Towards Circular Economy Ecosystems with Sustainable Open Innovation

The transition to a circular economy cannot be achieved by a single company or a single innovation but requires systemic changes across entire ecosystems. However, prior research provides relatively limited insight into ecosystem dynamics towards circularity. This paper addresses this gap by examining how sustainable open innovation can facilitate ecosystem transitions toward a circular economy. The study draws on the literature streams of sustainable open innovation and circular economy ecosystems. Using a qualitative case study of industrial side-stream utilization in the construction sector, it investigates how open innovation can support ecosystem-level transition toward circularity. The findings show that sustainable open innovation is beneficial for three key ecosystem realignment processes essential for the transition to a circular economy: technological realignment, market realignment, and institutional realignment. Sustainable open innovation involves collaborating and sharing knowledge with diverse parties, and it can prompt the required changes for CE in technology, market, and institutional aspects, facilitating the corresponding realignment processes in the ecosystem. This paper contributes to a broader understanding of open innovation as a catalyst for circular economy ecosystems. It demonstrates how sustainable open innovation can accelerate ecosystem-wide transitions and provides actionable managerial implications for fostering and implementing sustainable innovations that drive circular economy change.