Firms and the path to circular economy: unveiling the impact of ownership dynamics and innovation capacity through advanced econometric and quantile regression analysis

In the face of escalating environmental challenges and growing economic pressures, the circular economy (CE) has emerged as a transformative pathway toward sustainable development. This study explores the impact of ownership dynamics on CE performance among manufacturing firms in the MENA region, with a particular focus on the moderating role of innovation capacity. Grounded in the Resource-Based View and Agency Theory, the analysis draws on panel data from 447 listed firms spanning 2010 to 2022. Using the GMM estimator and quantile regression analysis, the findings reveal significant heterogeneity in the effects of ownership types: family and foreign ownership are negatively associated with CE performance, while managerial, state, and institutional ownership show positive and significant relationships highlighting the importance of governance alignment, public resource leverage, and institutional influence. Innovation capacity emerges as a key enabler, enhancing the effectiveness of ownership dynamics by promoting advanced CE practices and operational efficiencies. Robustness checks, including heterogeneity and sensitivity analyses, confirm the consistency of the results across sectors and performance levels. The study offers actionable insights for policymakers and business leaders, recommending targeted strategies to align ownership structures, strengthen innovation ecosystems, and accelerate sustainability transitions in emerging markets.