Ecocentric approach for knowledge management and eco-conscious open innovation for a circular economy: leveraging intellectual capital

Purpose The transition toward a circular economy (CE) requires organizations to develop environmentally responsible innovation practices; however, limited research has explained how knowledge management (KM) practices facilitate eco-conscious open innovation (EOI), particularly within small and medium-sized manufacturing enterprises (SMEs) in emerging economies. Furthermore, the role of intellectual capital (IC) as an underlying mechanism linking the ecocentric approach to KM with EOI remains underexplored. Therefore, this study examines the mediating role of IC dimensions in the relationship between the ecocentric approach to KM and EOI among manufacturing SMEs in Pakistan. Drawing on the resource-based view (RBV), knowledge-based view (KBV), and intellectual capital-based view (ICBV), the study explains how environmentally oriented knowledge practices are transformed into sustainable innovation outcomes. Design/methodology/approach Data were collected from 398 respondents employed in manufacturing SMEs in Pakistan. PLS-SEM using SmartPLS 4.0.9 was employed to test the proposed relationships and examine the mediating role of IC dimensions in the ecocentric KM–EOI relationship. Findings The findings reveal that IC dimensions fully mediate the relationship between the ecocentric approach to KM and EOI. The results further indicate that the ecocentric approach to KM enhances human, structural, and relational capital, which subsequently promote inbound and outbound EOI. The direct effects of the ecocentric approach to KM on EOI became insignificant when IC dimensions were included, whereas the corresponding indirect effects remained significant, confirming full mediation. Originality/value This study contributes to the literature by extending understanding of the ecocentric approach to KM within the CE context and by identifying IC as a critical mechanism through which environmentally oriented knowledge practices contribute to EOI. By integrating RBV, KBV and ICBV, the study offers a comprehensive theoretical explanation of the KM–EOI relationship. Moreover, evidence from Pakistani manufacturing SMEs provides insights from an underexplored emerging-economy context and offers practical implications for organizations seeking to strengthen intellectual capital and advance eco-conscious innovation for circular economy objectives.