Textile companies face high pressure to move towards circular economy. This study investigates capabilities that enable clothing brands to overcome their past in linear economy, and eventually, to shift to CBMs. Previous research has pinpointed that company-level implementation of circular economy is still poorly understood and leaves companies without guidelines about how to make the change happen. To address this gap, two research questions are placed: how past trajectories affect the position of clothing brands in the move towards circular business models, and what capabilities are needed in the transformation process to overcome transformation-related challenges. A multiple case study was conducted in seven fashion brand companies in one country. Product-orientation and dependency on the current product portfolio affect the way the companies can transform the business models. Companies need to develop capabilities to sense opportunities, to break away from a linear business culture and restructure the firm resources accordingly. The position in the global value chain affects the way companies can adopt circularity. Strong position that allows control over the circularity of the value chain can be achieved through ownership, or by allying in business ecosystems. The value of the study is in identifying factors that affect the business model transformation process of incumbent textile companies, and capabilities needed to overcome the inertia by these factors.
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