Iterative Causal Loop Diagrams for Theory Building: Mapping the Dynamics of Sustainable Open Business Models

ABSTRACT Complex organisational phenomena emerge from dynamic interactions between multiple variables, yet existing qualitative approaches often struggle to build explanatory theory that captures these dynamics while integrating insights from multiple theoretical domains. This paper develops and demonstrates an iterative causal loop diagram (CLD) method for qualitative theory building in complex organisational settings. Applied to an analysis of six sustainable open business models in the energy sector, the method progressively refined system boundaries, abstracted recurring causal structures and integrated concepts drawn from business model theory, sustainability, collaborative innovation and organisational design. The resulting common model linked diverse empirical observations into a shared explanation of how societal value is created and sustained over time. Findings suggest that sustainability in open business models is not simply a product of business model design, but emerges from interacting feedback processes involving governance, innovation, stakeholder alignment and external collaboration. More broadly, the study demonstrates how iterative CLD development can support integrative middle‐range theory building from qualitative case evidence.