We aim to understand how actors respond to field logic plurality and maintain legitimacy through business model innovation. Drawing on a longitudinal field study in the fashion industry, we traced how de novo and incumbent firms incorporate circular logics in business models (for sustainability) and uncover how the intersection between issue and exchange fields creates institutional complexity and experimental spaces for business model innovation. Our findings showed a shift in the discourse on circular logic that diverted attention and resources from materials innovation (e.g., recycling) to business model innovation (e.g., circular business models). By juxtaposing institutional complexity and external pressure to maintain legitimacy, we derived four strategic business model innovation responses—preserve, detach, integrate and extend—that illuminate how actors leverage shifting logics and innovate extant business models (for sustainability). We make novel contributions to the literature on organizational fields, business models for sustainability, and business model innovation.
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