Business and Governance Strategies for Circular Economy Valorization of Construction Timber: A Systematic Review

Abstract

The valorization of construction and demolition timber is essential to advancing circular economy objectives but remains constrained by fragmented organizational, network, and institutional practices. For firms in the construction sector, this represents a critical strategic adaptation challenge. This study synthesizes evidence from academic and industry sources to construct a multi-level model anchored in dynamic capabilities theory, explaining how firm-level sensing, seizing, and reconfiguring capabilities are enabled or constrained by network governance and institutional pressures. The model integrates ecosystem orchestration, institutional mechanisms, and transaction-cost reasoning to explain how firm routines, network coordination, and policy environments interact through enablers such as digital infrastructure, market maturity, and stakeholder salience. Findings reveal that while firms increasingly demonstrate sensing and seizing capabilities, strategic reconfiguration and coordinated governance remain weak. Digital transparency and transaction-cost reduction emerge as critical mediators linking coordination, legitimacy, and environmental performance. The study extends dynamic capabilities theory to circular economy transitions in project-based industries and offers strategic guidance for aligning regulatory, digital, and market mechanisms to scale timber reuse.