Managing parallel business models in the circular transition: From tension recognition to synergy realization

Abstract

Organizations are increasingly urged to adopt circular economy principles for their business strategies, yet ‘going circular’ is challenging. The circular business model (CBM) transition—shifting from linear to CBMs—is complex, and our initial analysis of the literature indicated that organizations do not know how to implement circular principles alongside existing business models. In practice, the parallel management of two business models creates tensions between exploring new circular initiatives and exploiting established linear practices. By systematically reviewing research on organizational learning and business model innovation, this review proposes a theoretical model that frames the CBM transition as a dynamic, iterative and experiential process, turning tensions into synergies through continuous learning and adaptation. Our review reveals learning‐based strategies for organizations to address these inherent tensions at multiple levels, including employees’ cognitions, organizational operations and network legitimization. Furthermore, we set a future research agenda for the CBM transition.