Strengthening the circular economy through the transformation of Indonesia’s recycling industry: The role of green innovation and corporate social responsibility

Lestari, Yona Octiani ORCID: https://orcid.org/0000-0002-1825-0097, Sidharta, Eka Ananta, Asyik, Nur Fajrih, Gazali, Gazali, Hendrati, Ignatia Marta, Prasetyo, Indra, Rusdianto, Rusdianto, Malan, Irfah Najihah Basir, Oktaviana, Ulfi Kartika and Munir, Misbahul ORCID: https://orcid.org/0000-0003-3344-6845 (2026) Strengthening the circular economy through the transformation of Indonesia’s recycling industry: The role of green innovation and corporate social responsibility. Journal of Intelligent Decision Making and Information Science, 3 (12). pp. 2652-2670. ISSN eISSN: 3079-0875

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Abstract

Purpose: This research investigates the mediating role of company’s ability in the relationship between CSR and green innovation. Research Design/Methodology: Data from structured online questionnaire (distributed digitally) comprising 151 recycling firms from 13 regions in Indonesia was used in this quantitative study. PLS-SEM was performed with SmartPLS to test the mediating role of company capabilities in the CSR-to-green innovation relationship. Analyses included confirmatory factor analysis (CFA), correlation analysis, multicollinearity tests, reliability analysis, predictive relevance (Q²) for the model, common method bias tests, and structural model (bootstrapped path coefficients) tests. Findings: Findings confirm that company’s ability serves as an essential mediation for CSR and green innovation relationships in the recycling sector in Indonesia. These findings underscore the urgent need for long-term commitment and strategic alignment to tackle the high upfront costs and barriers to changes in sustainable practices among recycling firms in developing economies, particularly Indonesia. Originality/Value: This research highlights the urgent call for firms to play a strategic role in managing these resources to achieve green innovation within the global climate emergency. It incorporates offerings from companies, environmental initiatives, and green innovation into a comprehensive plan often lacking within the recycling sector in developing nations such as Indonesia. While providing novel insights into how to support sustainable value creation, the study provides a rich set of actionable recommendations for practitioners and policymakers with the company’s ability being the main mediator. In addition, it supports the acceleration of green innovation uptake and company’s ability in developing-country recycling companies, therefore reinforcing circular economy and ESG efforts.

Item Type:	Journal Article
Additional Information:	-
Keywords:	csr; green innovation; company's ability; indonesia; sem-pls; smartpls
Subjects:	14 ECONOMICS > 1402 Applied Economics > 140207 Financial Economics 14 ECONOMICS > 1499 Other Economics
Divisions:	Faculty of Economics > Department of Accounting
Depositing User:	SE.,MSA yonaoctiani lestari
Date Deposited:	21 Sep 2026 09:49

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