Information systems capabilities value creation through circular economy practices in uncertain environments: A conditional mediation model

The link between the field of information technology business value and sustainable activities is a widely discussed topic in academia and management. However, the mechanisms that lead to the impact on business performance are still elusive. The circular economy is one of the most recent approaches to address sustainability challenges. Drawing on the perspective of information technology-enabled organizational capabilities and contingency theory, this study is one of the first to analyze how information systems capabilities enable circular economy practices to become higher-order capabilities that enhance business performance, as well as the moderation that environmental uncertainty exerts on this relationship. Using partial least squares path modeling, empirical evidence demonstrates that circular economy practices fully mediate the relationship between information systems capabilities and business performance. Meanwhile, environmental uncertainty negatively moderates both the impact of circular economy practices on business performance and the mediation of circular economy practices in the information systems capabilities-business performance relationship. For managers, this research demonstrates how embedding information systems capabilities into organizational processes for transitioning to a circular economy model can present economic benefits depending upon the uncertainty within their specific operating environment. Finally, our mediation analysis method combines predictive and causal techniques with partial least squares structural equation modeling and applies a compelling approach to testing conditional mediation effects.