This study investigates circular economy practices (CEP) and financial performance (FP) and the moderating role of innovative capacity in strengthening this link in Nigeria. The study employed a survey research design from a population of 42 listed consumer and industrial goods manufacturing companies on the Nigerian Exchange Group as of December 31, 2025. The unit of analysis for the study was 1250 knowledgeable and competent staff members within the production, marketing, and accounting departments of the 25 sampled manufacturing companies, and a sample size of 303 was derived using Taro Yamene formula. Primary and secondary data were used. The primary data was collected from a structured questionnaire after reliability and validity tests. The responses obtained from the administered questionnaires were analysed using descriptive statistics, correlation matrix and multiple regression analysis. The findings revealed a significantly positive relationship between resource efficiency, product life cycle, waste management and circular material use on the financial performance of manufacturing firms in Nigeria. Additionally, innovative capacity positively and significantly moderates the link between CEP and FP. This suggests that innovation acts as a strategic enabler, enhancing the effectiveness and profitability of circular practices. The study contributes to the growing literature on sustainable business strategies by highlighting the synergistic role of innovation in maximising the economic benefits of circularity. Implications for managers and policymakers, limitations, and directions for future research were also discussed.
Keywords: Financial Performance, Innovative Capacity, Manufacturing Firms, Nigeria, circular economy
