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This paper investigates the role of institutional pressures (IPs) and supply chain integration (SCI) in driving the adoption of circular economy (CE) practices. It is hypothesised that, responding to IPs, firms might adopt higher levels of SCI in the attempt to implement CE practices.

A research model is developed and tested on a cross-sectional sample of 150 multi-national enterprises (MNEs). Textual content from corporate sustainability reports is used to measure the constructs of interest through an advanced coding approach.

Findings show that IPs are driving the adoption of CE practices primarily through the mediation of SCI; the prominent roles of coercive regulatory pressures (CRPs) and normative pressures (NPs) are also highlighted. CRPs influence on CE practices is partially mediated by SCI, with NPs influence being fully mediated by it.

The study shows that SCI is a key mechanism that lies in between IPs and CE practices; as such, organisations interested in implementing CE practices need to be aware of requirements for achieving higher levels of SCI.

This empirical study is the first large scale analysis that conceptualises how MNE-driven supply chains adopt CE practices. The study empirically validates the model and identifies research avenues in supply chain management (SCM) research to support the adoption of CE practices.