The circular economy has attracted increasing attention from researchers, academics, policymakers, business professionals, and public institutions, largely driven by environmental concerns and current policies focused on sustainability and resource preservation. Despite the extensive discussion in the literature regarding the advantages of circular economy adoption in manufacturing firms and its contribution to sustainable development, existing empirical evidence remains limited and inconclusive. In response to this gap, the present study seeks to deepen understanding of the outcomes associated with circular economic implementation by examining its effects on sustainable performance and sustainable development. To this end, a survey was administered to 300 manufacturing companies within the Mexican automotive sector, and the proposed research framework was empirically tested using partial least squares structural equation modeling (PLS-SEM). The findings indicate that circular economy practices exert a significant positive influence on both sustainable development and sustainable performance. Additionally, sustainable development not only enhances sustainable performance directly but also mediates the relationship between circular economy practices and sustainable performance.

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