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[Podcast] The impact of big data analysis capacity on the performance of circular economy implementation at administrative units in the Southern region

19 October, 2024

Key words: Big data, accounting information system, circular economy, administrative units

The Circular economy is increasingly receiving deep attention from the socio-economic organizations and the scientific community. Therefore, improving the efficiency of implementing circular economy is considered as the foundation for building roadmaps and policies with the purpose of ensuring successful implementation of circular economy. Regarding this issue, the author group from University of Economics Ho Chi Minh City (UEH) conducted the research project “Impact of big data analysis capacity on dynamic accounting information system capacity towards improving the efficiency of implementing circular economy at administrative units in the Southern region”.

Research context

Circular economy is considered as an effective solution to address the current challenges related to sustainability and transition from linear production and consumption models to circular resource management models. Therefore, the implementation of Circular Economy is increasingly receiving deep attention from governments, management agencies, socio-economic organizations as well as the community of the scientists around the world. Although the public and the private sectors are highlighted as the key actors in the circular economy transition, the majority of circular economy research at the micro-level of organizations focuses on private sector organizations whereas the public sector seems to be primarily considered at the macro level of policies and regulations. In accordance with the previous studies, the public sector is an important agent promoting sustainable development at the micro level. The public sector organizations play an important role in the economy and serve as the role models for other public sector organizations, NGOs, the private sector as well as the citizens. On the other hand, the researches on the application of circular economy in public sector organizations have not received the adequate attention from the researchers yet. The successful implementation of circular economy in public sector entities requires the necessary resources; nevertheless, the knowledge of how public entities can properly apply the circular economy model effectively has been limited. Therefore, this research on internal factors – the resources and the capabilities needed to improve circular economy implementation (CEP) performance in public entities – has not been researched in a satisfying manner.

On the other hand, one barrier that makes it difficult for organizations to implement circular economy results from the lack of useful information. In that context, big data analytics (BDA) helps organizations achieve this goal. In other words, big data analytics is an effective approach that helps organizations make informed decisions regarding the strategies and the actions during circular economy implementation. Concurrently, Big data analytics capabilities (BDAC) are proven to contribute significantly towards helping organizations implement the circular economy. On the contrary, the relationship between BDAC (Big data analytics capacity) and circular economy implementation performance in the context of public sector entities has not received much attention from researchers. In addition, the relationship between circular economy implementation performance and accounting work has been made by the previous scholars. Notably, the advantages of dynamic accounting information systems (DAIS) have been considered as one concern of various organizations and researchers for decades. Accordingly, the components of Dynamic accounting information system capabilities (DAISC) significantly impact the performance of activities to create conditions for the organization to achieve development in a sustainable direction. On the other hand, applying the circular economy model in organizations is believed to create conditions for organizations to achieve sustainable development. Therefore, those units with higher potential for dynamic accounting information systems will have more advantages in implementing circular economy.

Starting from the above analysis, the author group from UEH aims to solve the following research questions: Understanding the impact of big data analysis capacity on the performance of circular economy implementation in administrative and public service units in the Southern region; Understanding the role of dynamic accounting information system capacity in the relationship between big data analysis capacity and circular economy implementation performance in administrative and public service units in the Southern region.

Research methods and Findings

In accordance with the arguments of the previous studies, public sector units have different characteristics compared to private sector units. Accordingly, public sector units mainly aim at providing services instead of producing products and goods. It is, therefore, important to consider the specific characteristics relevant to the public administration sector because this may have implications for the implementation of the circular economy. Consequently, administrative and public service units, in this study, are selected. On the other hand, because of the outstanding economic development of the Southern region of Vietnam, this area was selected to conduct a large-scale investigation in this study. In addition, public sector units are considered as those that are required to comply with the strictest laws during their operations. Therefore, most public sector units in Vietnam can use the results of this study as a reference. Furthermore, with the advantage of favorable economic and environmental conditions, the Southern region in Vietnam always receives more foreign investment compared to other regions in the country. Therefore, this is an area with significant development in the application of modern technology.

The survey subjects of this study are the accountants at the above units. The reason for this choice is that the accountants are considered as individuals with a certain understanding of accounting information systems. In addition to performing tasks related to accounting work at the unit, those accountants take on the role of advising and consulting the unit leaders in various other management activities. Implementing and applying technological advances of the 4.0 Industrial Revolution as well as executing the circular economy is one issue that will be applied at these units. Therefore, accountants are expected to be the ones who need to clearly grasp the issues related to the above contents in order to give accurate advice to their unit leaders.

The survey data of 712 respondents from administrative and public service units in the Southern region was analyzed, using a linear structural model with the support of data analysis software SPSS 29 and AMOS 28 to clarify the role of big data analysis capacity in improving the performance of circular economy implementation at administrative and public service units in the Southern region. Besides, the current research results demonstrate the partial mediator role of dynamic accounting information system capabilities in the relationship between big data analysis capabilities and actual implementation performance of the Circular economy in administrative and public service units in the Southern region.

Research contributions

The public sector not only includes regulatory and policy-making agencies but also is considered as a major economic actor. The public sector will, therefore, make a significant impact on sustainability. Another function of the public sector that many authors are interested in upon conducting research on implementing Circular economy is that the public sector will serve as a model in implementing Circular economy for all socio-economic organizations. This results from the fact that these public sector units have a significant degree of influence on other socio-economic organizations. Specifically, these public sector units are responsible for designing and promulgating policies and regulations as well as establishing overall directions for action strategies for socio-economic organizations to deploy and to implement Circular economy. Therefore, given the importance and the potential of public sector entities in implementing circular economy, these entities are required to apply circular economy principles to the management of resource force at the unit. In other words, integrating circular economy principles into the operations of public entities is considered a completely crucial factor in helping this type of entity achieve a higher level of sustainability. Therefore, the results of this research contribute to responding to the call for increased research on circular economy implementation in the public sector. On the other hand, the results of this research contribute to expanding insights into the performance of circular economy implementation at administrative units in particular and public units in general.

At the present time, organizations depend on data to achieve greater productivity and growth. However, one barrier that makes it difficult for organizations to implement circular economy results from the lack of useful information regarding key stakeholders – those who are expected to directly and indirectly benefit during the unit’s implementation of Circular economy. Indeed, the remarkable development of advanced technologies of the 4.0 Industrial Revolution has created a new resource in the form of data characterized by huge volume, variability and increasingly-fast speed, which is called “big data”. This huge volume of data is generated from every aspect of society and originates from various different geographical areas. This creates a challenge for organizations to deal with the uncertainty associated with data in addition to the value it creates. In that context, big data analytics will help units capture this value. Big data analytics refers to all the tools and techniques that analyze diverse business data to generate meaningful insights for decision making. Big data analytics is primarily driven by data management and analysis processes that involve collecting, storing, and retrieving data for use. Accordingly, the research results have contributed to affirming the role of big data analysis in achieving success in implementing circular economy at the unit. Concurrently, the research results contribute to expanding understanding of big data analytics capacity as one factor promoting administrative and public service units towards achieving circular economy performance.

What is more, the results of this study highlight the role of dynamic accounting information system capabilities as a catalyst in the relationship between big data analytics capabilities and Circular economic performance. Through this, the achieved research results contribute to expanding the understanding of researchers and create a foundation for future research on the role of big data analytics capacity in public administration units in particular and public units in general.

Policy implications

This research from UEH attempts to provide important management guidance for leaders at public administrative units with the purpose of developing a set of feasible strategies to gradually implement the Circular economy implemented at the unit. Accordingly, leaders of administrative and public service units need to be aware of the need to focus on developing organizational structure, processes and culture to create favorable conditions for learning, experimenting and renewing. To be illustrated in more details, managers can build a more flexible and adaptable organization to successfully deploy the circular economy model as well as those administrative units must participate in comprehensive operational planning besides representing and demonstrating a comprehensive understanding of their own capabilities and the current state of the circular economy model within the organization. To start with, these organizations intending to implement a circular economy model must have a dedicated big data analytics department together with specialized functions for asset management, product and process design, logistics and auditing. This requirement requires the staff from the big data analytics department to identify the inefficiencies in their resource consumption at various operation stages. It is important for managers to focus on developing the skills of their workforce through appropriate training programs that provide employees with the latest big data analytics programming techniques. On the other hand, managers must focus on tangible resources listed as big data analytics infrastructure, digital platforms, technology, and basic resources to execute big data analytics projects.

The results from this study indicate the partial mediator role of dynamic accounting information system capacity in the relationship between big data analysis capacity and circular economy implementation performance that the policymakers should consider to exploit the various capabilities of dynamic accounting information system capabilities effectively and efficiently. In other words, those companies that target to achieve Circular economy performance through big data analytics capabilities need to have an analytics strategy and understand different perspectives on issues related to the productivity of the dynamic accounting information system.

In addition, the findings from this current study provide policy guidance for governments and regulatory agencies in developing and promulgating policies related to the implementation of Circular economy in Vietnamese public sector thanks to the application of technological advances of the 4.0 Industrial Revolution.

Please refer to the full research titled “Impact of big data analysis capacity on dynamic accounting information system capacity towards improving the efficiency of implementing circular economy at administrative units in the Southern region” HERE.

Author group: Pham Quang Huy, Vu Kien Phuc – University of Economics Ho Chi Minh City (UEH).

This is an article in a series of articles spreading research and applied knowledge from UEH with the message “Research Contribution For All – Research For The Community”, UEH respectfully invites dear readers to look forward to the upcoming UEH Research Newsletter Insights .

News and photos: Author group, UEH Department of Communication and Partnerships