'Breaking the mold': Circular economy success in a challenging institutional context

This study contributes to the circular economy (CE) literature by empirically testing the influence of CE capabilities on the adoption of CE practices, a relationship that has largely been explored conceptually. It also investigates whether institutional aspects mediate this effect and examines how the adoption of CE practices impacts business performance and organizational resilience. Employing a mixed-methods approach, the research integrates survey data analyzed using generalized structured component analysis (GSCA) and qualitative insights from structured interviews with firms operating in Brazil-an emerging market characterized by an "institutional vacuum" due to outdated regulations and a lack of government incentives for CE practices. The findings demonstrate that CE capabilities positively affect the adoption of CE practices, which, in turn, enhance both business performance and organizational resilience. However, institutional aspects do not mediate this relationship, highlighting firms' ability to pursue CE practices despite regulatory voids. This originality lies in uncovering how CE practices thrive in contexts of limited policy support, emphasizing mimetic pressures and competitive advantage as driving factors. The study provides actionable insights for policymakers to address regulatory barriers and create supportive frameworks for CE adoption. Practitioners are encouraged to leverage CE practices as strategic tools for resilience and competitiveness in challenging institutional environments.