Sustainable development‐oriented regulatory and competitive pressures to shift toward a circular economy: The role of environmental orientation and Industry 4.0 technologies

Abstract Automakers' transition from a linear economy to a circular economy (CE) in response to sustainable development‐oriented regulatory and competitive pressures is a challenging process that requires innovative, practical technologies. However, Industry 4.0 (I4.0) technologies are an important part of the transition to CE for environmentally friendly companies. In this study, we examine whether regulatory pressure (RP) and competitive pressure (CP) toward sustainability motivate firms to implement I4.0 technologies for CE, along with the mediating effects of environmental orientation (EO). PLS‐SEM via SmartPLS software was used to analyze data from 230 managers in the automotive and auto component manufacturing industries in India. The findings of this study showed that RP and CP positively influence I4.0 adoption, which impacts CE capability. Furthermore, EO partially mediates the relationship between RP and CP with I4.0 technologies. As a practical implementation of this study, to transition to CE and contribute to sustainable development, managers need to deal effectively with RP and CP. Several implications for theory and practice are discussed at the end of the study.