Unveiling the Complex Relationship between Open Circular Innovation and Business Circularity: The Role of Circular-Based Dynamic Capabilities and Circular Ambidexterity

Following calls for more research on the circular economy and open innovation, this study sheds light on the scant mechanisms influencing the relationship between open circular innovation and business circularity. This study theorizes that achieving business circularity requires a radical shift, and those circular exploitative activities may not be an effective strategy for this transition. Therefore, circular-based dynamic capabilities and circular ambidexterity are proposed as moderated-mediation mechanisms that explain the relationship between open circular innovation and business circularity. This study employs a quantitative approach to examine the hypothesized relationships. Data were purposively collected from owners and managers of marble manufacturing units due to the significant amount of waste generated by these units. A total of 292 valid responses were analyzed using SmartPLS version 4.1.0.5. The results revealed that the combined effect of open circular innovation and circular-based dynamic capabilities stimulates circular ambidexterity, which in turn leads to business circularity. This signifies that the complementary role of circular ambidexterity and circular-based dynamic capabilities foster the implementation of business circularity. This study empirically confirmed the application of three frameworks into a single new structure called the circular resource-based view, which has been neglected in previous literature. This study concluded that an organization's circular resources, capabilities, and competencies, when combined harmoniously with circular strategies, could lead to business circularity.