Building Capabilities for Monetizing Circular Economy Strategies—A Case Study Analysis of 3R Strategies in a Japanese Firm

ABSTRACT

While many firms struggle to monetize circular economy (

) strategies due to high costs and capability gaps, understanding the specific capabilities required to effectively implement these strategies remains a critical challenge. Addressing this gap, this study explores how firms develop and institutionalize such capabilities to achieve both environmental and economic goals. The research identifies five distinct 3R (Reduce, Reuse, Recycle) implementation capabilities: circular logistics coordination, parts sorting, cleaning technology, recycling design, and manufacturing capability. The findings reveal that these capabilities are developed through long‐term, cumulative organizational learning, supported by enablers such as strategic leadership, cross‐functional cooperation, technological innovation, and external partnerships. By proposing an integrated framework and 10 related propositions, this study bridges the gap between theory and practice, offering strategic insights for firms aiming to build circular business models and emphasizing that successful implementation is a long‐term capability‐building process rather than a short‐term cost‐oriented initiative. These insights are generated through an inductive single case study of FUJIFILM Business Innovation Corp. (FUJIFILM BI), a leading Japanese manufacturing firm that successfully demonstrated a dual achievement: reaching a 99.9% recycling rate by 2000 (environmental feasibility) and securing stable profitability by 2003 (economic sustainability). Data were primarily collected through semi‐structured interviews with the Senior Manager of the Corporate Planning Division and the Factory Manager at the Suzuka plant, triangulated with extensive secondary records, including environmental reports and corporate histories.