Integrating knowledge management and

orientation dynamics for organization

transition from eco-innovation to
circular economy
Shajara Ul-Durar, Usama Awan, Arup Varma, Saim Memon and Anne-Laure Mention

Abstract (Information about the

Purpose – This study focuses on establishing relations with some important but underestimated authors can be found at the
elements of knowledge dynamics and firm orientations to characterize organizational circular end of this article.)
economy activities through eco-innovation (EIN). The advent of the circular economy (CE) in this
post-pandemic era has brought unpredictable sustainable challenges for the manufacturing
industries. This research paper aims to bring more clarity to the extant literature on the relationship
between environmental innovation (EI) and CE.
Design/methodology/approach – In this study, a systematic literature review methodology was
used to research the determinants of EI in the knowledge environment that drives the implementation
of a CE.
Findings – This paper proposes a framework that articulates organizational learning and orientation
dynamics and offers a new set of internal knowledge resources for a corporate CE. It is found that change
Received 30 May 2022
toward CE requires connection with EI. However, successful CE growth largely depends on leveraging
Revised 2 September 2022
knowledge resources and orientation dynamics (stakeholder orientation, sustainability orientation, 11 October 2022
organization learning orientation and entrepreneurial orientation). CE techniques are still in their early 21 November 2022
phases of adoption and their implementation is still in its development. Circular knowledge economy Accepted 13 December 2022
(CKE) has the potential to be a useful alternative to achieving thriving CE to achieve sustainability in local Conflict of Interest: All the
and global businesses operations. authors hereby state that there
is no conflict of interest with the
Practical implications – This study helps companies to understand the organizational learning and content of this article, both in
different orientation dynamics for achieving CE principles. The research findings imply that EI is critical in terms of academic and
establishing a sustainable transition toward CE through organizational learning and orientation dynamics professional capacity. It is to
and has garnered significant attention from academics, public policymakers and practitioners. The affirm that the work is not
submitted anywhere else other
proposed framework can guide managers to develop sustainable policies related to the CE. This than this journal.
research recognizes that firm-level CKE is important in shaping how knowledge resources relate to CE
Ethical Approval: The entire
within transition management literature. research process is in line with
Originality/value – This paper abridges the knowledge gap in identifying key drivers and presents the our institutional research ethics
policy. We declare that all
current eminence, challenges and prognostications of sustainable EI parameters in the changing
ethical standards are met and
climate of CE. This study builds a framework that combines insights from different viewpoints and complied with in true letter and
disciplines and extends one’s understanding of the relationship between EI and CE. From a theoretical spirit.
perspective, this study explains the knowledge management complexity links between EI and CE. It Informed Consent: All
builds a theoretical bridge between EI and CE to illustrate how firms transition toward CE following the participants in this study
recommendations. Thus, researchers should continue to support their research with appropriate volunteered themselves during
the entire research process,
theories that have the potential to explain EI and CE relationship phenomena, with a particular emphasis
and their consent was taken at
on some promising but underutilized theories such as organizational learning, dynamic capabilities and inception.
stakeholder theories.
Funding: This research did not
Keywords Knowledge management dynamics, Eco-innovation, Circular economy, receive any specific grant from
funding agencies in the public,
Organizational learning, Sustainable transition, Circular knowledge economy
commercial, or not-for-profit
Paper type Literature review sectors.

DOI 10.1108/JKM-05-2022-0424 VOL. 27 NO. 8 2023, pp. 2217-2248, © Emerald Publishing Limited, ISSN 1367-3270 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 2217
 1. Introduction
Knowledge management (KM) with a focus on managing sustainability is necessary for the
development of the ecological health of the planet (Chopra et al., 2021). Research by
(Martinez-Martinez et al., 2022) suggest that firms are realizing sustainability increase
because of environmental KM (EKM). Given the importance of EKM, firms need to realize
the importance of sustainability KM to (Cegarra-Navarro et al., 2010; Martı́nez-Martı́nez
et al., 2015). Sustainability KM aims to provide firms with the ability to meet natural resource
needs without sacrificing future generations’ needs (Birou et al., 2019). The urgency to
reduce CO2 emissions to avoid preventable climate change is echoed by the IPCC sixth
assessment report in 2021 (IPCC, 2021), which states the ‘earth’s warm up of 1.1˚C from
1850 to 1900 was caused by human activities, specifically in the post-industrial era.
Primarily, the industrial revolution focused entirely on systems, products and services. Eco-
innovation (EI) research focuses on a set of different firm knowledge resources that deal
with an objective such as reducing material consumption, improving energy savings and
innovating the recycling-reduce- processes (Ghisetti et al., 2015). Today’s EI has emerged
as an important issue affecting input resources to create growth conditions and accelerate
environmental efficiency (Cainelli et al., 2020; Canh et al., 2020; Nasir et al., 2021) and
improve manufacturing ‘processes’ performance (Lee and Schmidt, 2017). There has been
a growing interest in scholars on EI to tackle global climate challenges of sustainable
modes of consumption and production (de Jesus et al., 2016). According to Pham et al.
(2019, p. 1093) EI can be defined as a process of “creation, development, and optimization
of resources for the differentiation or the continuous improvement of green products.” EI has
been called a catalyst for the new sustainability paradigm and remains a relatively poorly
understood concept (Gonzalo et al., 2020). Much of the EI and circular economy (CE)
research has investigated the EI and CE antecedents and drivers (de Jesus et al., 2016).
CE at meso-level provides an opportunity to improve environmental performance (Ghisellini
et al., 2016). However, despite its importance of reducing the impact of the production-
consumption system, product-service system and addressing ecology challenge and
biodiversity (del Rı́o et al., 2010), a few empirical studies on the relationship between EI and
CE were reported (Gonzalo et al., 2020). The paucity of research applies specifically to
exploring the knowledge base and key factors influencing the relationship between EI and
CE (de Jesus et al., 2016).
The role of sustainability KM is critical for understanding the relationship between EI and CE
(Birou et al., 2019). Accord to (Cegarra-Navarro et al., 2010; Martı́nez-Martı́nez et al., 2015),
environmental knowledge (EK) remains an important topic in light of the continued
development of sustainability challenges. However, recent research has revealed that
businesses driven by EI are making a substantial shift to a CE (de Jesus et al., 2016). In a
broader sense, the ‘EI’s increased relevance implies that CE, as a result of sustainable
consumption and production activities, has eminence to modern manufacturers. Kirchherr
et al. (2017, p. 224) use the term CE “as an economic system that is based on the reuse,
reduction, recycling, and extraction of materials from end-of-life products to accomplish the
long-term benefit of current and future generations.” The EI literature has expanded in size,
but its influence on the EC has yet to be fully developed (Cainelli et al., 2020). Many firms
still face challenges managing the change from a linear to a CE (Cainelli et al., 2020; Dogan
et al., 2020). Atiku (2020) point to the need to develop a knowledge base ecosystem for
resource recovery to advance EI for environmental preservation. The knowledge base
perspective may serve as a foundation for understanding as a basis for assessing relevant
aspects of CE (Zhongming et al., 2016).
The most recent systematic literature review reveals that CE initiatives significantly drives EI
(de Jesus et al., 2016). As an example, Bitencourt et al. (2020) found that incorporating
reused and recycled material could partially support sustainable consumption and
production. The association between EI and CE within the internal organizational

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mechanism from an absorptive capacity has not been thoroughly investigated (Marrucci
et al., 2021). Further, de Jesus and Mendonça (2018) observe that the relationships
between EI and EC remained overlooked in the academic literature. Global problems of
resource scarcity and environmental challenges have promoted interest in different
stakeholder groups to enforce manufacturing firms to implement and use various circularity
practices (Lieder and Rashid, 2016) and knowledge base perspective (Lo
pez-Torres et al.,
2019a). According to Salim et al. (2019), EI research has just begun to investigate the role
of ‘firms’ internal capabilities in enhancing firm performance without elaborating the role of
knowledge dynamics. Organizational knowledge dynamics represent knowledge creation
and sharing activity (Nonaka, 1994). The term “knowledge dynamics” represents how
knowledge undergoes change development and integrates many of a ‘’firm’s new
experiences and new ways of thinking (Bratianu and Bejinaru, 2020). EK and KM provide
much guidance on how to use in green operations (Huang, 2009; Martı́nez-Martı́nez et al.,
2015). Knowledge can be used to maintain traditions, gain experience, produce fresh ideas
and disseminate gained information(Cheng and Wu, 2015). EKM system enabling presents
an opportunity for an individual in an organization to gain an understanding of the EK
circulation process to make an environmentally responsible business decision (Huang,
2009). Little is known about how EKM promotes sustainability (Martinez-Martinez et al.,
2022); therefore, exploring specific skills of businesses can help organization shift from EI to
CE (Marrucci et al., 2021). Zwiers et al. (2020) believe a KM approach is critical, becoming
fundamental to firm transitions from EI to CE. This transition is key to a CE. For this reason,
therefore, in recent years, there has been increasing interest in creating better KM
strategies and firms to enhance their primary focus to take action to operate more
sustainably (Atiku, 2020). Given the importance of research on KM in the CE and the high
interest and expectations in KM and sustainability, it is important to understand how KM can
prove to be a useful tool in the quest to drive EI (Ghinoi et al., 2020). First, empirical
evidence indicates that firms fail to undertake a set of knowledge practices that add value
to their existing internal routines to transition toward EI and sustainability (Marchi et al.,
2013). Second, empirical evidence suggests that different orientation perspectives may
enhance EI (Tseng et al., 2019). Third, Manninen et al. (2018) recently highlighted the
importance of ‘stakeholders’ roles in capturing intended environmental value through CE
practices. In his recent study, Lo
pez-Torres et al. (2019b) and Zhongming et al. (2016) call
for more scholarly research into KM and CE. However, relatively few research studies other
than Watson et al. (2018) explicitly examine operating ‘capabilities’ impact on innovation.
Therefore, a lack of understanding on how knowledge base perspective is likely to have a
positive impact on a ‘manufacturer’s ability to address CE challenges.
The CE has grown increasingly important in recent years to achieve organizational targets
to progressively reduce its greenhouse gas emissions and achieve resource recovery
efficiency (Awan and Sroufe, 2022). Given the heterogeneity of EI and CE in the literature,
understanding the broader picture of ‘businesses’ internal capabilities in the field of EI and
CE is still missing (Marrucci et al., 2021). Ghinoi et al. (2020) suggested that ‘firms’
orientation about local and regional administrative agencies could support firm strategy in
the transition to CE for improving sustainability management. Previous literature recognizes
that EI can be influential in the transition process by linking ‘stakeholders’ activities and
resources. Despite the increasing interest in bridging EI and CE (Cainelli et al., 2020), the
current understanding of EI drivers and the consequences of CE is limited. However, the
impact of knowledge base perspective on CE is not clariid by the recent studies (Zwiers
et al., 2020). EI is all forms of innovation that foster sustainable consumption and production
and addresses ecology challenges and encourages a closed-loop approach, leading to
increased economic and environmental benefits while CE is a dual-loop regenerative
system (Alhawari et al., 2021).
For instance, a vast body of evidence in the academic literature has been devoted to
researching how various KM approaches can contribute to a ‘firm’s CE (Ghinoi et al., 2020).

VOL. 27 NO. 8 2023 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 2219

 Zwiers et al. (2020) find that there has been researched on CE and sustainability; however,
research on how the knowledge base perspective affects the CE is rarely considered in the
organizational setting. Therefore, it is critical to review the existing literature to examine the
links between EI and CE and call for future research to account for dynamic factors that
facilitate successful firm transitions (de Jesus et al., 2016). The purpose of this research is
to bring more clarity to the extant literature on the relationship between EI and CE. This
paper argues that the main relevant transition mechanisms can be grouped into different
internal and external knowledge resources and firm capabilities perspectives. It argues that
previous research has focused on how firms can search for potential internal inbound
knowledge to improve EI (De Marchi and Grandinetti, 2013). Following Cainelli et al. (2020),
the literature on EI and CE was systematically reviewed and critical issues for future
research were highlighted. This study answers the following question: What internal and
external factors influence the transition between EI and CE in a sustainable manner in this
changing climate? This literature review focuses on critical organizational capabilities that
affect the EI and ‘CE’s perceived initiatives.
This research makes three significant contributions. First, the existing literature on EI and CE
is consolidated and a framework that combines insights from different disciplines are
investigated. Second, it responds to recent calls in the literature to identify critical factors
that influence ‘CE’s transition As there is a limited understanding of how different
capabilities may facilitate CE transition (de Jesus et al., 2016). Previous research
emphasizes the significance of KM system and organizational structures as antecedents to
promote sustainability (Chaurasia et al., 2020). Third, from a knowledge base theoretical
perspective, this study explains the complex links between EI and CE. It builds a theoretical
bridge between EI and CE to illustrate how firms transit toward CE following the
recommendations of Cainelli et al. (2020). The authors describe how diverse orientations
such as stakeholder orientation, sustainability orientation, learning orientation and
entrepreneurial orientation impact the link between EI and CE. Finally, this review highlights
the importance of different orientation capabilities and how these are critical in shaping firm
circular initiatives from the managerial perspective. Thus, it also provides insights into the
effectiveness of such orientation capabilities.

2. Research gaps on sustainable eco-innovation to circular economy level

2.1 Environmental innovation
Consequently, the natural resources of the globe, particularly the complicated ecosystems
that support biodiversity, are in jeopardy of becoming exhausted or even disappearing
altogether (Lo
pez-Torres et al., 2019b). In this regard, EI plays a critical role in actual
sustainable development (Rodrı́guez-Rebe
s et al., 2021). An essential element of
environmental innovation is higher resource efficiency. In the literature, environmental
innovation (EI), ecology innovation (EI) and green innovation (GI) phrases are frequently
used interchangeably. Environmental innovation is broadly defined as “the development of
products (goods and services), processes, marketing approaches, organizational
structure, and new or improved institutional arrangements which, intentionally or not,
contribute to a reduction of environmental impact in comparison with alternative practices”
(OECD, 2009, p. 2). CE remains a highly debatable topic, and Alhawari et al. (2021, p. 1)
defined CE as a “dual-loop regenerative system that focuses on the effective and efficient
utilisation of resources in the ecosystem, which is beneficial to environmental and economic
performance optimisation.” Adopting CE principles is encouraged by European Union
policies (Korhonen et al., 2018). Management, marketing and institutional structures at the
manufacturing level could establish a framework for achieving resource efficiency and
sustainability goals (Awan, 2020). The most common theme of the CE definition is the
maximization of resource utilization until its recycling stage (Awan et al., 2022). A strength of
this concept is that they emphasize the reusage of resources, while ensuring that both

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during manufacturing and after the ‘product’s lifespan, there is minimum waste and closing
loops (Awan, 2020). One particular line of inquiry on development of resource efficient
products, Pham et al. (2019) have carried out a literature review of 40 studies on EI (Watson
et al., 2018). The other studies aimed at advancing an overview of the literature on EI and a
capability-based framework from 1970 to 2014. In this paper, the authors suggest that
operating capabilities are key to drive EI, for which 88 scientific articles are analyzed,
focusing on environmental capabilities, learning capabilities and marketing capabilities
from an organizational perspective. Although their conceptualizations are aligned with the
existing literature review on EI, they focused only on the capability perspective rather than
examining the determinants of CE initiatives that impact ecological innovation at micro-level.
There are also literature review studies that focus on the capability perspective.
In contrast, Klewitz and Hansen (2014) carried out a systematic literature review on
sustainability orientation in small- and medium-sized enterprises (SMEs) between 1987 and
2010. For instance, Bhupendra and Sangle (2015) focus on the essential characteristics of
capability (market, product and behavioral) to successfully implement cleaner production
technologies to reduce pollution emissions while, Adams et al. (2016) reviewed literature
related to environmental management and sustainability between 1995 and 2012; these
were all connected to a sustainability mindset with the explicit goal of generating
environmental and social value. Amui et al. (2017) studied the drivers of organizational
capability development to enhance environmental conservation for the sustainability of
which innovation is the core issue at micro-level. The earliest work on CE appeared in
literature in the early 1980s. The closed-loop economy was first introduced by Stahel and
Reday-Mulvey (1981). Their work focused on evaluating the inter-organizational
relationships and concern about the extraction of waste disposal back into the system
(Ayres and Kneese, 1969). Discussion on how to incorporate and maintain a balance
between organizational resources and governmental demands came into discussion in the
1970s after the remarkable work of Stern (1973).

2.2 Circular economy

CE aims at the implementation of the 3Rs (reduce, reuse and recycle) initiative which is
essential to achieve a broader sustainable development goal toward landfill prevention,
reduction of greenhouse gas emission, procurement of resources and management of
hazardous waste (Ghisellini et al., 2016). It has various limitations and problems, much like
other sustainability methods, that must be acknowledged. ‘CE’s main idea is that one can
identify significant dimensions of 5Rs (reuse, recycle, remanufacture, repair and recovery)
and attribute them to shape the future. The term recycling has been highlighted in the
literature (Murray et al., 2017). The concept of recycling about any recovery procedures that
include waste materials being reprocessed into goods or materials that can be used for
their original or other purposes (European Commission, 2008). Reusage refers to using the
product again to maximize life (Stahel, 2014). Reuse is the process of reusing non-waste
materials or components for the original purpose for which they were intended (Yuan et al.,
2006; European Commission, 2008). The concept of CE has been emphasized as a system
to use a substitute or reuse the materials to improve the firm ability to meet the needs of
future generation (Awan and Sroufe, 2022). CE has recently received attention due to its
ability to provide the basis for the end-of-life products for re-processing, re-managing, re-
utilization and promotion of zero waste. The zero wase means to keep waste for upcycling
(redesigning the same part or components to improve the quality of the product) or
downcycling (use parts or components to develop a new product). The aim of zero waste is
not to dispose of unwanted waste in the landfill (Murray et al., 2017).
The Ellen MacArthur model demonstrates a component recycling and recovery program is
useful in reducing waste (Ellen MacArthur Foundation, 2013). This model is predicated on
the circulation of technical and biological nutrient-based goods and materials through the

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 economic system, as described above. (Ellen MacArthur Foundation, 2013). Hence, some
reusage of components and recycling components are just as relevant when the objectives
for minimizing greenhouse gas emissions influence the environment. When the firm owns
specific resources to reuse the components it can attract internal and external stakeholders
(Rodrı́guez-Rebe
s et al., 2021). Firms will be able to gather ecological knowledge, enhance
waste management and engage in GI due to the knowledge generated through KM
activities (Chopra et al., 2021). Consequently, the use of organizational KM is one of the key
elements that improves environmental sustainability throughout the entire life cycle of a
product (Shahzad et al., 2020).
The KM strategies that are used to achieve environmental advantages are impacted by the
identification of both the internal and external drivers of organizational EI (Marrucci et al.,
2021). Managers use knowledge produced by the external stakeholders that generate the
conditions necessary to reduce the amount of scattered knowledge (Gomes et al., 2021). In
this case, knowledge is learned sequentially and informally (Huang, 2009). Following
literature insights by (Martı́nez-Martı́nez et al., 2015), one critical observation of the extant
literature on CE is that few studies have focused on the circular knowledge economy (CKE).
The concept of CE has provided a useful basis for understanding circular KM (Zwiers et al.,
2020). CE dual loop organizational planning process leads toward more environmentally
responsible production and consumption system (Awan et al., 2022). It keeps material in
use for a longer period (to eliminate trash and promote the effective and efficient utilization
of the ecosystem) to achieve sustainability goals (Alhawari et al., 2021). The KM literature
has evolved to consider knowledge economy necessitate to focus on advancing EK
(Martinez-Martinez et al., 2022). EK is critical for sustainability initiatives (Martinez-Martinez
et al., 2019; Martı́nez-Martı́nez et al., 2019) and is viewed as a knowledge resource with
which organizations align their initiatives to tackle existing and upcoming environmental
challenges (Cegarra-Navarro et al., 2010). For this reason, the nature of environmental
challenges necessitates a firm level focus in examining CKE. The knowledge economy aims
to provide a unified system of production of products and services that contribute to the
development of technology and scientific innovation (Cheng and Wu, 2015). Following
(Huang, 2009) and (Martı́nez-Martı́nez et al., 2015), the CKE consists of the mechanism and
process that enable an organization to re-accumulation, re-internalize, re-utilization, a re-
sharing knowledge-intensive activity that focuses on resource-productivity and eco-
efficiency for creating and delivering products, components and materials at their highest
utility for customers and society that contribute to renewal and material management
innovation. However, the more profound understanding of the CE practices is still scary and
in its infancy in developing countries. Table 1 provides a summary of the previous literature
review on EI, while Table 2 provides an overview of CE definitions.
The aforementioned literature shows that several research studies investigated the
influence of orientation perspectives on EI. Environmental innovation is concerned with new
product development, reducing energy costs, increasing customer satisfaction and high
sales volume. Thus, sustainable manufacturing necessitates the demands of new
processes and equipment to create new businesses. The pursuit of long-term viability is
prompting businesses to rethink their approaches to technologies, products and business
processes (Nidumolu et al., 2009). Realizing sustainability benefits requires the
implementation of CE practices. Many firms are aware of civic sustainability’s potential
benefits (Awan et al., 2014). For instance, Kesidou and Demirel (2012) focus on different
vital determinants of the EI process, market conditions and demand factors. Sustainability is
usually associated with developing and implementing activities that support existing
resources to meet future generations’ needs.
Innovation plays a critical role in actual sustainable development (Chopra et al., 2021;
Zhang et al., 2021). An essential element of environmental innovation is higher resource
efficiency. Moreover, sustainable development can be achieved by reducing the use of

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Table 1 Summary of previous literature review on EI
Title Authors Summary

“The use of collaboration networks in Araujo and Mario (2021) The primary contribution of this study is to bring together
search of eco-innovation: a systematic the most relevant collaborative studies on EI in one place to
literature review” chart future research directions in this critical area of the
global economy
“What is the role of eco-labels for a circular Meis-harris et al. (2021) In general, the findings indicate that eco-labels as a
economy? A rapid review of the literature” standalone information-based communication tool are
unlikely to significantly change consumer behavior or
production
“Empirical generalizations in eco- Bitencourt et al. (2020) Identifying and analyzing factors affecting EI are critical for
innovation: A meta-analytic approach” advancing and consolidating knowledge in this field
“Key strategies, resources and Prieto-Sandoval et al. The review focuses on determining key resources,
capabilities for implementing the circular (2019) strategies and capabilities for implementing CE
economy in industrial small and medium
enterprises”
“A systematic review on environmental Pham et al. (2019) Reviews literature on environmental innovativeness aspects
innovativeness: a knowledge-based such as EI orientation, environmental management, green
resource view” absorptive capacity and green adaptive capacity
“Drivers of eco-innovation in the Sanni (2018) Reviews existing literature on EI from a different capability
manufacturing sector of Nigeria” perspective
“Contemporary corporate eco-innovation He et al. (2018a) The review mainly focuses on stakeholders’ influence,
research: a systematic review” drivers of EI, new product developments, product-service
systems and environmental management systems
“The drivers for the adoption Bossle et al. (2016) Findings highlight the need for more education for
of eco-innovation” sustainability in the business
“A literature survey on environmental Barbieri et al. (2016) Literature revolves around the following topics:
innovation based on main path analysis” determinants of EI; economic and environmental effects of
EI; and policy inducement of EI
“Eco-innovation: insights from a literature Dı́az-Garcı́a et al. (2015) Reviewed EI
review”

Table 2 CE definitions contrasting different perspectives

Standing et al. (2008, p. 5) “CE was developed in China as a strategy for reducing its economy’s demand for natural
resources as well as ecological damage”
Geng and Doberstein (2008, p. 232) “A circular economy approach encourages the organization of economic activities with feedback
processes which mimic natural ecosystems through a process of natural resources
transformation into manufactures products by-products of manufacturing used as resources for
other industries”
Ying and Li-jun (2012, p. 1683) “Circular economy is essentially an ecological economy which requires human economic
activities in line with the 3 R principle, namely reduce, reuse, and recycle”
MacArthur (2013, p. 7) “an industrial system [. . .] restorative by intention and design that relies on renewable energy and
eliminates the use of toxic chemicals’ aiming for the elimination of waste through the superior
design of materials, products, systems, and [. . .] business models”
Su et al. (2013, p. 1) “a traditional open-ended economy model developed with no built-in tendency to recycle which
is reflected by treating the environment as a waste reservoir”
Giurco et al. (2014, p. 432) “The concept of the circular economy proposes new patterns of production, consumption, and
use based on circular flows of a resource”
de Jesus et al. (2016, p. 10) “Circular economy is a regenerative system in which resource input and waste, emission, and
energy leakage are minimized by slowing, closing, and narrowing material and energy loops. It
can be achieved through durable design, maintenance, repair, reuse, remanufacturing,
refurbishing and recycling”
Murray et al. (2017, p. 377) “Circular economy is an economic model wherein planning, resourcing, procurement, production
and reprocessing are designed and managed, as both process and output, to maximize
ecosystem functioning and human well-being”
Blomsma and Brennan (2017, p. 1) “as an emergent framing around waste and resource management that aims to offer an
alternative to prevalent linear take-make-dispose practices by promoting the notion of waste and
resource cycling”

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 resources, production and consumption process (Bossle et al., 2016). At manufacturing
level, management, marketing and institutional arrangements constitute a mechanism for
attaining resource efficiency goals and sustainability. The link between EI and orientation
viewpoint is one of the study motivations for many of the studies covered in this literature
review. Thus, literature acknowledges that EI may be undertaken for several rationales and
motivations such as reduced environmental impact, exploitation of process and product
management, improved quality of products, reduced usage of natural resources, reduction
in environmental burdens and creation and optimization of resources.

3. Capabilities of eco-innovation and circular economy

Knowledge creation can be based on internal resources and capabilities focused on
environmental management (Bresciani et al., 2022). Companies with open participation
processes, strategies and tailored activities might have the best knowledge resources to
effectively oversee a more efficient way to manage and implement waste-to-resource
innovations (Velenturf, 2016). To that extent, the collaboration mechanism impact on
organizational capability development could be regarded as dynamic regenerative
capabilities (Ambrosini and Bowman, 2009). Much like prior literature, this study suggests a
focus on top-down knowledge inflow and sharing, enabling the recipient’s ability to improve
innovation (Quan et al., 2021; Shahzad et al., 2020). The field of CE is viewed as a means of
value creation and design process for innovation (Awan and Sroufe, 2022). Yet despite the
relevance of value creation and innovation for EI and CE, very little is known about the
impact of different capabilities on the relationship between EI and CE (Kiefer et al., 2021).
There is limited understanding of how different capabilities may facilitate the transition to CE
(de Jesus et al., 2016). de Jesus et al. (2019) discussed the sustainability transition of EI in
the context of CE. According to Masi et al. (2018), the prior research is concerned with
understanding the preferences of CE related practices at firm level. Previous research has
given little attention to the extent to which factors trigger the adoption of CE practices at the
firm level. With a view on exploring the barriers and drivers of CE, recent literature reviews
by Govindan and Hasanagic (2018) have made attempts to explore CE’s implementation by
identifying barriers and drivers. CE implementation in manufacturing has received more
attention (Kalmykova et al., 2017). Some research studies have been published in recent
years, offering a conceptualization of CE (Kirchherr et al., 2017), expected transition to the
ecosystem (Ghisellini et al., 2016), CE for product design (Mestre and Cooper, 2017) and
challenges of the CE. Research on implementation of CE practices, which considers the
role of collaboration, and level of implementation occurring at a particular capability setting
are important to the advancement of implementation.

4. Solution method
A systematic review approach was followed to answer the specific question to collect and
analyze CE and EI (Denyer and Tranfield, 2009). Contributions, analysis of existing research
and evidence reporting are all part of this sort of review. The literature was then evaluated in
terms of the model’s dimensions and the results were discussed. Winans et al. (2017)
examined the CE concept’s history and current applications by reviewing 150 articles from
Scopus, ScienceDirect and Google Scholar. They used keywords such as eco-industrial
parts, material flow analysis and industrial symbiosis. There is an essential publication in
this direction by Ghisellini et al. (2016) that reviewed 155 articles (ranging from 2004 to
2014, using the Web of Science and Science direct) with different keywords such as clean
production, CE and eco-industrial parts. More recently, Govindan and Hasanagic (2018)
conducted a review of the systematic literature on the determinants of drivers and barriers
in relationship to stakeholders’ perspectives, analyzing 173 articles from Scopus2 and Web
of Science. They used keywords such as drivers, barriers, practices, closed loop,
remanufacturing, reduce, reuse and recycling. In this study, article selection was carried

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out through Scopus and the Web of Science. The general keywords, CE, remanufacturing,
recycling, drivers and institutional are used as research criteria in both databases with title,
keywords and abstract. The data range set to 2006 following the assessment of Govindan
and Hasanagic (2018) 2006 marked the beginning of academic interest in the CE.
The four-step procedure was adopted as the foundation for this review of literature as
outlined by Kunisch et al. (2018). First, a search query for the selected database was
initiated. Second, studies were selected and evaluated. Third, studies were analyzed and
broken down, and finally, the results were analyzed and presented. The research strategy is
shown in Table 3. The research cover article was restricted using the key terms stakeholder
AND innovation, stakeholder AND eco-innovation, orientation AND circular economy, green
innovation OR environmental innovation, circular economy AND Orientation AND Innovation,
strategic orientations AND innovation, circular economy AND eco-innovation. The search
was narrowed to published articles between 2006 (as the concept of CE emerged then) to
2020. The research on both databases was conducted on 30 August 2020. The authors
select the articles to be analyzed based on which title, keywords and abstracts contained
the terms circular economy (CE), remanufacturing, recycling and innovation.
First, Mendeley was used to eliminate duplicate articles from both databases. These articles
were removed from the overall number of articles, bringing the total number of articles down
to 1,443. The abstracts of publications were reviewed, tallied and categorized according to
the study problem features and facet of the CE. In total, 111 publications were selected as it
being related to the study goal after carefully analyzing the title, abstract and keywords. The
goal was to keep up with the most recent developments in CE and innovation research. To
further concentrate on relevant articles, only articles from business economics were
included in the review because the aim is in the mechanisms that affect CE practices
implementation from an environmental innovation viewpoint. Articles were included if
they specifically aligned to a CE, management practices, innovation and collaborations.

Table 3 Research strategy

Publication selection
criteria Web of Science, Scopus

Searched items Journal articles review papers

Search applied on: Full text, to avoid exclusion of papers not including searched keywords in abstracts or titles or those using
a a different variant of the terms but which were relevant for the review
Year of publications 2006–2020
Research method Classification of methods used (mathematical modeling, the survey, case studies, literature review)
Inclusion criteria Peer-reviewed research papers using quantitative, qualitative, blended-methods in any country that must
address the CE
Exclusion criteria Not related to management area, book chapters, conference proceedings, not original research (editorial
or commentary)
Scopus inclusion criteria Inclusion criteria
Language: English
The search field(s): Title, abstract and keywords.
Scientific areas(s): social sciences, business, management and accounting, environmental science
Journal(s): All journal and review articles
Web of Science inclusion Inclusion criteria
criteria Language: English
Scientific areas(s): management, business, environmental studies
Journal(s): All
The search field(s): Topic
science citation index expanded (SCI-EXPANDED) – 1975–present
social sciences citation index (SSCI) – 1975–present
arts and humanities citation index (AandHCI) – 1975–present
emerging sources citation index (ESCI) – 2015–present
Date of publication: 2006–2020

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 Figure 1 provides an overview of data collection and illustrates the study flow diagram
searches on a Web of Science and Scopus databases. The identification of relevant articles
was based on the four steps: identification of the papers; analysis of data and screening;
define for the eligibility; and inclusion (Moher et al., 2009). The literature identification
strategy resulted in 111 articles.

5. Findings and discussion

5.1 Sustainable eco-innovation research
Tables 4 and 5 review the findings related to the benefits of environmental innovation to CE.
Many studies found that transition toward EI requires identification of opportunities (de Jesus
et al., 2019), development, integration of internal competencies (Salim et al., 2019), working
collaboratively (Potter and Graham, 2019), supplier involvement and cross-functional
collaboration (Fernando et al., 2019) for the CE. While others have looked at the relationship
between organization innovation, marketing innovation (Sanni, 2018), market pull factors
(Hojnik and Ruzzier, 2016), environmental capability and managerial concerns (Bossle et al.,
2016), few studies have pragmatically tested EI determinants (Del Rı́o et al., 2016; Horbach
et al., 2012; Kammerer, 2009). The literature analysis shows that few research studies are
investigating the influence of orientation perspectives on EI. EI is concerned with new
product development, reducing energy costs, increasing customer satisfaction and high
sales volume. Thus, sustainable manufacturing necessitates the demands of new processes
and equipment to create new businesses. Realizing sustainability benefits require the
implementation of CE practices. Many firms are becoming aware of civic sustainability’s
potential benefits (Awan et al., 2014). For instance, Kesidou and Demirel (2012) focus on
different critical determinants of the EI process, market conditions and demand factors.

6. Prognostications
6.1 Approaches to understanding role of multiple strategic orientations
This literature review highlights the importance of various organizational capabilities and
orientations for aiding firms in their CE to EI transition. For example, Adams et al. (2019)

Figure 1 Implemented research strategy adapted from Moher et al. (2009)

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Table 4 Conclusive remarks of the relevant research articles distinguishing design and methods and key findings
Author (Year) Design and methods Key findings

Ghassim and Bogers (2019) Quantitative According to the findings of this study, involving stakeholders in the
development of renewable energy technologies and the production of goods
with a greater degree of recyclability is significantly linked to the
implementation of ongoing knowledge
Adams et al. (2019) Quantitative Organizational capabilities align firm knowledge resources and improve
innovation performance
Kiefer et al. (2019) Empirical Strong co-operation links with key stakeholders can help the organization to
develop end-of-pipe solutions
Tseng et al. (2019) Empirical analysis – Inter-functional co-ordination has a positive impact on SO
– SO improves environmental innovation capability
Nogueira et al. (2019) Literature review A transition toward CE requires understanding different actors and their
interests
de Jesus et al. (2019) Qualitative Co-operation and multi-actor networking are needed to encourage a
take-make-dispose economy in the direction of the innovation system
Parida et al. (2019) Case study There are two types of ecosystem orchestrators to achieve the system
transition toward CE: ecosystem readiness assessment and ecosystem
transformation

n et al. (2019)
Aranda-Uso Quantitative Essential requirements for the implementation of CE practices: resource
saving and efficiency
Guzzo et al. (2019) Literature review Key success factors for circular model innovation; reduced consumption and
sharing products
Ünal and Shao (2019) Empirical analysis Companies’ competitive capability to reconfigure their operations and
business models is positively associated with operational and innovation
performance
Jean et al. (2018) Empirical analysis Key findings are:
– SO links with the innovation generation.
– Improve joint learning capability
Li et al. (2018) Empirical analysis Different stakeholders likely to affect organizational innovativeness outcomes
Jonas et al. (2018) Empirical analysis Stakeholders’ engagement is useful for institutional arrangements, resource
dependency and interorganizational innovation
Kiefer et al. (2018) Empirical analysis Co-operation, technological path dependency, corporate culture,
technology-push and market-pull are key factors for EI
Watson et al. (2018) Literature review External collaboration is critically crucial for environmental innovation
Reike et al. (2018) Review Firms need to put more focus on remanufacturing, refurbishing and
repurposing
Pigosso et al. (2018) Empirical analysis Organizations’ internal activities and process are essential to act as a
strategic bridge between the external environment and readiness for EI
Masi et al. (2018) Empirical analysis A firm with better environmental awareness can positively contribute toward
the transition to CE
Korhonen et al.(2018) Review Collaboration is an essentially contested concept for CE outcomes
Ghisellini et al. (2018) Literature review Adoption of CE practices positively associated with environmental benefits
Stewart and Niero( 2018) Literature review CE and sustainability are interlinked with each other
Kalmykova et al. (2018) Literature review Companies require research and development, market readiness and
knowledge transfer strategies within all value chain parts
Murray et al. (2017) Literature review Redesigning processes and reusing materials is a major focus
Urbinati et al. (2017) Literature review implementing CE requires the value of networks and customer value
proposition
De los Rios and Charnley Case study Capabilities, skills and change in the design process are essential to support
(2017) the CE approach
Mu et al. (2017) Empirical analysis – External and internal variables affect the relationship between SO
– SO affects new product development performance
Geissdoerfer et al. (2017) Literature review The CE is regarded as a necessary requirement for long-term viability
Spring and Araujo (2017) Review The CE can improve the reconfiguration of networks
Velenturf (2016) Case study Strategic insights and operational efficiencies likely to promote waste to
resource management for innovation
Van Weelden et al. (2016) Qualitative The findings highlight the importance of information provision and
decision-making in product design and acceptance of refurbished products
(continued)

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 Table 4
Author (Year) Design and methods Key findings

Flammer and Kacperczyk Empirical analysis This study finds that customer-focused firms are likely to improve innovative
(2016) productivity
Franklin-Johnson et al. Modeling It is imperative to manage design decisions as a business to enable
(2016) continued material and production retention
Lieder and Rashid (2016) Literature review Informal joint support affects the successful implementation of the CE
concept
Ghisellini et al. (2016) Literature review To implement the CE concept, exchange partners’ collaboration is
fundamental

et al. (2016)
Sauve Conceptual Findings indicate the need for an interdisciplinary approach to help to solve
environmental challenges
Supino et al. (2016) Literature review The conclusion highlights the need for a collaborative approach between
stakeholders such as the business community and institutions as a business
strategy to implement CE practices
 et al. (2016)
Maletic Empirical analysis SOI is positively associated with innovation performance
Tukker (2015) Literature review The result shows that the product-service system supports the CE approach.
Managers required to possess relationship management skills and
knowledge of the product and its reusability
Haas et al. (2015) Socio-metabolic Eco-design adoption practices facilitate the economic transition from linear to
approach circular
Weng et al. (2015) Empirical analysis The organization can benefit from stakeholder’s perspectives on GI
Klewitz and Hansen (2014) Systematic literature External actor co-operation is an enabling mechanism for SMEs
review Sustainability orientation is likely to lead to an improved innovation path
Su et al. (2013) Literature review The collaborative relationship is essential
Oxborrow and Brindley Empirical analysis Supplier co-operation is critical and a catalyst for sustainability innovations
(2013)
De Marchi (2012) Empirical analysis Co-operation with the supplier is more relevant for innovation
Van Bommel (2011) Literature review External orientation and transparency, co-operation between departments,
learning and adapting can enhance the innovation perspective
Zhu et al. (2010) Empirical study Companies with better environmental-orientated supply chain co-operation
are more likely to implement CE approaches
Verghese and Lewis (2007) Literature review Results showed that environmental innovation requires a co-operative
approach to reduce environmental impacts and costs
Yuan et al. (2006) Conceptual study The adoption of a CE strategy is more likely to result in increases in resource
productivity and environmental efficiency
Sizhen et al. (2005) Quantitative analysis It is imperative to manage cleaner production technologies

point to the prominence of developing strategic orientation (SO) that is necessary for
innovation performance. SO reflects the firm’s ideology of managing the business and
participating in a market to achieve superior performance (Gatignon and Xuereb, 1997). SO
fosters adaptations to its environment through the generation and dissemination of
knowledge to obtain required resources (Miles and Snow, 1978). SOs are “principles that
direct and influence a firm’s activities and generate the behaviors intended to ensure its
viability and performance” (Hakala, 2011, p. 199). According to the literature study,
entrepreneurial attitude emphasizes creativity, risk-taking and proactiveness.
KM systems have become increasingly popular in literature to facilitate the learning,
transmission and reuse of information (Edwards et al., 2005), organization learning
effectiveness depends on knowledge transformation (Jiang et al., 2019) and
learning orientation capability assumes a strong propensity to create physical resources
and create knowledge (Sinkula et al., 1997). Learning orientation, according to the study,
is a flexible method to build new technologies, products and processes (Calantone et al.,
2002) or changing organizational structure to meet the specific requirements of
customers. Technology orientation is closely related to product orientation and innovation
(Grinstein, 2008). The high level of SO is thus based on the degree to which sustainability
activities are embedded in the organizational culture as a central element under
consideration of the natural environment’s long-term protection (Adams et al., 2016).

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Table 5 Review of the findings related to the benefits of environmental innovation to a CE
Author (Year) Design and methods Key findings

Suchek et al. (2021) Literature review Companies must be aware of and engage in more sustainable practices to
transition to a CE
The literature also shows that research on innovation in the CE needs to be
expanded to include all sectors, because many studies only look at the
fashion and manufacturing industries, while those that deal with the biological
cycle and the environment are not given as much attention as they should be
Kiefer et al. (2021) Mathematical modeling Some argue that the two concepts are compatible and interdependent
and that EI is critical to achieving the CE
The findings contribute to one’s understanding of how EIs
facilitate the transition to the CE
de Jesus et al. (2019) Qualitative analysis The successful transition toward EI requires the identification and exploration
of opportunities within the organization. CE initiatives have the potential to
contribute positively to sustainability
Salim et al. (2019) Literature review Integration capability as co-ordination activities introduce new or changed
products
Colombo et al. (2019) Review Research should explore the relationship between the CE and EI. Eco-centric
approaches to sustainability may provide an opportunity to unlock the real
potential of CE initiatives
Potter and Graham (2019) Empirical analysis Findings show that working collaboratively with their suppliers to generate
inter-organizational EIs
Fernando et al. (2019) Empirical analysis Key elements pursuing EI:
– supplier involvement
– cross-functional co-ordination
– market focus
Aboelmaged (2018) Empirical analysis Supplier collaboration and environmental orientation are positively associated
with EI
He et al. (2018 a) Literature review The critical process for EI:
– collaborative management among customers and suppliers
– Institutional role
Sanni (2018) Empirical analysis Key drivers for EI:
– Organizational innovation
– Marketing innovation
– Informal sources of knowledge

ez-Martı́nez et al. (2016)
Sa Empirical analysis Technological collaboration and green consumerism are a crucial driver for EI
de Jesus et al. (2016) Literature review As a new paradigm, the CE has been steadily gaining traction
There is a considerable number of literature on EI, as well as a rising body of
study on the CE but as yet there is no full understanding of the relationships
that exist between these two notions
Del Rı́o et al. (2016) Literature review EIs depends on:
– Sectoral and regional features
– In-house knowledge
– Customer relationships and reputation
Peng and Liu (2016) Empirical analysis The findings indicate that managerial environmental awareness, EI
management and external resource acquisition may increase the eco-
process and eco-product innovation
Hojnik and Ruzzier (2016) Literature review Market pull factors and conceptualization of the EI process
Bossle et al. (2016) Literature review Major drivers for EIs are:
– Environmental capability
– Environmental managerial concerns
Dı́az-Garcı́a et al. (2015) Literature review Key Elements for the introduction of EI:
– Firm internal competencies and capabilities
– Visionary management
– Green organizational identity and absorptive capacity
Mylan et al. (2015) Qualitative analysis – Positive co-operation and co-ordination.
– A shift in the existing model of governance mechanism
– Focus on information exchange modes and framing of sustainability issues
– Mechanisms to stimulate EI
– The clarity in the orientation of EI
(continued)

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 Table 5
Author (Year) Design and methods Key findings

Klewitz and Hansen (2014) Literature review The higher level of sustainability behavior, the better the innovation practices
Bönte and Dienes (2013) Empirical analysis This study finds three different process innovation strategies:
– A firm may follow in house strategy
– A firm may opt for the external resources
– A firm may opt for a co-operation strategy
Kesidou and Demirel Empirical analysis – Environmental regulations
(2012) – High level of investment
– Organizational capabilities
– Cost saving
Cheng and Shiu, (2012) Empirical analysis The key findings are:
– Developing new products with the use of cleaner production technologies
– Use natural materials in designing new products
– Reduce waste in operations
Horbach et al. (2012) Empirical analysis Determinants of EIs:
– Market pull factors (customer and market conditions)
– Market push factors (regulations)
– Investment intensity and improvement of a company’s innovative capacities
(energy efficiency or renewable energy)
– Market orientation of the different environmental areas
Kammerer (2009) Empirical analysis – Green capabilities
– Resources and knowledge
– Government regulations
– Internal factors (customer orientation, environmental strategy)

SO within a company is supposed to increase the integration of changes in products and

processes, focusing on sustainability orientation innovation (Linnenluecke and Griffiths,
2010). The review provided evidence that technology orientation is related to the
organization-wide development of new solutions through new technology. There is little
evidence in the literature that supports technology orientation to introduce or use new
products, innovations and technologies. It suggests that orientation capabilities trigger
managerial activities to meet ecological challenges. This review of the literature led the
authors of this paper to offer several research streams by the degree to which different
orientations contribute to the firm path toward CE.

6.2 Research stream 1: stakeholder orientation in eco-innovation as means to

circular economy
As this literature analysis shows that CE concerns are becoming more prevalent, managers
are faced with the task of incorporating CE principles into their operations. Stakeholder
participation, for example, has been found to be a key driver of EI in a variety of studies
(Munodawafa and Johl, 2019). However, Meixell and Luoma (2015) suggest that different
stakeholders have a different influence on various supply chain areas. Some stakeholders
dominate in one area more than others. According to Freeman et al. (2010), “stakeholders
are those active groups whose action can significantly impact the firm operational
objective.” Stakeholders’ interests and expectations may vary from being an implementation
to supportive. Previous research has explored different stakeholders’ influence empirically
on environmental strategy, green and social responsibility practices and GI (Park-Poaps
and Rees, 2010; Sarkis et al., 2010; Betts et al., 2015; Graham, 2017; Kawai et al., 2018;
Nguyen et al., 2021). Li et al. (2018) suggest that one or more stakeholders are likely to
affect innovation outcomes. This study considers firm stakeholder orientation as a means of
involvement, collaboration and exchange of knowledge and resources at various functional
levels. These findings support the idea that firms that seek to enhance operational efficiency
should share EK with employees and other stakeholders (Martı́nez-Martı́nez et al., 2015).

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However, little remains in the literature about how the organization views the interest of
stakeholders in the implementation of CE (Ghinoi et al., 2020). As an example, in Netherland,
a customer of the mobile phone showed resistance in adopting the remanufactured mobile
phones due to the lack of awareness limiting the move toward circular consumption (Van
Weelden et al., 2016). Customer collaboration should be aimed at catalyzing CE initiatives at
the operational level to the extent that collaboration mechanism impacts organizational
capability development, could be stakeholders interactive abilities (Ambrosini and Bowman,
2009; Nasir et al., 2021). Much the same as prior literature, this paper suggests a focus on
top-down knowledge inflow and sharing, enabling the recipient’s ability to improve
performance. The literature on CE identifies varied types of stakeholders’ interest in
implementing law and policies regarding CE and influences firms to adopt circular thinking
(Li and Yu, 2011; Maitre-Ekern and Dalhammar, 2016; Sauve
et al., 2016). Previous studies
focus their analysis on tax incentive to develop new clean production technologies and tax
incentives on renewable energy use (Andersen, 2007; Ghisellini et al., 2016; Hazen et al.,
2017; Lieder and Rashid, 2016; Shahbaz et al, 2020). Stakeholders’ involvement in
environmental innovation help firms to reduce waste and improve the recyclability of waste
(Weng et al., 2015). Based on the previous discussion, stakeholder orientation may be more
relevant in an EI context. A small number of research studies have investigated how
stakeholder orientation affects EI. The effect of stakeholder orientation on CE has been
investigated (Salvioni and Almici, 2020).
Another insight gained from the review of the literature is that there is no previous study that
explicitly examines how stakeholder orientation may affect the relationship between EI and
CE. This study’s review of the literature led to the following research question: To what extent
does stakeholder orientation affect the relationship between EI and CE? It would be
interesting to test this relationship in information technology-related firms in terms of future
research direction. Another potential future direction is applying strategic flexibility theories
(Martinez-Sa
nchez et al., 2009; Bock et al., 2012). These studies suggest that decision-
makers (internal stakeholders) experience different cognitive flexibility challenges as they
are enthusiastic about bringing substantial change related to tackling ecological challenges.
This review uncovered stakeholder orientation such as increased use of technology to
improve products using natural resources, increased understanding of customer
requirements, increased collaborative planning for resource integration and increased
attention of the community and institutional pressure. This review has revealed that little
research has examined stakeholder orientation with EI that may increase the CE
performance. This study proposes that the more excellent stakeholder orientation related to
sustainability, the higher the long-term CE performance.

6.3 Research stream 2: learning orientation in eco-innovation as means to circular

economy
Another relevant theme invoked in the literature review is the role of learning orientation; that
is, how much of CE implementation is affected by organizational learning and engagement.
While Mu et al. (2017) examined the relationship between SO and product development,
many empirical research studies are positioned in describing that knowledge resources
(Adams et al., 2019), inter-firm co-ordination (Tseng et al., 2019) technology push and
market pull factors (Kiefer et al., 2018) are reasonable to support environmental innovations.
Korhonen et al. (2018) suggest that collaboration enhances the CE orientation by
generating better information at creating skills and capabilities. Companies with open
participation processes, strategies and activities tailored might have the best knowledge
resources to manage effectively, more efficiently manage and implement waste-to-resource
innovations (Velenturf, 2016). Thus, organizational learning orientation (OLO) leads to
incremental and radical innovation in high-tech firms (Sheng and Chien, 2016) and improve
awareness on EK (Martı́nez-Martı́nez et al., 2015). The concept of EK comprises

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 environmental information resources with a focus on organizations and individuals can
better manage environmental risk (Martı́nez-Martı́nez et al., 2015). EK helps enhance
individuals’ responsible behaviors with greater environmental awareness, are more likely to
show concern for the environment and take initiatives(Cheng and Wu, 2015). EK has
become priority of many firms to improve environmental learning orientation (Huang, 2009).
In this context, there is a necessity to foster environmental learning processes both within
and between organizations to collect information from a variety of sources to support the
adoption of CE policies such as zero waste practices (Agyabeng-Mensah et al., 2021). As
evident from the literature, the relationship between CE practices and KM orientation is less
clear (Zhongming et al., 2016). Urbinati et al. (2017) propose the value of networks and
customer value proposition understanding requires for a successful transition toward a CE.
Previous research has established a hierarchical structure of different learning orientations
and innovation and firm performance (Calantone et al., 2002). Thus, the innovation
perspective is less clearly understood as to how and under what condition the recognition
of learning orientation may affect EI. Recently, Wang et al. (2020) have examined learning
orientation and GI. However, multiple researchers in various countries have thoroughly
examined the barriers and drivers in implementing CE (Scipioni et al., 2021a). Thus, it can
be expected that organization learning orientation as a shared understanding of generating
learning from external resources, acquiring strategic information and combining with their
existing pieces of information and disseminating among the organization would enable the
organization to recognize the needed resources to overcome barriers of EI and may shift
toward CE. However, little remains known about how OL orientation is influencing the
implementations of CE.
As the literature review explicitly acknowledges that learning orientation may initiate the
change process, most studies do not identify a specific type of market orientation and
organizational learning capabilities. Therefore it can be summarized that these organizational
factors are more fitting for implementing an EI and CE. This review has revealed that little
research has examined learning orientation with EI that may increase the CE performance.
This review uncovered learning orientation, such as management commitment to training, to
achieve resource conservation objectives. Management encourages people to think out of
the box for resource conservation and one understands the importance of sharing vision and
resource conservation ideas across all units. From the above literature discussion, the
following research question is proposed: how would OL orientation interact with the EI and
influence CE. This paper suggest that OLO may act as a moderator between EI and CE. If the
firm has chosen this form of OL orientation, it is argued that the greater the firm OL orientation
the greater the firm’s tendency toward CE. This study proposes that the greater learning
orientation related to sustainability, the higher the EI impact on long-term CE performance.

6.4 Research stream 3: Entrepreneurial orientation in eco-innovation as means

to circular economy
Filion (2008) defines an entrepreneur as “an actor who innovates by recognizing
opportunities (who) makes moderately risky decisions that lead into actions requiring the
efficient use of resources and contributing an added value” (p. 7). EO is essential for
strategy development (Smith and Jambulingam, 2018). EO’s concept is just emerging in the
CE literature (Veleva and Bodkin, 2018; Cullen and De Angelis, 2020). The field of CE is
viewed as a means of value creation and design process for innovation. However, despite
the relevance of value creation and innovation for EI and CE, the research of EO within the
CE literature is limited. Despite the overall progress made in EI and CE, this literature review
reveals that minimal advancement has been made in studying the orientation capabilities.
Nevertheless, very little is known about the relationship between specific aspects of
circularity entrepreneurial and business model innovation (Cullen and De Angelis, 2020).
This provides evidence that there is a dearth of study in the entrepreneurial process that

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addresses environmental problems while both identifying and exploiting new business
prospects (Ranta et al., 2018). It is evident from literature there is an increased interest in
cross-level studies in which entrepreneurship at one level affects the CE. Previous literature
has discussed entrepreneurship from business model innovation (Henry et al., 2020). It
inflates the interest of research to examine further how entrepreneurial orientations does
affect CE initiatives. First, it requires an investment in developing research and development
capacities to exploit competitive advantages (Haro-Domı́nguez et al., 2010).
This review of literature provides limited evidence on how and under what conditions EI
significantly influences CE initiatives. Pro-active circularity EO means establishing policies
and procedures to provide a foundation for successfully implementing practices. Pro-
activeness toward green initiatives, risk-taking in introducing green productions and
implementing innovative ideas, means managers may strive for accomplishment and growth
to pursue the circularity ecosystem goal. This review uncovered learning orientation such as
one has the autonomy to implementing creative ideas to contribute toward sustainability
objective and has the autonomy to seek opportunities that contribute toward sustainability
objectives. There is a culture of promoting creativity across all units for sustainable initiatives.
The study of CE within the entrepreneurial is only gaining recent attention in the literature to
address firm environmental challenges. Regardless of the changing nature of the business
environment, it was concluded that there had been little or no research on how EO affects
CE. In other words, this paper argues that EO may act as a moderator between EI and CE.

6.5 Research stream 4: Sustainability-orientated innovation in eco-innovation

as means to circular economy
Sustainability-oriented innovation (SOI) “involves making intentional changes to an
organization’s philosophy and values, as well as to its products, processes or practices, to
serve the specific purpose of creating and realizing social and environmental value in
addition to economic returns” (Adams et al., 2016, p.181). Today, firms operate within
complex environmental innovation challenges requiring them to explore innovative processes
for adapting to environmental changes. Many researchers suggest that sustainability
orientation innovation could be achieved by increasing customer collaboration and flexibility
(Klewitz and Hansen, 2014). External stakeholders offer organizations insights to improve a
firm’s sustainable innovation orientation (Ayuso et al., 2011; Malik et al., 2021). A collaborative
approach with customers is increasingly recognized as a possibility of innovation (Goodman
et al., 2017). The sustainability orientation practices include safeguarding the ecosystem,
improving the end of product life cycling issues and promoting health and safety (Karakayali
et al., 2007). The evidence from the literature suggests that sustainability orientation
innovation facilitates customer expectations around new solutions to the problems and can
co-create solutions for sustainable development.
Firms with sustainability objectives are often depicted as environmental, economic and
sustainability orientations. This study proposes that the key determinant of collaboration
success relies on the presence of sustainability learning and planning. Sustainability
orientation refers to the level of the individual firm about environmental, social and economic
responsibilities. A company’s sustainability orientation depends on how social and
ecological challenges are met conceptually, institutionally and instrumentally (Arnold, 2015).
In the stakeholder collaboration, the SOI may help achieve the operation and exchange of
information on sustainability-related challenges. On the other hand, SOI will encourage the
firm to integrate sustainability initiatives to benefit operational efficiencies such as product
customization ability, new product introduction ability and new product quality and reliability
(Hong et al., 2019). The broad picture that emerges from the literature review is that
organizations need to continuously make intentional changes in their operational routine
with a vision to set a greater purpose for environmental innovation and improve the related
organizational system to progress toward a better future for the common good.

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 This review uncovered learning orientations such as intelligent knowledge generation about
environmental management, increased knowledge about environmental protection
practices and increased use of customer green knowledge resources to develop new
environmental protection practices. The study of CE within the sustainability orientation is
only gaining recent attention in the literature to address firm ecological challenges.
Regardless of the changing nature of the business environment, this paper concluded that
there has little or no research on how sustainability orientation affects CE. Thus it proposes
that sustainability orientation plays a role in moderating the relationship between EI and CE
performance (Figure 2).

7. Implications for theory and practice

The paper’s previous review of the available empirical literature on links between EI and CE
relationships established unequivocally that this sustainable business strategy research field
has matured over time into a substantial body of scholarly knowledge with sound theoretical
and managerial implications. The review’s comprehensive and integrated approach has
aided in the emergence of some novel and useful insights into the EI and CE relationship
phenomenon. First, from a theoretical perspective, it was discovered that research on EI and
CE relationships has a robust theoretical foundation, as evidenced by the wide array of
explicit (make use of the RBV, institutional theory, stakeholder theory, or so forth, in an
individualistic) theories (Hazarika and Zhang, 2019). From a theoretical perspective, this
study explains the complex links between EI and CE. It builds a theoretical bridge between
EI and CE to illustrate how firms’ transit toward CE following the recommendations (Cainelli
et al., 2020). The proposed framework contributes to the literature by showing that
organizational learning is also important for determining a firm’s ability to maintain a
sustainable improvement in CE. As a result of the link between KM and sustainability,
organizations are rethinking their position and managing their knowledge practices and
processes to fulfill their sustainability objectives (Chopra et al., 2021; Song et al., 2022).
Following previous literature (Chopra et al., 2021), the authors of this paper suggest that
stakeholder orientation and OLO are necessary processes through which firms may acquire
and transmit information for achieving efficient and responsible use of natural resources. In
this framework, KM has emerged as a new paradigm that may help firms attain

Figure 2 Conceptual framework of SO impact on CE and eco-innovation 4R circular

economy principles adopted by the European Commission (2008)

PAGE 2234 j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 27 NO. 8 2023

sustainability goals and targets efficiently and seamlessly (Shahzad et al., 2020). KM may
be key to achieving sustainability (Chopra et al., 2021). Another relevant theme invoked in
the literature review is the role of learning orientation; that is, how much of CE
implementation is affected by organizational learning and engagement (Awan and Sroufe,
2022). Most of the previous literature has viewed EI and CE from the organizational learning
perspective. Most of the studies’ focal point is on OLO and transition toward CE (Scipioni
and Niccolini, 2021b). Organizations’ focus on different orientation perspectives enables
navigating differences in environmental management practices and their stakeholders’
collaboration. Thus, researchers should continue to support their research with appropriate
theories that have the potential to explain EI and CE relationship phenomena, with a special
emphasis on some promising but underutilized theories, such as organizational learning,
dynamic capabilities and stakeholder theories. Second, previous studies review the
literature on EI in the transition to CE (de Jesus et al., 2016). As argued by Suchek et al.
(2021), the literature demonstrates the importance of broadening the scope of research on
CE innovation to include all sectors. However, little has been known about the micro level
contribution of various EI characteristics to CE (Kiefer et al., 2019). This study builds up a
framework that combines insights from different orientations and disciplines and extends
our understanding of the relationship between EI and CE. Third, these findings have
practical implications for the decision-makers. There is limited understanding of how
different capabilities may facilitate CE (de Jesus et al., 2016). In practice, literature
advocates that CE policies and regulations guide and create awareness to pursue
responsible production and consumption patterns. In literature, many approaches are likely
to proceed successful implementation of CE practices, but little consensus about how to
incorporate and proceed (Lieder and Rashid, 2016). Identifying stakeholders is one of the
most significant hurdles in implementing CE principles (Tyl et al., 2015). The implementation
of CE practices requires collaboration across the value chain (Kalmykova et al., 2017). The
findings of this research suggest that firms must embrace a deeper understanding of
stakeholder orientation and OLO to achieve efficient and responsible use of natural
resources. On the other hand, sustainability orientation and entrepreneurial orientation
enable firms to gradually understand shared global challenges and risks such as resource
scarcity and climate change, capture new growth opportunities and build a green company
image.

8. Conclusions
This study aimed to investigate the link between EI and CE to better understand how, and
under what conditions, businesses may successfully transition from EI to CE in this
changing environment. After synthesizing the findings of 111 encompassed studies on EI
and CE this analysis reveals several internal organizational learning dynamics and
orientation strategies that can support a firm transition from EI to CE. Understanding these
factors on EI and CE links is of paramount importance for policymakers in both designing
and implementing climate change-related reforms and the firms that need to take
competitive advantage of the new opportunities. The research contributes by drawing
attention to the significance of contextual knowledge dynamics and orientation strategies
from an organizational perspective in explaining that EI is an essential determinant in
achieving a sustainable transition toward CE. However, the existing studies exhibit that a
complicated relationship exists between EI and CE. CKE has the potential to be a useful
alternative to achieving thriving CE to achieve sustainability in local and global businesses
operations. The CKE allows a business to re-accumulate, re-internalize, re-use and re-share
knowledge-intensive activities that emphasize resource-productivity and eco-efficiency for
creating and delivering products, components and materials with the highest utility for
customers and society, thereby contributing to renewal and material management
innovation. In view of the expanding body of research on CKE in the CE and the high
expectations surrounding the convergence of KM and sustainability, it is essential to get an

VOL. 27 NO. 8 2023 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 2235

 understanding of the various ways in which KM can aid progress toward the objective of
driving EI. The role of KM dynamics and orientation strategies in implementing EC is
emphasized for an accelerated transition toward CE to achieve United Nations Sustainable
Development Goals.

9. Limitations, future research and implications

CE research has gained momentum over the last decade due to scholars giving accrued
importance to industrial symbiosis development aimed at zero waste for the industrial
process. Many diverse CE practices exist in different countries such as the upgrading
technology and product development in China, increasing consumer responsibility for
material return and reusage in Japan and Korea particularly and emphasis on recycling,
reusage and reduction in Europe which have the potential to contribute to standardized CE
practices in manufacturing industries. Never before has stakeholder’ collaboration research
been necessary among researchers. The more remarkable advances in recycling and
waste management have resulted from inter-firm joint activities (for example, eco-industrial
symbiosis). North America, Europe, Australia and China have made significant progress
toward industrial symbiosis through policies and legislation in recent years. However,
affirmative action programs and regulations are required in benefitting from the recycling-
manufacturing and reuse of materials; this study provides insights for managerial decision-
makers. It implies that a sustainable future for human growth and improvement will demand
the implementation of CE practices without compromising the firm’s economic self-interest-
seeking behavior. The results guide the managers in compliance with the stakeholder’s
expectations. A vital issue in the CE and sustainability literature is to increase the
understanding of various stakeholders’ roles in creating awareness about sustainable
production and consumption attitudes by managing resource more efficiently. Although
there is a wealth of literature on CE and sustainability, the knowledge base viewpoint’s
impact on CE in the organization is rarely studied. When a company moves from EI to CE, a
CKE approach is essential. The findings of our study have critical implications for
managers. Our findings suggest that successful renewal and transition toward CE depend
on knowledge and orientation dynamics. Given the diversity of the knowledge and
orientation dynamics, this study should help firms manage the identified KM factors and
encourage further development of circular knowledge for the transition to CE. Our findings
encourage firm’s to focus on cultivating a CKE environment within firms to take global
climate challenges to shift focus toward using the restorative design of material products
and systems within a business to help improve sustainability performance. Indeed, the
development of CKE is critical to top management efforts to encourage managers to be
proactive in creating knowledge assets in their CE activities. Our research recognizes that
firm level CKE are important in shaping how knowledge resources relate to CE within
transition management literature. This change in CKE is important for a CE and
sustainability. The literature on CKE has been silent on how to promote and mitigate
sustainability challenges. Circular firms must position themselves as CKE pioneers in a
resource constraint environment to improve their ecological footprint. We suggest that
managers should consider firm-level CKE more suitable because the long-term viability of
the CE system depends on the firm’s ability to use knowledge about encouraging material
resilience (resource productivity ad eco-efficiency) and respecting product life cycle eco-
system that maximizes waste to achieve long-term sustainability.

Highlights

䊏 Critique of sustainable eco-innovation (EI) and the implementation of circular economy

(CE) with regards to integrating knowledge management.

PAGE 2236 j JOURNAL OF KNOWLEDGE MANAGEMENT j VOL. 27 NO. 8 2023

䊏 Better understanding of how, and under what conditions, businesses may successfully
transition from EI to CE.
䊏 Stakeholder orientation and organizational learning orientation are necessary to
acquire for Knowledge management and transmitting information for achieving efficient
and responsible use of natural resources.
䊏 Sustainability orientation and entrepreneurial orientation enable firms to make a gradual
understanding of shared global challenges and risks such as resource scarcity, climate
change, capture new growth opportunities, and build a green company image.

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Author affiliations
Shajara Ul-Durar is based at the Faculty of Business, Law and Tourism, Sunderland
Business School, University of Sunderland, Sunderland, UK.
Usama Awan is based at the Center for Research on Digitalization and Sustainability,
Inland Norway University of Applied Science, Elverum, Norway.
Arup Varma is based at the Department of Management, Loyola University Chicago,
Chicago, Illinois, USA.
Saim Memon is based at the School of Engineering, Arden University Ltd, Birmingham, UK.
Anne-Laure Mention is based at the College of Business, RMIT, Melbourne, Australia.

Corresponding author
Arup Varma can be contacted at: [email protected]

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