IDEAS home Printed from https://ideas.repec.org/a/wly/sustdv/v33y2025i4p5719-5741.html

Transition Toward a Sustainable Circular Economy: A Perspective on Green Innovation and Governance Policy Using a Novel MMQR Approach

Author

Listed:
  • Dragana Ostic
  • Ummar Faruk Saeed
  • Angelina Kissiwaa Twum
  • Rahmatu Chibsah

Abstract

As global sustainability challenges intensify, the transition to circular economy (CE) practices has become a critical strategy for businesses seeking to align with Sustainable Development Goals, particularly SDG 12. In emerging markets, understanding the key drivers behind successful CE adoption is vital for fostering sustainable growth. This study investigates how RET influence the adoption of CE practices in manufacturing firms across the MENA region, with a focus on the moderating roles of green innovation and governance policy. Drawing insights from the resource‐based view, dynamic capabilities, and stakeholder theories, the study constructs models linking returnee directors (RET) to CE adoption. Using a panel dataset of 5302 firm‐year observations, the study employs advanced econometric techniques, including MMQR and dynamic GMM modeling, while addressing endogeneity through IV‐2SLS, lagged effects, and PSM estimations. The findings reveal that RET significantly enhance CE practices across lower, middle and upper quantiles. Green innovation not only directly promotes CE adoption, but also amplify the positive influence of RET on CE practices. Additionally, robust governance policies strengthen the relationship between RET and CE practices, particularly at higher quantiles, underscoring the importance of institutional frameworks for fostering sustainability. This study highlights the pivotal role of RET in advancing CE and offers practical insights for policymakers and business leaders aiming to align with global sustainability goals. By integrating green innovation and effective governance mechanisms, this research provides a strategic roadmap for accelerating the transition to a CE in emerging markets.

Suggested Citation

  • Dragana Ostic & Ummar Faruk Saeed & Angelina Kissiwaa Twum & Rahmatu Chibsah, 2025. "Transition Toward a Sustainable Circular Economy: A Perspective on Green Innovation and Governance Policy Using a Novel MMQR Approach," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5719-5741, August.
    • Handle: RePEc:wly:sustdv:v:33:y:2025:i:4:p:5719-5741
    DOI: 10.1002/sd.3410
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sd.3410
    Download Restriction: no
    File URL: https://libkey.io/10.1002/sd.3410?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Tariq Javed & Fareyha Said & Dalilawati Zainal & Azlina Abdul Jalil, 2024. "Circular Economy Implementation Status of Selected ASEAN Countries," SAGE Open, , vol. 14(1), pages 21582440231, March.
    2. Matteo Pozzoli & Raffaela Nastari & Sabrina Pisano & Marco Venuti, 2023. "How Circular Economy Disclosure Responds to Institutional Determinants Empirical Evidences in Non-Financial European Firms," Sustainability, MDPI, vol. 15(22), pages 1-20, November.
    3. Odeh Al-Jayyousi & Hira Amin & Hiba Ali Al-Saudi & Amjaad Aljassas & Evren Tok, 2023. "Mission-Oriented Innovation Policy for Sustainable Development: A Systematic Literature Review," Sustainability, MDPI, vol. 15(17), pages 1-21, August.
    4. Ummar Faruk Saeed & Wu Ning & Andrew Osei Agyemang, 2025. "Advancing Sustainable Development Goal 15: The Role of Corporate Governance Structures and Environmental Regulations in Emerging Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(3), pages 3403-3426, June.
    5. Naiping Zhu & Ishmael Wiredu & Andrew Osei Agyemang & Abednego Osei, 2024. "Addressing corporate governance and carbon accounting disclosure gaps: A path toward firms commitment to sustainable development goal 13," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(5), pages 5421-5436, October.
    6. Korhonen, Jouni & Honkasalo, Antero & Seppälä, Jyri, 2018. "Circular Economy: The Concept and its Limitations," Ecological Economics, Elsevier, vol. 143(C), pages 37-46.
    7. Filippo Vitolla & Vitiana L’Abate & Felice Petruzzella & Nicola Raimo & Antonio Salvi, 2023. "Circular Economy Disclosure in Sustainability Reporting: The Effect of Firm Characteristics," Sustainability, MDPI, vol. 15(3), pages 1-15, January.
    8. Osei, Vivian & Bai, Chunguang & Asante-Darko, Disraeli & Quayson, Matthew, 2023. "Evaluating the barriers and drivers of adopting circular economy for improving sustainability in the mining industry," Resources Policy, Elsevier, vol. 86(PB).
    9. Andrew Osei Agyemang & Kong Yusheng & Angelina Kissiwaa Twum & Emmanuel Caesar Ayamba & Maxwell Kongkuah & Mohammed Musah, 2021. "Trend and relationship between environmental accounting disclosure and environmental performance for mining companies listed in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(8), pages 12192-12216, August.
    10. Patrick Schroeder & Kartika Anggraeni & Uwe Weber, 2019. "The Relevance of Circular Economy Practices to the Sustainable Development Goals," Journal of Industrial Ecology, Yale University, vol. 23(1), pages 77-95, February.
    11. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    12. Valeria Naciti & Fabrizio Cesaroni & Luisa Pulejo, 2022. "Corporate governance and sustainability: a review of the existing literature," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(1), pages 55-74, March.
    13. Assunta Di Vaio & Giuseppe Dell'Amura & Meghna Chhabra & Antonio Garofalo, 2024. "Circular economy and waste production models for sustainable development goals 12 and 14: Evidence from cruise sustainability reporting," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 6686-6702, December.
    14. Jian Wang & Yuzhen Zhang & Angelina Kissiwaa Twum & Andrew Osei Agyemang, 2024. "Realizing sustainable development goals in sub‐Saharan Africa: The role of industrialization on consumption‐based carbon emission," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(3), pages 2666-2677, June.
    15. Yusheng Kong & Andrew Agyemang & Noha Alessa & Maxwell Kongkuah, 2023. "The Moderating Role of Technological Innovation on Environment, Social, and Governance (ESG) Performance and Firm Value: Evidence from Developing and Least-Developed Countries," Sustainability, MDPI, vol. 15(19), pages 1-16, September.
    16. Charbel Jose Chiappetta Jabbour & Stefan Seuring & Ana Beatriz Lopes De Sousa Jabbour & Daniel Jugend & Paula de Camargo Fiorini & Hengky Latan & Wagner Colucci Izeppi, 2020. "Stakeholders, innovative business models for the circular economy and sustainable performance of firms in an emerging economy facing institutional voids," Post-Print hal-04275092, HAL.
    17. Hamzeh Al Amosh & Saleh F. A. Khatib, 2021. "Corporate governance and voluntary disclosure of sustainability performance: the case of Jordan," SN Business & Economics, Springer, vol. 1(12), pages 1-22, December.
    18. Newey, Whitney K & Powell, James L, 1987. "Asymmetric Least Squares Estimation and Testing," Econometrica, Econometric Society, vol. 55(4), pages 819-847, July.
    19. Pacheco, Desirée F. & Dean, Thomas J. & Payne, David S., 2010. "Escaping the green prison: Entrepreneurship and the creation of opportunities for sustainable development," Journal of Business Venturing, Elsevier, vol. 25(5), pages 464-480, September.
    20. Natacha Klein & Tomás B. Ramos & Pauline Deutz, 2020. "Circular Economy Practices and Strategies in Public Sector Organizations: An Integrative Review," Sustainability, MDPI, vol. 12(10), pages 1-24, May.
    21. Ummar Faruk Saeed & Rabiatu Kamil & Ishmael Wiredu, 2024. "The moderating role of technological innovation on ownership structure, financing decisions and environmental accounting disclosure," Cogent Business & Management, Taylor & Francis Journals, vol. 11(1), pages 2396543-239, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ilarslan Kenan & Yıldız Münevvere, 2025. "The Asymmetric Effect of Financial Development on Economic Growth: Empirical Evidence from Lower and Upper Middle Income Countries," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 18(4), pages 491-509.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ummar Faruk Saeed & Wu Ning & Andrew Osei Agyemang, 2025. "Advancing Sustainable Development Goal 15: The Role of Corporate Governance Structures and Environmental Regulations in Emerging Economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(3), pages 3403-3426, June.
    2. Abednego Osei & Naiping Zhu & Hela Borgi & Joana Cobbinah, 2025. "Empowering Sustainable Production: Firm Governance, Finance Strategies, and Tech‐Innovation in Advancing Circular Economy for SDG 12 in the US, China and Japan," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(4), pages 5282-5307, August.
    3. Vivian Osei & Disraeli Asante-Darko & Matthew Quayson, 2024. "Stakeholder Pressure, Circular Economy Practices, and Sustainability Performance: The Moderating Effect of Ecological Innovation Capabilities," Circular Economy and Sustainability, Springer, vol. 4(4), pages 3139-3170, December.
    4. Desmond Bayong & Bernard Bawuah & Elizabeth Amoah, 2025. "Advancing environmental, social, and governance disclosure in emerging economies: does regulatory environment and ownership structure matter?," SN Business & Economics, Springer, vol. 5(1), pages 1-45, January.
    5. Ummar Faruk Saeed & Timothy Masuni Nagriwum, 2026. "Carbon Accounting and Climate Change: Leveraging Eco-digitalization and Governance Dynamics for Environmental Sustainability in Emerging Markets," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(2), pages 4843-4874, April.
    6. German Arana‐Landin & Waleska Sigüenza & Beñat Landeta‐Manzano & Iker Laskurain‐Iturbe, 2024. "Circular economy: On the road to ISO 59000 family of standards," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1977-2009, May.
    7. Bruno Michel Roman Pais Seles & Janaina Mascarenhas & Ana Beatriz Lopes de Sousa Jabbour & Adriana Hoffman Trevisan, 2022. "Smoothing the circular economy transition: The role of resources and capabilities enablers," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1814-1837, May.
    8. D. D’Amato, 2021. "Sustainability Narratives as Transformative Solution Pathways: Zooming in on the Circular Economy," Circular Economy and Sustainability, Springer, vol. 1(1), pages 231-242, June.
    9. Ashish Adholiya, 2025. "Evaluating the Impact of Digitalization on Circular Economy Growth: Insights from Structural Equation Modelling," Circular Economy and Sustainability, Springer, vol. 5(6), pages 4889-4918, November.
    10. Arezoo Ghazanfari, 2023. "An Analysis of Circular Economy Literature at the Macro Level, with a Particular Focus on Energy Markets," Energies, MDPI, vol. 16(4), pages 1-24, February.
    11. Karolina Södergren, 2026. "Governing Industrial and Urban Symbiosis from Within: Internal Municipal Strategies in Sweden," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-30, April.
    12. Hamdi Becha & Afifa Ferhi & Maha Kalai & Kamel Helali, 2026. "Non-linearity Inflation-Growth relationship in Tunisia: application with threshold regression model," SN Business & Economics, Springer, vol. 6(3), pages 1-40, March.
    13. Alejandro Aristi Capetillo & Fredric Bauer & Cristina Chaminade, 2023. "Emerging Technologies Supporting the Transition to a Circular Economy in the Plastic Materials Value Chain," Circular Economy and Sustainability, Springer, vol. 3(2), pages 953-982, June.
    14. Andreza Rodrigues de Araujo & Rodrigo Marques de Almeida Guerra & David Lorenzi Junior & Jordana Marques Kneipp & Luísa Margarida Cagica Carvalho, 2026. "Circular and Sustainable Business Model Innovation: Formulating an Integrated Concept Through A Systematic Literature Review," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-30, April.
    15. Abdulkarim Hasan Rashed & Afzal Shah, 2021. "The role of private sector in the implementation of sustainable development goals," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(3), pages 2931-2948, March.
    16. Thayla Zomer & Tim McAloone & Daniela Pigosso, 2024. "Categorization of manufacturing companies’ readiness profiles for the transition to the circular economy: A multidimensional cluster analysis," Journal of Industrial Ecology, Yale University, vol. 28(2), pages 277-288, April.
    17. Junior Maganga Maganga & Pleny Axcene Ondo Menie & Pamphile Nguema Ndoutoumou, 2025. "Determinants of Tropical Hardwood Lumber Exports to the ITTO Market: Econometric Evidence and Strategic Pathways for Sustainable Development in Producing Regions," Sustainability, MDPI, vol. 17(18), pages 1-39, September.
    18. Wu Ning & Ummar Faruk Saeed & Angelina Kissiwaa Twum & Abednego Osei, 2024. "Can ESG disclosures promote firms going concern? Evidence from BRICS countries," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3792-3803, September.
    19. Andrea Cecchin & Roberta Salomone & Pauline Deutz & Andrea Raggi & Laura Cutaia, 2021. "What Is in a Name? The Rising Star of the Circular Economy as a Resource-Related Concept for Sustainable Development," Circular Economy and Sustainability, Springer, vol. 1(1), pages 83-97, June.
    20. Chembessi Chedrak & Gohoungodji Paulin & Juste Rajaonson, 2023. "“A fine wine, better with age”: Circular economy historical roots and influential publications: A bibliometric analysis using Reference Publication Year Spectroscopy (RPYS)," Journal of Industrial Ecology, Yale University, vol. 27(6), pages 1593-1612, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:sustdv:v:33:y:2025:i:4:p:5719-5741. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.