The Front‐End of Circular Innovation in Incumbent Firms

ABSTRACT The Circular Economy introduces ambiguity and complexity when developing products and services, by using materials and resources differently; innovations and related business models thus deviate markedly from those evident in the “linear economy”. This reshapes the landscape for front‐end of innovation activities, being especially challenging for incumbent firms that have long honed their innovation processes toward the dominant “linear” paradigm. Adopting a qualitative inquiry of eight multinational and well‐established corporations, this study explores how incumbent firms reconfigure their “front‐end” innovation processes as they start developing circular products and services. We conceptualize our findings in a grounded model of the “circular front‐end innovation”, illustrating how a shift in the dominant logics of incumbent firms—from linear to circular—influences activities in the front‐end. We identify how these companies' front‐end processes (opportunity identification and idea generation, concept design, and solution development) differ accordingly, with a need to broaden the idea search scope, conceptualize product‐business model fit, and discover value from circularity. Our findings provide insights into how circular front‐end processes are both constrained and enabled by considerations regarding materials and resource circulation, as well as the anticipation of circular business models, triggered by these considerations.