THE DETERMINING ROLE OF FIRM INNOVATIVENESS IN THE IMPLEMENTATION OF CIRCULAR BUSINESS MODELS: AN EMPIRICAL STUDY OF THE MANUFACTURING INDUSTRY IN BOSNIA AND HERZEGOVINA

Abstract

This paper conceptually and empirically examines the role of firm innovativeness as a determinant of circular business model (CBM) implementation in the manufacturing industry (NACE Section C) of Bosnia and Herzegovina. The theoretical framework builds on the Resource-Based View and the Dynamic Capabilities View, differentiating between technological (product and process) and non-technological (organisational and marketing) innovativeness and their complementary roles in slowing, closing, and narrowing resource flows. The methodological design employs standardised firm-level measures and appropriate statistical techniques to assess how these innovation dimensions relate to the degree of CBM implementation. The research is based on a sample of 159 manufacturing firms, using harmonised business statistics indicators. The analytical procedure includes factor analysis, descriptive and correlational statistics, as well as multiple regressions with robust standard errors (HC3). The findings indicate that technological innovativeness provides the material and process foundations of circularity, through eco-design, process efficiency, and digital traceability, while non-technological innovativeness creates organisational and market conditions for diffusion and scaling, such as servitisation, reverse logistics routines, and stakeholder alignment. The contribution of this study is threefold. Theoretically, it refines the link between the Resource-Based View and the Dynamic Capabilities View perspectives and contemporary CBM typologies. Methodologically, it operationalises and tests “hard” and “soft” forms of innovation in parallel. At the practical and policy level, the study outlines key measures to support standardisation, servitisation, and circular material flows consistent with EU standards, with implications for managerial practice and industrial policy.