Expanding the Company's Innovation Boundaries for Circularity: The Mediating Role of Green Strategic Orientation and the Moderating Role of Environmental Turbulence

ABSTRACT Circular economy capability (CEC) is an increasingly adopted approach by companies to address the challenges of mitigating the impact of corporate processes on the deterioration of the natural environment. Ensuring that businesses respond appropriately to current and future challenges on the efficient use of resources stakeholder demands is critical for their survival. Likewise, open innovation (OI) has demonstrated that companies can create value within their boundaries through collaborative work with external stakeholders. In line with the dynamic capabilities perspective, we explore the relationship between OI and CEC by studying the mediating effect of green strategic orientation (GSO) and the moderating effect of Technological Turbulence (TT) and market turbulence (MT). The research model was tested using structural equation modeling with data obtained from 157 companies located in an emerging country. The results confirm the positive impact of OI, that is, the exchange of information and knowledge flows, along with collaborative work with external actors, on the transition of companies to the circular economy. Additionally, the mediating role of GSO and the positive moderation exerted by MT and TT are highlighted.