an eye for the needs of vulnerable workers, also offer new opportunities to maximize social equity and economic inclusion.

This paper advances an inclusive circular economy solution that aims to empower waste pickers in the developing world. Waste pickers have the potential to act as environmental stewards by mitigating the effects of waste, contributing to the resilience of urban systems, reducing greenhouse gas (GHG) emissions through recovery of materials from waste streams, and saving energy and preserving natural resources by enabling recycling and reuse [4]. They play critical roles in waste management, but their full potential to contribute to the circular economy remains unrealized due to their marginalized social status, lack of recognition by authorities, and disconnection from the formal economy. Additionally, they face significant occupational hazards and social exclusion, and their livelihoods are at risk of being displaced by private-sector-led waste management approaches.

**Citation:** Buch, R.; Marseille, A.; Williams, M.; Aggarwal, R.; Sharma, A. From Waste Pickers to Producers: An Inclusive Circular Economy Solution through Development of Cooperatives in Waste Management. *Sustainability* **2021**, *13*, 8925. https://doi.org/ 10.3390/su13168925

Academic Editor: Alessia Amato

Received: 30 June 2021 Accepted: 9 August 2021 Published: 10 August 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

Due to the prevalence of plastic waste, combined with its unique harms and relative ease of reprocessing, this paper emphasizes the strong potential of plastics recovery and remanufacturing as an initial input for this approach to catalyzing greater inclusion and entrepreneurial capacity for waste pickers; however, the inclusive circular economy solution described here has wide applicability for nearly any other waste stream. After describing the global plastics crisis, we discuss the unique social, occupational, and economic challenges faced by waste pickers. We then propose a new strategy for empowering waste pickers through education and capacity strengthening that leverages cooperative enterprise models, along with low-cost micro-manufacturing technologies, that will allow waste pickers to create value-added products out of plastic waste—enabling new economic opportunities for waste pickers-as-producers while realizing their enormous potential to accelerate the transition to a circular economy.

#### **2. The Growth in Plastics Use and Waste**

Plastics are integral to the global economy, acting as an enabling technology in almost every sector of economic activity. For decades, the production of plastics increased at a compound annual growth rate of 8.4%, from 2 Mt in 1950 to 380 Mt in 2015—roughly 2.5 times the compound annual growth rate of global GDP during the same period.  By one estimate, of the 6300 Mt of plastics produced from 1950–2015, 79% accumulated in landfills or in the environment, 12% was incinerated, and only 9% was recycled [5]. The fate of plastics is invariably intertwined with waste management systems that are poorly optimized for recycling and reuse. Globally 37% of waste is disposed in landfills, 33% is openly dumped, 11% is incinerated for final disposal, and only 19% is recycled. In low-income countries, 90% of solid waste is still burned or openly dumped, and low- and middle-income countries are expected to see a threefold increase in total waste production by 2050 [6]—a fact that is especially significant to the solution described here, given the large numbers of informal sector waste pickers in these countries.

#### **3. Harmful Impact of Plastic Waste**

The harms of plastic waste can broadly be categorized in environmental and economic terms. Regarding the environment, plastic waste contributes to the destruction of natural ecosystems, especially oceans and riverways. Ten rivers account for 88–95% of plastic debris that makes its way to the ocean [7].  By 2050, the rate of plastic dumping into the ocean will increase to four dump trucks per minute, and the volume of plastics by weight will exceed that of fish [8]. Plastics that litter the earth also disintegrate into microplastic particles that become atmospheric pollutants. One study recorded 365 microplastic particles per square foot falling from the sky [9]. The health consequences of microplastics inhalation and ingestion are unknown [10]. An additional environmental harm of plastics waste is the production of GHGs from after-use incineration, estimated at 390 Mt in 2012. From now through 2050, GHG emissions from the plastics sector will increase from 1% of global carbon emissions to 15%, contributing significantly to climate change [8].

The mismanagement of plastic waste also has significant financial impacts. Ninetyfive percent of the material value of plastics packaging, estimated at 80–120 billion USD, is lost after a single usage cycle [8]. Plastics waste annually causes 13 billion USD in damages to marine ecosystems and 1.3 billion USD in losses to tourism, fishing, and shipping industries in the Asia-Pacific Economic Cooperation (APEC) region alone. The total afteruse externalities created by plastic waste, accounting for GHGs emitted in production and incineration, are estimated at 40 billion USD annually [8].

#### **4. Waste Picking as Informal Sector Labor**

The informal sector accounts for 61% of employment globally—approximately 2 billion people—and comprises 90% of employment in developing countries [11]. Informal workers are most heavily concentrated in the agricultural sector, but many informal occupations exist ranging from housekeeping to construction. The International Labour Office estimates that in the developing world, 1% of the urban workforce, or 15 to 20 million people, is engaged in recycling [12]. Known as waste pickers, they collect, wash, sort, and process waste from streets, waterways, and landfills. Waste pickers are generally not compensated for collecting trash, but instead earn income through low-value forms of resource valorization through volatile commodity markets.

International organizations have attempted to determine the number of waste pickers from local to global scales, and although some data are available for cities, country-level and global data are scarce. Waste pickers comprise an estimated 0.1–0.4% of workers in seven West African cities; 0.7% of workers in South Africa; and 0.1% of workers in India [13]. These figures, although proportionately small, represent millions of workers. Some municipal and national governments, such as Brazil, have created employment classifications to monitor the waste picker population and track the economic impacts they create.

The level of organization and labor formality of waste pickers varies, and these two factors bear heavily on their ability to earn a living wage. Generally, waste pickers fall into three categories: unorganized (independent), organized (e.g., through a business collective or union), and contract laborers [13]. Local authorities often maintain informal arrangements with waste pickers who supplement formal private sector contracts by filling small niches in urban waste management. In Pune, India, municipal authorities offer formal recognition to waste pickers, providing identity cards and access to health insurance [14], but this is an exceptional case; in most cities, local authorities reap significant benefits from the contributions of waste pickers without formally recognizing or paying them [15].

#### **5. Occupational Hazards of Waste Picking**

Informal sector workers are uniquely vulnerable to exploitation and mistreatment and lack the security provided by connection to the formal economy, such as banking services, business licensure, and insurance. Waste pickers are no exception to these dynamics and face unique additional challenges. First, waste picking is an inherently high-risk occupation that brings significant health hazards, such as exposure to hazardous chemicals and biological waste; threats to occupational safety; and lack of access to basic sanitation amenities when working in landfills, such as drinking water, toilets, and places to wash [16]. In one study of waste pickers in Mumbai, India, the "prevalence of morbidities was significantly higher among the waste-pickers, particularly for injuries (75%), respiratory illness (28%), eye infection (29%), and stomach problems (32%), compared to the comparison group (17%, 15%, 18%, and 19% respectively)" [17]. Secondly, waste pickers face social alienation and exclusion, ranging from daily mistreatment and humiliation to police harassment and beatings [18]. Third, waste pickers face a variety of social problems including racial conflict, violence and infighting, theft, insecure living conditions, and substance abuse [16]. Finally, waste pickers are often deprived of opportunities for education and social mobility. In families that rely on waste picking for income, children are often put to work before they can finish school, reinforcing the cycle of social exclusion and poverty [19]. Importantly, women in waste picking may also suffer gender-based income discrimination: One survey showed that where there are larger concentrations of women in informal valorization, junk shops pay women lower rates for materials [14].

#### **6. Economic Vulnerability of Waste Pickers**

Waste pickers' livelihoods are constantly under threat due to their dependence upon volatility-prone commodity markets and the ever-present possibility of losing access to waste streams as municipalities adopt "cleaner" private sector solutions. Both problems are exacerbated by their lack of collective economic and political influence. Consequently, waste pickers are uniquely economically vulnerable and often live at the edge of subsistence: for example, in Mumbai, waste pickers earn between 2.71 and 3.62 USD per day [20].

Labor informality adds to the challenges that waste pickers face as service providers at the bottom of the global waste value chain. The primary value that waste pickers provide is in the highly labor-intensive tasks of door-to-door collection and segregation and preparation of materials for recycling, which are sold to middlemen who pay low prices generally only about 10% of the acquired value of the materials, or one-third of what they would pay to actors in the formal sector [21]. In recent years, the livelihoods of waste pickers have also become increasingly vulnerable to displacement by the private sector, such as when cities establish contracts with waste management providers—sometimes at the behest of donor agencies [12]. For example, the Inter-American Development Bank and the World Bank have encouraged Latin American countries to adopt Integrated Solid Waste Management (ISWM) solutions that include source reduction, recycling and composting, waste transportation, and landfilling. These systems, if designed without an eye for inclusion of all stakeholders—including the informal sector—may limit waste pickers' access to the waste sources that are most profitable for recycling [19]. Although some municipalities have consulted with waste picker cooperatives in ISWM planning to create complementarities between waste pickers and the private sector, waste pickers are generally left out of deliberation and planning processes that shape their futures [1].

Importantly, top-down, private-sector-implemented approaches to waste management not only put waste pickers at risk financially, but also reinforce the linear economy. Private sector actors handle waste in whatever manner is most profitable, even if it means incineration—which creates 25 times the emissions of recycling [12]. In contrast, waste pickers are incentivized to maximize the quantity and quality of recyclable material for resale, and thus devote significant effort to segregating the waste and connecting to appropriate buyers using their local knowledge. One study of six cities found that where private sector recycling has replaced informal valorization, results have been inconsistent, and recycling plants have tended to show disappointing performance. The study concludes that, partially as a result of waste pickers' reliance on lower technology solutions (such as human and animal transport of waste), "an integration of the informal sector would contribute significantly to reducing GHG emissions, as it results in increases in the quantity of recovered material . . . [and] more material recovery at lower environmental cost" [14].