Abstract
Abstract This study aimed to examine the relationships among Sustainable Strategic Innovation Orientation (SSIO), Sustainable Entrepreneurship Orientation (SEO), Green Dynamic Capability (GDC), and Circular Economy Performance (CEP) within the context of Ethiopian industrial parks. The researcher employed a quantitative research approach. The researcher collected data from 345 employees across different technical, managerial, and operational positions using a structured questionnaire. The researchers used a stratified sampling technique across industrial parks in this study. The validity and reliability of instruments were confirmed through factor analysis. Data analysis involved descriptive statistics, exploratory and confirmatory factor analyses, and structural equation modelling (SEM) using SPSS 26 and AMOS 26 to examine direct and indirect effects. The finding of the study indicated that SSIO and SEO significantly influence GDC. In addition to this, GDC significantly influence CEP. SSIO exhibited a moderate direct effect on CEP (β = 0.210, p < 0.001) and a slightly higher indirect effect through GDC (β = 0.240, p < 0.001), indicating partial mediation. SEO had a stronger direct effect on CEP (β = 0.47, p < 0.001) and indirect effect (β = 0.15, p < 0.001), reflecting partial mediation. Based on total effect values (SEO = 0.620; SSIO = 0.450), sustainable entrepreneurial orientation emerges as the dominant driver of circular economy performance. These findings indicate that sustainable strategic innovation orientation and sustainable entrepreneurial initiatives are more effective in achieving circular economy outcomes when organizations develop dynamic green capabilities to adapt resources and processes sustainably. This study is novel in jointly examining sustainable strategic and entrepreneurial orientations, introducing green dynamic capabilities as a mediator, and providing first empirical evidence from Ethiopian industrial parks. The study concluded that integrating sustainable strategic innovation orientations with capability development is essential for enhancing circular economy performance. Practically, industrial park managers should prioritize building green dynamic capabilities by investing in employee skills, knowledge, and adaptive practices. Future research is recommended to explore longitudinal effects and other contextual factors influencing sustainability performance in industrial park settings.