Business environmental innovation and circular economy practices: global evidence from corporate waste recycling

This study examines the role of business environmental innovation in advancing circular economy practices, with a particular focus on corporate waste recycling. Using a large sample of publicly listed firms from 41 countries over the period of 2007–2024, we provide robust empirical evidence that firms’ engagement in environmental innovation has a positive impact on their waste recycling performance. This relationship is significantly stronger in countries with lower levels of circular economy capability accumulation, suggesting that firms’ strategic decisions play a more critical role in the presence of institutional voids. Further analysis shows that although firms with greater environmental innovation engagement achieve lower waste intensities and higher waste recycling, they also generate larger absolute volumes of waste, pointing to the presence of a potential circular economy rebound effect. This study contributes to the rapidly growing interdisciplinary literature on the circular economy transition and offers important implications for policy design and corporate sustainability strategies.