RESEARCH ARTICLE
Driving Circular Economy Strategies for Sustainable Development: The Role of Board Capital and Innovation Capacity in Emerging Markets
Ishmael Wiredu,
Naiping Zhu,
Andrew Osei Agyemang,
Hela Borgi,
Corresponding Author
Ishmael Wiredu
School of Finance and Economics, Jiangsu University, Zhenjiang, China
Correspondence:
Ishmael Wiredu ([email protected]) Naiping Zhu ([email protected])
Search for more papers by this authorCorresponding Author
Naiping Zhu
School of Finance and Economics, Jiangsu University, Zhenjiang, China
Correspondence:
Ishmael Wiredu ([email protected]) Naiping Zhu ([email protected])
Search for more papers by this authorAndrew Osei Agyemang
School of Finance and Economics, Jiangsu University, Zhenjiang, China
Search for more papers by this authorHela Borgi
Department of Accounting, College of Business Administration, Princess Nourah bint Abdulrahman University, Riyadh, Saudi Arabia
Search for more papers by this authorIshmael Wiredu,
Naiping Zhu,
Andrew Osei Agyemang,
Hela Borgi,
Corresponding Author
Ishmael Wiredu
School of Finance and Economics, Jiangsu University, Zhenjiang, China
Correspondence:
Ishmael Wiredu ([email protected]) Naiping Zhu ([email protected])
Search for more papers by this authorCorresponding Author
Naiping Zhu
School of Finance and Economics, Jiangsu University, Zhenjiang, China
Correspondence:
Ishmael Wiredu ([email protected]) Naiping Zhu ([email protected])
Search for more papers by this authorAndrew Osei Agyemang
School of Finance and Economics, Jiangsu University, Zhenjiang, China
Search for more papers by this authorHela Borgi
Department of Accounting, College of Business Administration, Princess Nourah bint Abdulrahman University, Riyadh, Saudi Arabia
Search for more papers by this authorFunding: This study was supported by the National Social Science Foundation of China (No. 20BGL099) and the Princess Nourah bint Abdulrahman University Researchers Supporting Project number (PNURSP2025R856), Princess Nourah bint Abdulrahman University, Riyadh, Saudi Arabia.
ABSTRACT
The transition to a circular economy (CE) is necessary for achieving sustainable development, yet research on governance mechanisms that drive CE strategies remains limited. This study bridges this gap and significantly advances studies CE, board governance, innovation, and sustainability by assessing the critical function of board capital in driving CE strategies within manufacturing companies in emerging economies, specifically the Middle East and North Africa (MENA) area. Drawing on agency theory and resource-based theory, the study develops models to assess the influence of board human and social capital on CE strategies, with innovation capacity as a key moderating factor. Using panel data from 268 manufacturing firms between 2010 and 2022 and employing dynamic generalized method of moments (GMM) technique, the outcome reveal that both board human and social capital significantly and positively influence CE strategies. Notably, innovation capacity not only enhances CE strategies directly but also amplifies the impact of board capital, underscoring the synergistic connection between governance and innovation in driving sustainability. The study highlights substantial heterogeneity in the effect of board capital on CE strategies across the MENA region. These findings remain robust after conducting several robustness and diagnostic tests. For firms, the study emphasizes the need to invest in building a diverse, skilled, and well-connected board capable of leading circular strategies. For policymakers, it highlights the importance of creating frameworks that strengthen board governance and foster innovation ecosystems, enabling boards to promote the adoption of CE strategies.
Conflicts of Interest
The authors declare no conflicts of interest.
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