Knowledge management capability, green finance, and sustainability orientation as drivers of circular economy performance: A PLS-SEM analysis from China

The global shift towards sustainable production has increased the need for circular economy practices, especially in the resource-intensive manufacturing sectors. Based on Dynamic Capabilities Theory and Institutional Theory, and incorporating the new characteristics of knowledge management in the digital era, this study examines how knowledge management capability underpinned by embedded data governance, green finance adoption and organizational sustainability orientation influence circular economy performance, while assessing the mediating role of Eco-Innovation Capability and the moderating role of environmental regulation strength in China’s electronics and electrical equipment sector. In this study, the PLS-SEM findings of 316 responses show that eco-innovation is a key mechanism in linking knowledge management capabilities, green finance adoption, and organizational sustainability orientation to circular economy performance, while stringent environmental regulation positively strengthens these relationships. Data governance capability embedded within the knowledge management system serves as a critical foundational condition for ensuring the efficient flow of knowledge and supporting the effective implementation of eco-innovation. This study offers important policy and managerial insights for advancing national circular economy strategies through the promotion of eco-innovation-driven sustainability transition.