Fostering Circularity Through Digital Leadership: Mediation of FinTech and Moderation of Environmental Turbulence and Organizational Agility

ABSTRACT

Unsustainable consumption and production practices threaten global economic stability and ecosystems, creating an urgent need for circular economy (

) adoption. However, implementing practices remains challenging, especially for small and medium enterprises (SMEs). Grounded in the upper echelons and dynamic capabilities theories, this study investigates how digital leadership (DL) drives practices through two mechanisms: the direct effect, moderated by organizational agility (OA), and an indirect effect mediated by financial technologies (FinTech) adoption, with this latter path being moderated by environmental turbulence (ET). Data were collected from 312 technologically innovative manufacturing SMEs in Pakistan using a purposive sampling technique and analyzed via “partial least squares structural equation modeling.” The results conveyed positive relationships between DL and practices through both pathways. OA also augmented the relationship whereas the ET demonstrated a negative relationship. This study offers theoretical value by establishing a multidimensional construct of DL as a key driver of . For practitioners, it provides actionable insights. Managers should cultivate DL capabilities and invest in FinTech solutions to enhance circularity, while proactively managing market turbulence.