Beyond Linear Growth: How SMEs Use Knowledge Management and Open Innovation to Unlock Circular Potential in China and Turkey

ABSTRACT This study investigates the role of knowledge management in fostering open innovation among SMEs transitioning towards a circular economy. Drawing on data from 402 manufacturing employees in China and 342 in Turkey, the study applies partial least squares structural equation modeling (PLS‐SEM) to examine the sequential mediating roles of intellectual capital and corporate social responsibility (CSR), alongside the moderating effects of resource efficiency and employee readiness for change. The findings reveal that intellectual capital and CSR significantly mediate the relationship between knowledge management and open innovation. Resource efficiency exerts distinct moderating effects across the two countries, while employee readiness for change strengthens the CSR–open innovation relationship but not the intellectual capital–open innovation relationship. This study contributes a process‐oriented and context‐sensitive framework explaining how SMEs can enhance sustainable and resource‐efficient innovation practices in emerging economies.