Transformation or Optimization? How Circular Innovations Strengthen or Stall Systemic Change in Public Sectors

The transition to a circular economy requires innovations that shift from short-term resource reduction with technological fixes to fundamentally transforming socio-technical systems. While a broad array of circular innovations has emerged, their contributions to the circular economy transition often remain unclear. Insights into the different ways in which respective innovations contribute to transformative change are particularly relevant in public sectors, where public authorities shape and select the dominant solution directions. By introducing the concept of ‘systemic potential’, this paper proposes a framework for assessing how circular innovations can contribute to fully circular resource loops and transformative change within existing socio-technical regimes. The theory-based framework is illustrated through eight circular viaduct innovation initiatives in the Netherlands. The analysis reveals variations in both circularity and system alignment across the innovation initiatives. Some innovations align well with existing regimes and offer immediate circular benefits, yet risk reinforcing linear practices; others have high potential for long-term circularity but come with destabilization of the existing regime. For academics, the framework offers a novel, transition-oriented perspective to circular innovation by explicitly linking circular resource loops to niche-regime interactions in socio-technical systems. Moreover, it helps practitioners involved in selecting circular innovations to distinguish between system-optimizing and system-transforming solutions. Particularly for public clients and policymakers, it is beneficial to prioritize circular innovations that support deep structural change. In doing so, it supports more deliberate and reflexive decision-making in selecting solution directions in circularity-focused transitions.