Transforming Procurement: The Dynamic Capabilities and Microfoundations to Buy Circular

ABSTRACT Circular Procurement (CP) integrates Circular Economy ( CE ) principles into purchasing decisions to close material loops and retain value across product life cycles. Yet, its adoption remains limited due to persistent barriers within procurement processes. This study investigates where these barriers emerge across procurement phases and how firms develop capabilities to overcome them. Drawing on Dynamic Capabilities (DCs) theory and the microfoundational perspective, we conduct a multiple‐case study of nine Italian manufacturing firms recognized for leadership in CP. Our analysis identifies five key DCs–demand intelligence, market intelligence, strategic design, reconfiguring supplier selection, reconfiguring contracts–each underpinned by distinct microfoundations at individual, process, and structural levels. Building on these insights, this study offers a process‐based framework linking CP barriers to DCs and microfoundations addressing them. The findings aim to advance theoretical understanding of capability building for CP and offer practical guidance for managers seeking to embed circularity into purchasing routines.