Unlocking sustainable performance through circular economy principles

Purpose Drawing on stakeholder theory, institutional theory and upper echelon theory, this study aims to determine the roles of stakeholder pressure, institutional pressure and top management’s sustainability commitment in adopting circular economy principles. Additionally, it evaluates how the adoption of these principles impacts sustainable-oriented innovation and subsequently influences sustainable performance. Design/methodology/approach By employing an online survey, data were collected from 172 owners, managers and staff involved in circular economy practices. Findings The results indicate that stakeholder pressure and institutional pressure positively influence top management’s sustainability commitment, which in turn influences adoption of the circular economy principles. Furthermore, adopting circular economy principles positively impacts sustainable-oriented innovation, enhancing the sustainable performance of hotels. Additionally, the relationship between the pressures and sustainable performance was sequentially mediated by top management’s sustainability commitment, adoption of circular economy principles and sustainable-oriented innovation. Practical implications This study offers actionable insights for hospitality managers by emphasizing the interplay of stakeholder and institutional pressures with top management’s commitment to sustainability. Practical strategies include engaging stakeholders, investing in leadership training, conducting internal audits for circular economy practices and fostering a culture of sustainability-oriented innovation. These initiatives not only enhance environmental performance but also contribute to societal goals of reducing environmental degradation and promoting responsible consumption. Originality/value The study emphasizes the importance of shifting from a linear to a circular economy model to enhance sustainability in the hospitality sector.