LAUSR

The concepts “circular business models” and “transitions towards a circular economy” have become modern‐day buzzwords. Yet, an understanding of the interplay between these two concepts remains unclear. This paper proposes a conceptual framework that illustrates the innovation mechanisms enhancing circular business models emerging within the context of transitions towards a circular economy. The paper follows a two‐step methodology. First, a theoretical framing is proposed by adopting insights from transitions studies. Second, a systematic literature review is employed. The review synthesizes the selected literature tracing the proposed framing in the previously published research. Finally, a transitions framework for circular business models is proposed. This framework suggests future lines of research to support its plausibility. Moreover, it offers prescriptive help to managers, entrepreneurs, policymakers, and other social actors enabling them to make informed decisions about and take innovative actions for circular business models in specific contexts.