Digital Transformation, Government Incentives, and Circular Performance in the E-Waste Sector: A Sri Lankan Study

Amila Kasun Sampath Udage Kankanamge; Michael Odei Erdiaw-Kwasie; Matthew Abunyewah; Thuy An Truong

doi:10.55845/joce-2026-41298

Authors

Amila Kasun Sampath Udage Kankanamge Charles Darwin University Author
Michael Odei Erdiaw-Kwasie Charles Darwin University Author
Matthew Abunyewah Charles Darwin University Author
Thuy An Truong Charles Darwin University Author

DOI:

https://doi.org/10.55845/joce-2026-41298

Keywords:

Digital Transformation, Circular Performance, E-waste Sector, Organisation-level, Government Incentives

Abstract

Digital transformation is widely promoted as a catalyst for circular economy transitions; however, empirical evidence regarding whether digitalisation generates measurable circular performance gains in the e-waste sector remains limited. Drawing on socio-technical systems (STS) theory, this study examines how organisational digital enablers drive digital transformation and under what institutional conditions such transformation translates into circular performance. Survey data collected from 279 employees in Sri Lanka’s e-waste sector were analysed using covariance-based structural equation modelling (CB-SEM), moderation analysis, and bootstrapped moderated mediation procedures. The findings indicate that digital resources and digital leadership significantly enable digital transformation. More importantly, digital transformation does not directly affect circular performance. Instead, its effectiveness depends on government incentives, indicating that institutional support functions as a critical boundary condition shaping the performance implications of digitalisation. These findings challenge technology-deterministic assumptions within circular economy and digital transformation literature by positioning digital transformation as a policy-contingent socio-technical capability rather than an inherently performance-enhancing intervention. The study advances STS theory by demonstrating that internally developed digital capabilities require enabling institutional conditions before they can translate into measurable circular outcomes. Practical implications are provided for managers and policymakers designing digitally enabled circular transformation strategies.

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