<p>The accelerating environmental crisis intensifies the search for more sustainable economic systems. This study examines why the circular transformation of industrial parks, despite its potential, remains limited. Drawing on historical institutionalism, it argues that industrial parks are embedded in path-dependent linear structures that privilege competition over cooperation and reinforce continuity rather than circular change. To analyse how these institutional dynamics constrain transformation, the study combines institutional theory with field data from industrial parks in Konya and Erzurum, Türkiye. The findings support the path-dependence-oriented institutionalist argument that existing market dynamics do not generate genuine alternatives but instead reproduce modified continuities of the linear system. Despite firms’ rhetorical support for circular practices, cooperation remains weak due to institutional lock-ins, information asymmetries, and mistrust. The study concludes that circular transformation requires state-led institutional change beginning with OIZ-level governance reform and supported by financial mechanisms, shared infrastructures, and gradual institutional bricolage.</p>