Individual Producer Responsibility Based Product Take-Back, Circular Product Design, and Firm Performance

Product take-back programs based on Extended Producer Responsibility (EPR) are critical in advancing the Circular Economy; however, their effectiveness depends on the underlying governance models. While Collective Producer Responsibility (CPR) dominates in regions like the European Union (EU), it is often criticized for failing to help incentivize sustainable product design. In contrast, Individual Producer Responsibility (IPR) is regarded as more effective in incentivizing sustainable product design, but its efficacy lacks empirical evidence. Our research fills this gap by empirically investigating how IPR-based product take-back affects firm-level environmental and financial performance. Drawing on the Practice-Based View, we hypothesize the effects of IPR-based product take-back on Circular Product Design (CPD) and firm performance. Based on survey data from 227 Chinese manufacturers and nine post-survey interviews, we find that IPR-based product take-back does not directly impact environmental or financial performance. However, it positively impacts CPD, through which it exerts an indirect positive effect on both environmental and financial performance. These results contrast sharply with the EU’s CPR-dominant model, in which producers have little incentive to alter product designs. Our findings underscore the significance of EPR governance models in shaping the effectiveness of product take-back programs and have important theoretical and practical implications.