Digital Transformation and Circular Economy Adoption in Digital Business: A Systematic Review of Enabling Mechanisms, Boundary Conditions, and Value Outcomes
TL;DR
This review examines how digital technologies support circular-economy adoption at the firm and organizational levels and integrates dynamic capabilities theory with the natural-resource-based view and institutional theory to distinguish internal capability development from external constraints.
Abstract
Digital transformation can help firms put circular-economy practices into operation. Existing studies often discuss technical tools and implementation practices separately. Few studies explain the organizational logic that connects the two. This systematic review identifies 146 peer-reviewed English-language journal articles published from January 2015 to June 2026. The review follows PRISMA 2020. It examines how digital technologies support circular-economy adoption at the firm and organizational levels. Industry and supply-chain levels are also included. The evidence points to three core mechanisms. The first is information transparency. The second is resource-efficiency optimization. The third is circular business-model innovation. Their effects depend on internal green and digital capabilities. Supply-chain coordination and external institutional pressures also change how these mechanisms work. Environmental outcomes receive the most consistent empirical support. Operational and social outcomes depend more strongly on context and innovation and economic outcomes are also context-dependent. This review integrates dynamic capabilities theory with the natural-resource-based view and institutional theory to distinguish internal capability development from external constraints. The resulting framework links mechanisms with boundary conditions and outcomes while identifying priorities for longitudinal research, comparative research and improved outcome measurement.