Abstract
Despite growing regulatory pressure and technological availability, sustainability transformation in the fashion industry remains slow, uneven, and fragmented. This paper argues that a critical but underexamined barrier to sustainability transitions lies not in technological availability or strategic intent, but in high coordination costs embedded within fragmented organisational and supply-chain systems. Drawing on transaction cost economics and dynamic capabilities theory, this paper demonstrates how information asymmetries between suppliers and brands create systematic bottlenecks that prevent circular business models from scaling beyond pilots. Through qualitative analysis of 18 in-depth interviews across the fashion ecosystem, this paper reveals how digital infrastructure functions as a meta-capability that enables sensing, seizing, and reconfiguring for sustainability innovation. The findings show that firms trapped in "coordination traps" cannot transition from linear to circular models without shared digital infrastructures that reduce the costs of cross-boundary alignment. This research contributes to innovation theory by identifying coordination costs as a structural barrier to post-adoption implementation, and extends dynamic capabilities view by proposing an integrated multilevel framework that positions digital infrastructure as the connective tissue enabling ecosystem-level transformation.