Circular economy and innovation: A look from the perspective of organizational capabilities

Abstract Studies of circular economy and innovation have received increasing attention in academic literature in the last quadrennium. They fill a managerial gap on how to operationalise the transition from the linear model to the circular. They show practices, tools and mechanisms that allow creation of business models based on circularity premises. In this article, we seek to identify the intellectual contours of this emerging field, conducting a review of the basic conceptual framework, with an analysis of articles published on the topic of circular economy and innovation. In summary, a systematic literature review was developed, whose final bibliographic portfolio consisted of 94 analysed papers. The results of the study show that eco‐innovation and innovation in business models are highlighted in this field. They are operationalised, mainly, by activating dynamic, relational and absorptive capabilities. The most important innovation practices in this context are waste management, eco‐design business models, product leasing and collaborative commerce. The main contribution of this study is to pave the way for new conceptual developments in organisational capabilities to make transition sustainable and serve as a support arsenal for the maturation of circular economy studies supported by the theory of innovation and also to link management practices to operational processes in the business and production environment favouring the transition to a circular business model. It generates insights for the scientific progression of studies and shows propositions that can be validated in future quantitative studies.