Circular economy capability and supply chain sustainability: the roles of green orientation and technology orientation

Abstract

Growing sustainability challenges have led to the adoption of the circular economy as a crucial environmental strategy for manufacturing companies. To fully maximize its benefits, firms need to develop circular economy capabilities (CEC) that enhance sustainability across their supply chains. Drawing on the dynamic capability and contingency theories, this study examines the relationship between CEC and supply chain sustainability (SCS), examining the mediating role of green orientation (GO) and the moderating influence of technology orientation (TO). The proposed model was tested using structural equation modelling based on survey data collected from 180 manufacturing firms in Ghana. The results revealed that CEC has a positive and significant effect on all three dimensions of SCS. These relationships are partially mediated by GO and inversely moderated by TO. The study contributes to the understanding of how CEC and GO jointly create sustainable supply chains. It highlights that firms that prioritize green-oriented practices can create positive social impacts by promoting fair labour practices, supporting local communities and addressing social issues, thereby leading to improved social sustainability.