Fostering Technology Adoption and Management Advancements in Environmental Performance: Mediation of Circular Economy and Sustainability-Oriented Innovation

This study aims to address a research gap by analyzing the role of technology adoption as a determinant of the circular economy in relation to sustainability-oriented innovation and environmental performance. This study uses an advanced structural equation modeling (SEM-PLS) approach to address methodological rigor issues, including multigroup analysis and bootstrap methods to ensure reliability and validity. Data were collected from 201 Indonesian SMEs, and 603 responses were collected and analyzed using structural equation modeling. The findings indicate that technology adoption contributes significantly to the circular economy and sustainability-oriented innovation but is insignificant to environmental performance. Furthermore, the circular economy and sustainability-oriented innovation are key to improving environmental performance. This study presents an advanced mediation model using serial mediation analysis with bias-corrected confidence intervals to ensure methodological robustness. This study develops a theoretical framework by integrating the natural resource-based view (NRBV), environmental concern theory, and stakeholder theory in the context of SMEs, providing a more comprehensive overview for understanding the mechanisms of environmental conservation. The results also highlighted the role of the circular economy and sustainability-oriented innovation as serial mediators in the relationship between technology adoption and environmental performance. In terms of theoretical implications, this study incorporates the natural resource-based view, environmental concern theory, and stakeholder theory to improve our understanding of environmental conservation. In terms of managerial contribution, the main implication for SME managers is to invest in sustainable practices by focusing on circular practices and improving the understanding of efforts to improve environmental performance.