From digital transformation to environmental value: the role of green digital culture and circular economy adoption

Purpose This study aims to examine how green digital culture (GDC) and digital sustainability (DS) function as dynamic organizational capabilities that enable circular economy (CE) practices and enhance sustainable environmental practices among small and medium-sized enterprises (SMEs) in the United Arab Emirates (UAE). Positioned within the broader context of Asia–Gulf economic integration and vision-driven sustainability reforms, the study explores how emerging Asian markets translate digital transformation into environmental value. Design/methodology/approach Grounded in dynamic capabilities theory and stakeholder theory, data were collected from 322 SME managers and decision-makers across the UAE using a structured survey instrument. The proposed model was tested using partial least squares structural equation modeling. Findings The results demonstrate that green digital culture (GDC) and DS significantly enhance sustainable environmental practices. DS exerts a particularly strong influence on CE adoption. CE practices partially mediate the relationship between digitally enabled capabilities and environmental practices, illustrating how SMEs operationalize sustainability through digitally supported circular strategies under evolving regulatory and stakeholder pressures. Research limitations/implications The study is based on cross-sectional data from a single emerging economy. Future research should undertake longitudinal and multi-country Asian comparisons to examine how institutional environments and policy ambition moderate digital–sustainability linkages. Practical implications The findings provide actionable insights for SME leaders and policymakers across Asia seeking to align digital transformation agendas with CE transitions. Strengthening DS capabilities and embedding GDC can accelerate environmentally responsible growth in resource-constrained emerging markets. Social implications By supporting SME-led sustainability transitions, digitally enabled circular practices can contribute to regional environmental resilience and advance national vision-driven sustainability commitments across Asia. Originality/value This study advances Asia business scholarship by explaining how digital transformation capabilities are converted into environmental performance through CE mechanisms in emerging Asian markets undergoing institutional and policy reform.