Developing Knowledge-Based Dynamic Capabilities for Shared Value Creation in Circular Supply Networks

Abstract

This paper examines the development of knowledge-based dynamic capabilities (KBDCs) within a circular supply network and their role in enabling shared value creation. It analyses the interplay among knowledge acquisition, knowledge generation, and knowledge combination capabilities as they emerge through interorganizational collaboration and investigates how these capabilities contribute to economic, environmental, and social value outcomes. An exploratory case study was conducted within a circular supply network in Poland comprising grain producers, distributors, feed manufacturers, farms, and processors engaged in circular exchanges of materials, services, and by-products. Data were collected through in-depth interviews, focus groups, study tour observations, and internal documents. The findings indicate that all forms of KBDCs, such as knowledge acquisition, generation, and combination, are actively developed through collaboration among network actors. High relational embeddedness, manifested through trust, joint problem-solving, and mutual commitment, is identified as the central enabler of KBDC development. Knowledge acquisition is enhanced through interactions that enable actors to assimilate strategic, operational, and contextual knowledge. Knowledge generation arises from collective efforts orientated toward circularity, whereas knowledge combination is facilitated through the integration and reconfiguration of knowledge flows across the network. These processes foster shared value creation, manifested in economic efficiency and supply chain resilience, environmental restoration through regenerative production and closed-loop practices, and social benefits such as local skill development and community education. The study advances understanding of how KBDCs support shared value creation within circular supply networks by elucidating the interplay among distinct knowledge capabilities and demonstrating that collaborative interactions underpin their development. Contributes to the knowledge management literature by showing how KBDCs emerge from joint interactions and are reinforced through industrial network relationships in a circular economy context. The study illustrates how organisations can embed environmental and social objectives into their strategic core by leveraging KBDCs to develop circular solutions and simultaneously achieve economic, environmental, and social value.