Twin transition in manufacturing firms: The role of supply chain orchestration and supply chain business model innovation

Abstract

Twin transition, the concurrent development of digitalization practices and circular practices, are believed to be the key to firm performance. However, empirical evidence is currently scarce regarding the effect of twin transition on firm performance and the complementary practices that enable and realize it. This study draws on a survey of 188 Swedish manufacturing firms and employs PLS structural equation modelling to test the hypothesis. The results indicate that firm performance can be improved through digitalization practices but with circular practices as a mediator. Moreover, our results show a significant and positive moderation effect of supply chain orchestration and supply chain business model innovation as complementary mechanisms for enabling and realizing the process. This implies time sequencing between the two twin transition dimensions. These results carry theoretical implications for twin transition research and circular economy literatures. The results also provide novel managerial insights by showing that digital investments must be coupled with early orchestration of supply chain partners and aligned business model innovation to effectively scale circular practices and realize performance benefits.