Retire, Reimagine and Reconfigure: Leveraging Exnovation to Unlock Circular‐Economy Business‐Model Adoption

ABSTRACT Digital transformation is accelerating at an unprecedented pace, yet many technology‐intensive firms remain embedded in linear, efficiency‐oriented business models. Motivated by this persistent paradox, this study examines how exploitative innovation, explorative innovation and exnovation jointly relate to circular‐economy business‐model (CEBM) adoption in the ICT sector. Grounded in ambidexterity and dynamic‐capabilities theory, the study conceptualises exnovation as a strategic reconfiguration capability that conditions how efficiency gains are redirected toward exploratory experimentation, rather than treating it as a stand‐alone innovation activity. Survey data from 262 ICT managers were analysed using Hayes' PROCESS macro. The findings show that exploitative innovation is positively associated with CEBM adoption both directly and indirectly via explorative innovation and that the indirect association is significantly stronger under higher levels of exnovation capability. By framing CEBM adoption as an emergent outcome of the integrated exploitation–exploration–exnovation triad, the study advances theoretical debates on innovation‐portfolio alignment under sustainability constraints and bridges sustainability‐transition research with mainstream strategic‐management literature. The evidence further shows that systemic circularity is unlikely to arise from ecoefficiency alone; instead, it is associated with innovation portfolios that combine optimisation, experimentation and deliberate withdrawal from legacy technologies and routines.