Empowering Sustainable Production: Firm Governance, Finance Strategies, and Tech‐Innovation in Advancing Circular Economy for SDG 12 in the US, China and Japan

Abednego Osei, Naiping Zhu, Hela Borgi and Joana Cobbinah

Sustainable Development, 2025, vol. 33, issue 4, 5282-5307

Abstract: In an era where sustainability has transitioned from being optional to essential, how can firms transform governance and financing strategies to lead the transition toward a circular economy (CE)? This study makes a vital contribution to the evolving fields of CE, sustainability, and corporate governance by investigating the dynamic interplay between firm governance structures (FGS), financing strategies (FS), and technological innovation (TI) in enhancing CE performance across the US, China, and Japan. Grounded in the Resource‐Based View and Agency Theory, the study examines four critical governance dimensions: leadership, composition, diversity, and structure alongside debt and equity financing strategies. To ensure methodological rigor, dynamic panel models and the Generalized Method of Moments (GMM) estimator are employed, complemented by instrumental variable approaches. Drawing on a comprehensive dataset of 461 firms from 2000 to 2022, the findings reveal significant regional disparities in how FGS and FS influence CE performance, with TI emerging as a pivotal moderating factor. The study further highlights heterogeneous effects across corporate ownership types and between Low‐CE and High‐CE performers, emphasizing the importance of contextual and institutional factors in CE adoption. These robust findings, validated through extensive endogeneity and sensitivity tests, offer actionable insights for policymakers, corporate leaders, and practitioners, stressing the need for innovative governance reforms, strategic financing mechanisms, and technology‐driven solutions to accelerate the global transition toward a sustainable CE model.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:wly:sustdv:v:33:y:2025:i:4:p:5282-5307

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