Impact of the circular economy on sustainable innovation Capabilities: moderating role of institutional pressure

Abstract

The circular economy has gained significant attention as a promising approach for achieving sustainability in business operations. It involves reducing waste and maximizing the value of resources by designing closed-loop systems. Sustainable innovation capabilities refer to a company's ability to create and implement sustainable innovations that benefit both the environment and the business. In this study, we explore the impact of the circular economy on sustainable innovation capabilities and examine the moderating role of institutional pressure. Our findings suggest that the circular economy has a positive impact on sustainable innovation capabilities. Furthermore, we found that institutional pressure moderates this relationship, such that the impact of the circular economy on sustainable innovation capabilities is stronger in the presence of high institutional pressure. These results provide valuable insights into the role of the circular economy and institutional pressure in enhancing sustainable innovation capabilities. They also highlight the importance of considering the institutional context in which a business operates when implementing circular economy practices. In conclusion, our study highlights the importance of considering both the circular economy and institutional pressure for enhancing sustainable innovation capabilities. Companies that adopt circular economy practices and face high institutional pressure are likely to experience a stronger positive impact on their sustainable innovation capabilities. These findings contribute to the growing body of research on sustainability and innovation and provide practical implications for businesses seeking to enhance their sustainability performance.