The Strategic Role of Circular Economy Innovations and Stakeholder Engagement in Advancing Responsible Production and Consumption

Li KaoDui and Maxwell Kongkuah

Business Strategy and the Environment, 2025, vol. 34, issue 5, 5947-5966

Abstract: As the urgency of global sustainability goals intensifies, achieving responsible production and consumption (RPC) has become a critical priority, especially in emerging markets where economic growth must be balanced with environmental stewardship. Businesses play a pivotal role in advancing sustainability, and understanding how governance practices influence RPC is essential for aligning corporate strategies with global objectives. This study investigates how circular economy innovations and stakeholder engagement moderate the link between indigenous directors and RPC. Using secondary data from 439 manufacturing firms across MENA countries between 2012 and 2022, we employed the method of moments quantile regression (MMQR) and fixed effects estimations, addressing endogeneity through GMM modeling and propensity score matching techniques. Our findings demonstrate that indigenous directors significantly enhance RPC across all quantiles. Additionally, circular economy innovations not only advance RPC but also amplify the positive effects of indigenous directors on sustainable practices. Stakeholder engagement further strengthens this relationship, particularly in higher quantiles, underscoring the importance of inclusive governance for achieving sustainability goals. These insights provide actionable implications for business leaders and policymakers, particularly in the MENA region, by emphasizing the strategic integration of Indigenous leadership and circular economy innovations into corporate governance. This study offers a framework for aligning business strategies with global sustainability objectives, notably SDG 12 while also contributing to the literature on strategic management and sustainability. By highlighting the role of Indigenous leadership in driving sustainable practices, this research provides valuable guidance for firms and policymakers seeking to advance environmental sustainability in emerging market economies.

Date: 2025
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