Barriers to employing digital technologies for a circular economy: A multi-level perspective

Industry 4.0 and digital technologies might significantly impact resource optimization in a smart circular economy. However, adopting digital technologies is not easy due to barriers that may arise during this process. While prior literature offers initial insights into barriers at the firm level, these studies pay less attention to these barriers' multi-level nature. Focusing only on one particular level while ignoring others may not unleash the full potential of DTs in a circular economy. To overcome barriers, it's necessary to have a systemic understanding of the phenomenon, which is missing in previous literature. By combining a systematic literature review and multiple case studies of nine firms, this study aims to unpack the multi-level nature of barriers to a smart circular economy. The primary contribution of this study is a new theoretical framework composed of eight dimensions of barriers. Each dimension provides unique insights related to the multi-level nature of the smart circular economy transition. In total, 45 barriers were identified and categorized into the following dimensions: 1. Knowledge management (five barriers), 2. Financial (three barriers), 3. Process management & Governance (eight barriers), 4. Technological (ten barriers), 5. Product & Material (three barriers), 6. Reverse logistic infrastructure (four barriers), 7. Social behaviour (seven barriers), and 8. Policy & Regulatory (five barriers). This study examines how each dimension and multi-level barrier affects the transitions toward a smart circular economy. An effective transition copes with complex, multidimensional, multi-level barriers, which might require mobilization beyond a single firm. Government actions need to be more effective and correlated with sustainable initiatives. Policies also should focus on mitigating barriers. Overall, the study contributes to smart circular economy literature by increasing theoretical and empirical understanding of digital transformation barriers towards circularity.