Lukas Falcke

Academic Summary: In response to escalating societal challenges, such as climate change and resource constraints, this article examines the transition from linear toward circular business models (CBMs). It explores the challenges of CBM transitions and how to tackle them through open innovation. We leverage 68 interviews with 45 firms, including 12 focal manufacturers and their open innovation partners. We identify 13 challenges and their relevant time horizons. They concern the product and service portfolio, data governance, life cycle valuation, circular strategy, and the legal environment. By iterating our inductive analysis with insights from the literature, we develop a framework that explains the link between open innovation and CBMs. We develop three mechanisms: (1) capture value by coupling internal innovation and data sharing to incentivize life cycle valuation, (2) technology co‐development with supply chain partners for an improved circular product and service portfolio aligned with data governance to create value, and (3) orchestrate complementary partners to promote circular strategies and resources for the legal environment to deliver value. Our framework contributes to the literature on CBMs and open innovation by explaining when and how different forms of open innovation can help in the transition from linear toward CBMs.Practitioner Summary: In response to growing environmental pressures, this study explores how firms can transition from linear toward circular business models (CBMs) by leveraging open innovation. Drawing on 68 interviews with 45 firms, including 12 manufacturers and their innovation partners, we identify 13 key challenges grouped into five strategic themes: product and service portfolio, data governance, life cycle valuation, circular strategy, and the legal environment. Our findings emphasize that CBM transition is an iterative process, rather than a one‐time shift, that comes with many challenges. Our study proposes open innovation as a strategic option to address these challenges. Firms need to deploy varied approaches over time: internal innovation and data sharing in the short term to drive circular value capture; supply chain co‐development in the mid term to enhance circular value creation; and the orchestration of complementary partners in the long term to improve value delivery and system‐wide circularity. We offer a practical framework and a temporal innovation roadmap to help managers structure their CBM efforts. This roadmap provides clear guidance on when and how to apply open innovation strategies, enabling decision‐makers to address challenges, align internal and external partners, and transition their linear business models toward circularity.

This study adopts a temporal perspective to investigate how boundary spanners can increase the inflow of external knowledge by engaging with both external and internal parties. We add to prior work on knowledge transfer by shifting the focus from engagement levels to investigating engagement dynamics, especially the degree of switching between external and internal engagement across consecutive time periods. Drawing from a cognitive perspective, we argue that switching strongly between engagement types is associated with a segmented knowledge structure that enables quick and efficient categorical processing when knowledge can simply be “channeled” from source to recipient units. In contrast, weak or no switching is associated with a blended knowledge structure and more reflective processing, which is particularly helpful when knowledge transfer requires more translation and transformation. Correspondingly, we adopt a contingency perspective and theorize that the cognitive advantages associated with stronger versus weaker switching weigh differently, contingent on the stickiness of knowledge to be transferred and the nature of boundary-spanning activities that vary in importance over time. Fixed effects models of eight waves of original survey data reveal that, in line with our theorizing, the association between switching and knowledge transfer becomes increasingly negative (1) the more boundary spanners access knowledge that is transspecialist in nature, (2) the greater the organizational distance between source and recipient units, and (3) in later phases of the boundary-spanning process. Funding: This work was supported by the Swiss Competence Center for Energy Research–Competence Center for Research in Energy, Society and Transition (SCCER CREST) [Grant 1155000154]. The work was also financially supported by a seed grant from the Bits and Watts Initiative within the Precourt Institute for Energy at Stanford University. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.1677 .

This study investigates how, why, and under which conditions incumbents and new entrants realign in innovation ecosystems to collectively tackle the grand challenge (GC) of climate change. The discussion on innovation and GCs is still lacking sufficient theoretical underpinnings and empirical insights to make sense of the role of for‐profit firms and their collaborative innovation efforts to address the GCs of our times. We introduce innovation ecosystems as a theoretical lens for understanding the combinations of technological interfaces and strategic relations that firms can employ to craft value propositions with high potential for tackling GCs. Empirically, this study focuses on the GC of climate change that requires a transformation of the electricity sector. We investigate collaborative pilot projects between 10 international electric utilities and 57 clean‐tech startups. In these pilots, incumbents and new entrants explore low‐carbon value propositions through novel technological interfaces and strategic relations. Via qualitative comparative analysis, we identify three configurations of ecosystem realignment with high climate impact: an incumbent‐led digital platform realignment, a device complementor and customer‐enabling realignment, and a new orchestrator realignment. Based on a multiple case analysis, we uncover three innovation mechanisms that explain why these specific configurations unlock climate impact: they enhance resource efficiency, the flexibility and resilience of infrastructure, and the trading and leveraging of information and resources. On this basis, we contribute to the literature at the intersection of innovation management and GCs by developing theory that explicates (1) how the realignment of incumbents and startups in innovation ecosystems changes existing industry structures; (2) why specific configurations of such ecosystems are associated with high climate impact and are thus effective in addressing GCs; and (3) the boundary conditions under which collective innovation efforts in ecosystems can translate into climate impact.