Purpose: The concept of Circular-Oriented Innovation represents a new, valuable, and growing stream of research embedded in management literature. The conceptualization of such innovations indicates that they are involved in the systemic creation and implementation of environmental changes in all dimensions of companies' activities (process, product, organization, business model). Since the effective implementation of sustainable practices requires the development of resources, skills, and competencies/capabilities, especially dynamic capabilities, the paper aims to identify the dynamic determinants of Circular-Oriented Innovation at the organizational level. Design/methodology/approach: The paper is theoretical and cognitive and is based on an in- depth literature review. The developed conceptual model considers the direct and indirect relationships linking a company's propensity and ability to act for Circular-Oriented Innovation with three types of dynamic capabilities (i.e., relation, absorption, and digitalization capabilities), the organizational processes underlying their building, and elements of the organizational context (leadership, organizational structure, and culture, as well as a long-term strategic vision for the company's development). Findings: The paper adds to the existing literature and contributes to understanding Circular- Oriented Innovation from the dynamic capability perspective. In addition, they indicate the need for further scientific research that can use the proposed conceptual framework to formulate research proposals and then develop (in the future) testable research hypotheses necessary for empirical verification of this conceptual model. Originality/value: The critical scientific contribution of the paper is the development of a research framework that goes well beyond existing studies on Circular-Oriented Innovation and Circular Business Model Innovation. The proposed extension of the model's theoretical structure to include propensity (representing behavioral and structural aspects) and ability (i.e., practices, routines, and actions) indicates that a paradigm shift in how companies do business requires developing both propensity and ability to act for Circular-Oriented Innovation, through shaping the structural and organizational context, on the one hand, and simultaneous building of dynamic capabilities, on the other. (original abstract)