Connecting Thoughts and Actions: A Managerial Process Model on Circular Business Model Innovation

Abstract

Addressing environmental grand challenges such as resource scarcity requires circular business model innovation (CBMI) that enables firms to efficiently close and slow resource cycles through novel activity systems. Drawing on a grounded theory approach based on 59 in-depth interviews with top managers from Swiss SMEs, we developed a process model that explains how cognitive and behavioral managerial antecedents interact to drive CBMI. Anchored in dynamic capability (DC) theory, the model conceptualizes CBMI as a three-phase process and identifies six key managerial antecedents. We show how perceived environmental embeddedness and collaborative ideation support the sensing of circular opportunities, how foresighted thrift and cultivating organizational change enable the seizing of resources, and how enduring commitment and continuous experimentation drive business model reconfiguration. We contribute to the CBMI literature by advancing a processual understanding of managerial agency and applying DC theory to explicate the cognitive-behavioral dynamics through which DCs are activated and sustained.