Transforming Environmental Knowledge Into Business Opportunity through Circular Economy Practices Mediation

Abstract

In conditions of increasing environmental turbulence, organisations must continuously transform environmental information into strategic and operational responses. This study examines whether circular economy (CE) practices mediate the relationship between environmental scanning and business opportunity. Drawing on dynamic capabilities and the knowledge-based view, environmental scanning is conceptualised as a sensing capability, while CE practices represent organisational mechanisms transforming knowledge into value-creating actions. The study distinguishes between Sustainable Product Design and Circular Resource Management to explain how different CE dimensions contribute to business outcomes. Quantitative data were collected from 300 medium and large enterprises operating across 19 industrial sectors in Poland. Structural Equation Modelling (SEM) was used to examine direct and indirect relationships. The results show that environmental scanning does not directly influence business opportunity. Instead, its impact is primarily indirect and mediated through CE practices. The strongest effect was identified for Circular Resource Management, indicating that operational circular practices are critical for transforming environmental knowledge into business value. The study contributes to research on environmental scanning and circular economy by demonstrating that environmental knowledge creates value only when embedded in organisational capabilities enabling resource reconfiguration and operational implementation. The findings also provide managerial implications for firms seeking to translate environmental signals into competitive advantage.