Operationalising Circular Economy Through Social Innovation: A Systems Thinking‐Based Model for Sustainability Transitions

ABSTRACT Social innovation (SI) is increasingly recognised as an important enabler of circular economy (CE) transitions. However, existing research offers limited explanation of the processes through which SI operationalises CE principles, as SI and CE have largely evolved in parallel and existing conceptualisations remain predominantly descriptive. Addressing this gap, this study adopts a systems thinking perspective to examine how SI processes enact CE principles through a systematic scoping review of 97 peer‐reviewed articles. The analysis identifies four interrelated systemic dynamics through which SI operationalises CE principles. Rather than operating as discrete stages, they interact through interrelated reinforcing feedbacks and dynamics that enable institutional legitimisation, participatory governance and production, and community empowerment. Building on these findings, the study develops a systems‐based conceptual model explaining how SI processes generate circular outcomes. By focusing on explaining the mechanisms linking SI and CE, this review advances the theoretical integration of SI and CE scholarship and demonstrates the value of systems thinking for understanding sustainability transitions. The proposed framework provides a foundation for future empirical research on the systemic processes that underpin socially embedded CE towards sustainability transitions.