Implementing Circular Business Models for Sustainability Goals: A Systematic Literature Review

Circular business model (CBM) has been identified as an effective approach to addressing sustainability issues in the manufacturing industry, yet most firms adopting CBM fail to achieve their sustainability targets. The dynamic and uncertain nature of the industry's environment requires developing dynamic capabilities (ability to adapt to the rapidly changing business environment) to address this CBM theory–practice problem. However, dynamic capabilities that address this research problem are impacted by a firm's institutional environment. Despite this, research that explicitly explores the role of dynamic capabilities and institutional pressure in addressing the CBM theory–practice problems remains missing. The proposed study fills this knowledge gap by developing a theoretical model highlighting the causal relationship between institutional pressure, dynamic capabilities, and CBM strategies. Using Scientific Procedures and Rationales for Systematic Literature Reviews protocol, a contingency analysis of 52 selected articles was conducted. The study identified causal relationships between normative pressure, seize capabilities, and slowing CBM strategies. It also highlighted causal relationships between seize capabilities and CBM strategies. Though the theoretical relationships between institutional pressures and dynamic capabilities exist, the proposed theoretical model extends its boundaries.