Impact of organisational capabilities on the implementation of circularity‐oriented activities

Abstract A transition to a circular economy should be seen as a fundamental systemic change involving a rethinking and development of organisational capabilities. Most studies have focused on the normative aspects of what circular capabilities and circularity‐oriented activities should be. There is a lack of research empirically demonstrating what dynamic capabilities influence circularity‐oriented activities, which range from product design to waste management. By using survey data of 139 incumbent manufacturing companies, this paper investigates organisational capabilities that influence the implementation of circularity‐oriented activities. The functional relationship analysis is performed by combining a variance‐based structural equation model with ordered logistic regression. Zooming‐in and zooming‐out perspectives highlight the dynamic nature of circular capabilities. Our empirical results show that zooming‐out capabilities (adaptability to the network, adaptability to regulation, consumer acceptance) positively influence product design, while zooming‐in capabilities (financial capabilities and organisational resources and skills) positively affect circularity‐oriented activities, such as cleaner production and waste management.