Leveraging Digital Technology Capability for Circular Economy Innovation in the Food Products Supply Chain: A Mixed-Method Study

Our study aims to enhance the understanding of how digital technologies function as a dynamic capability in order to improve digital circular economy (CE) innovation and food products supply chain (FSC) performance. In particular, we examine the moderating effect of absorptive capacity (AC), which remains understudied in the sustainable operations management literature. We followed an explanatory sequential mixed-method design in this study with two main phases. In the first phase, we developed a model based on a review of the extant literature review, which was grounded in the dynamic capability view. We then statistically analyzed the model, using data collected from 623 respondents working in the food products and allied industries industry sector. In the second phase, primary data were collected from interviews with ten practitioners working in five companies in that industry sector and secondary data from the company documents. The qualitative data were used to test the relevance and practical applicability of the model developed in the first phase. Using structural equation modeling, our developed model provides empirical evidence to show that digital technology capability in the FSC positively influences digital CE innovation. We further show that AC moderates the relationship between digital technology capability in FSC and digital CE innovation. Thematic analysis of the interview data confirms digital technology capability as a higher order capability, comprising of digital sensing, digital seizing, and digital transformation capabilities, and that digital technology knowledge absorption is a technically focused AC. The analysis further confirms the relationships between digital technology capability, digital CE innovation, and enhanced FSC performance.