In this study, we examine the way leadership commitment and circular economy (CE) capabilities affect employee adaptability to change to adapt CE practices. In this pursuit, this study demystifies the mechanism leading to dynamic capabilities to contribute to sustainable business practices and environmental performance.
We collected data from 273 employees of different organizations and analyzed it using Structural Equation Modelling (SEM). We have used Dynamic Capabilities Theory (DCT) to examine the data and explain the results.
We found leadership commitment and CE capabilities to significantly improve employee adaptability to change, which positively influences the adoption of CE practices. We also found that organizational flexibility moderates the relationship between employee adaptability to change and adoption of CE practices. These results underscore the necessity of supportive leadership and an adaptive workforce to establish successful circular economy practices.
This study adds to the knowledge on behavioral aspects of circular economy by focusing on the leadership approach to enhance employee adaptability, and organizational flexibility to shape CE practices adoption. Contrary to previous that majorly focused on technology and policy, in this study, we highlight human factors to drive change. Furthermore, this study’s findings offer a new perspective of DCT to provide actionable guide to manage sustainability transition through people and processes.
