The purpose of this study is to highlight that organizations must integrate and share external knowledge to establish a circular economy. This study uses transactive memory systems (TMS) and knowledge sharing (KS)/knowledge hiding (KH) to evaluate how open innovation (OI) depth and breadth contribute to circular knowledge recombination capabilities (CKRCs) using the knowledge-based view (KBV).
A survey-based study was used with validated constructs from earlier investigations. The direct, mediating and moderating interactions between OI, TMS, KS, KH and CKRC were examined using structural equation modeling.
Both OI breadth and depth positively affect CKRC, wherein OI breadth is directly related to CKRC and somewhat mediated by TMS; OI depth is only related through TMS. TMS positively affects KS and CKRC, confirming its cognitive coordinating role. KH has no significant moderating effect on the KS–CKRC relationship, suggesting that robust cognitive mechanisms mitigate its dysfunctional effects.
This study establishes TMS as a dynamic capability that converts OI inputs into CKRC, explains how CKRC develops using the KBV and shows how TMS and KS contribute to circular economy development.
