Dynamic Capabilities for Circular Economy Innovations towards Net Zero: Acqua & Sole Case Study

Abstract

Circular economy innovations can support firms’ transition towards the ‘net-zero target’, one of the key objectives that firms ought to pursue to face climate change. Dynamic capabilities are deemed pivotal to enhance circular economy innovations; however, little is known about which ones – and how – can contribute to reaching such objectives. Through an in-depth and longitudinal case study of an innovative circular firm in the agricultural industry, and the adoption of a multi-level approach, we unpack a set of novel dynamic capabilities activated at different organizational levels: market anticipation, close collaboration with research centres, talent acquisition, development of creative thinking, internal collaboration and exchange of ideas, and decision-making and leadership skills. These capabilities make the organization flexible, forward-looking, and able to sense and seize opportunities to reach sustainable goals continuously. We contribute to management studies on dynamic capabilities and circular economy innovations by introducing a multi-level framework showing how dynamic capabilities at each organizational level and their interactions drive circular innovations. We finally present our study's limitations and advance recommendations for future research.