Organizational transition management of circular business model innovations

Scholars and practitioners across fields increasingly recognize that business models for the circular economy may be an effective lever for solving ecological persistent problems such as climate change, biodiversity loss, and growing natural resource scarcity. Despite a growing interest in the potential of circular business models, interconnections between the organizational dimensions of firms and their business model innovation processes remain underexplored. Based on problem‐centered expert interviews with business consultants experienced in circular business development, this study creates a conceptual model that offers structured knowledge about why firms steadily reproduce linear BMs and how incumbents manifest themselves as a constant linear‐oriented value creation system. The model also demonstrates organizational conditions and management strategies that frustrate the reproduction of linear BMs and, thus, enable initial moves towards CBM innovation. Building on this, the article provides a set of propositions on how an organizational transition management may be configured and what incumbents require to successfully navigate circular business model innovation. The findings provide a foundation for a contemporary understanding of circular business model transition management, which simultaneously serve as impulses for future research investigations.     

Unravelling the design process of business models from linear to circular: An empirical investigation

In the last years, circular economy has represented one of the most-debated topics in management research. Although the understanding of this industrial paradigm has significantly improved over the last decade, a number of important research questions still remain unanswered. Among them, the design process of business model through which established firms evolve from being linear to circular deserves further investigation. Existing research still falls short to investigate how companies design the dimensions of value creation, value transfer, and value capture of their business models to launch circular products into the market. By leveraging a multiple case study analysis of four companies in the paper and beverage industries that have launched six circular products, the paper examines the process that these companies have followed to face the transition toward a circular business model. The paper contributes to the research field in the intersection between new product development and circular business models, by showing that the process toward a circular business model occurs along three major phases, that is, idea generation, product development, and commercialization. In each phase, companies implement peculiar managerial practices for launching circular products into the market, which typically address all the dimensions of the business model and follows a recurrent path over time.     

Systemic circular business model application at the company,supply chain and society levels—A view into circular economy native and adopter companies

This study contributes to the conceptualization of a sustainable circular business model (CBM), the application of the circular economy (CE) by companies. The study utilized a three-level framework adapted from the CE literature with company (micro), supply chain (meso) and society (macro) levels. This multiple-case study in the textile industry included two types of companies operating in the CE: companies founded on the sustainable principles of a CE (natives) and companies transitioning to a CE from the linear economy (adopters). The findings show that the adopters emphasized long-term economic sustainability on a company level and implemented CE elements to varying degrees on all three levels. The natives pursued business decisions from environmental and social sustainability standpoints, and the three levels were integral in their systemic approach to a CE. The study highlights two key claims: established operational structures and economic volition hindered adopters in their systemic CE implementation, and an integral part of the CBM for natives was a proactive approach towards the society level.     

Innovation and the circular economy: A systematic literature review

The circular economy emerged as an alternative model to the linear system, which now appears to be reaching its physical limitations. To transition to a circular economy, companies must not only be aware of but also engage in more sustainable practices. For such a transition, companies must rethink and innovate their business models and the ways they propose value to their clients while simultaneously considering environmental and social facets. This systematic literature review sought to map out from the company perspective the key topics interrelated with innovation and the circular economy, describing the internal and external factors to consider in such transition processes. Key lines of research were identified, and suggestions for future research and for facilitating movement toward a circular economy are provided. This work contributes to deepening the literature by identifying the priority areas concerning the circular economy and encouraging future research that meets international standards of excellence.     

Industry 4.0 and the circular economy: A literature review and recommendations for future research

Research regarding the Fourth Industrial Revolution (Industry 4.0) and the circular economy has gained traction since 2014. Paralleling the growth in the internet of things (IoT), the circular economy poses both risks and opportunities to various stakeholders in its development. This literature review aims to identify Industry 4.0 stakeholders' interests and expectations regarding how the IoT can be part of circular economy management. Contributions include identifying various IoT tools for dealing with circular economy challenges while also addressing implementation best practices. The transition of the circular economy within Industry 4.0 requires a better understanding of government, suppliers, international organizational interests, and expectations regarding the IoT. This study enables future research on circular economy practices and their potential sustainability benefits for manufacturing firms. This study's findings allow practitioners and researchers to understand the literature and critical elements of the transition toward a more circular economy.     

Circular business models in high value manufacturing: Five industry cases to bridge theory and practice

The transition to a circular economy (CE) requires companies to evaluate their resource flows, supply chains, and business models and to question the ways in which value is created. In the high value manufacturing (HVM) sector, this evaluation is critical, as HVM enables value in nonconventional forms, beyond profit, including unique production processes, brand recognition, rapid delivery times, and highly customized services. We investigate the role of value, cost, and other factors of influence in the selection of a circular business model (CBM) for HVM. Explored through five case studies using a qualitative evaluation of circularity, we then contribute to the emerging field of CBMs by modifying the CBM canvas that can capture the nontraditional value, traditional value, cost, and other influencing factors enabled via CBM adoption in HVM. Finally, the important role of digital technologies for incentivizing and enabling CBM adoption, is clarified.     

Designing business models in circular economy: A systematic literature review and research agenda

The concept of circular economy is increasingly receiving attention in different domains, including strategic management, operations management, and technology management. It requires companies to design their business model (i.e., the value network, the relationships with the supply chain partners, and the value propositions towards customers) around a new concept of sustainable development that reduces consumption of natural resources and preserves the environment. However, extant research falls short in terms of explaining how companies design their business model according to the circular economy principles. Starting from this premise, the present paper provides a systematic review of the literature on the design of business models in the context of circular economy, aiming to offer an overview of the state of research and outline a promising research agenda.     

Microfoundations of dynamic capabilities: Insights from circular economy business cases

Circular economy is a key strategy to achieve corporate sustainability. However, so far, most firms are unable to translate the concept of circular economy into their corporate strategies, business models, and operations. Some scholars have argued that firms need to develop new (and dynamic) capabilities for circular economy implementation. Yet there is a little discussion on how firms can develop such capabilities. Notably, there is a paucity of research on specific skills, processes, and organizational activities (microfoundations of dynamic capabilities) that may facilitate circular economy implementation. To address this knowledge gap, using a multiple‐case studies approach, we explore microfoundations of dynamic capabilities in successful circular economy business cases. Our findings indicate that dynamic capabilities positively contribute to circular economy implementation. Our case studies show that case firms identified circular economy opportunities by using four microfoundations of sensing capability. Further, case firms acted on the identified opportunities by using simultaneously three microfoundations of seizing capability and four microfoundations of reconfiguring capability. This paper contributes to the literature on the relations between dynamic capabilities and corporate sustainability by providing insights on how sensing, seizing, and reconfiguring dynamic capabilities act in successful operationalization of circular economy strategies.     

From circular business models to circular business ecosystems

The circular economy aims to minimize resource inputs and waste and emission outputs of the economy and its organizational subsystems. This can benefit both financial and sustainability performance of companies. To analyze industrial implementation of the concept, the prevalent unit of analysis on the firm level is currently the circular business model. Our investigation of nine Swedish biogas companies and one branch organization indicates a range of conceptual shortcomings that challenges this approach. Our comparative case analysis points towards circular ecosystems being a more appropriate concept to describe the high level of coordination between different stakeholders necessary to implement circular systems. This increases the suitability to analyze, plan, and communicate circular economy systems on an organizational level, especially if value chain integration is low. An ecosystem perspective can thus support innovation and entrepreneurship in the context of the circular economy.     

Toward a circular economy: Understanding consumers' moral stance on corporations' and individuals' responsibilities in creating a circular fashion economy

For long, the fashion industry has adopted the linear economy's “take-make-use-throwaway” system, an approach that has adverse side effects, such as economic loss, environmental destruction, and threats to human society. To address these adverse consequences from fashion's linear system, governments and business leaders are advocating the societal need for a shift from the linear economy to the circular economy, which endorses the “take-make-use-reuse” system. Despite the growing demand for changing to a circular economy in the fashion business (circular fashion [CF]), two critical issues remain understudied in the current literature. First, although academic research on CF has increased in the past 5 years, the lack of scalable CF research has hindered the industry's ability to increase its adoption of a truly circular economy. Second, although the fashion industry faces complex challenges in instituting CF in that just one supply chain member's (a fashion retailer's) commitment is not sufficient to create a truly CF without the involvement of others (consumers), there is yet no empirical research that investigates whether consumers morally support the idea of a CF and feel obliged to take part in fashion businesses' CF offerings. Thus, we investigate whether and how morally grounded traits—corporate moral responsibility (H1+), consumer moral responsibility (H2+), their interaction effect (H3), and corporate hypocrisy (H4−)—influence consumers' attitudes and engagement (H5+) toward fashion corporations' CF offerings. Our empirical evidence, using a U.S. consumer survey dataset of 351 responses, shows that all of these hypotheses are supported. The results provide important theoretical and managerial implications.     

Environmental management capabilities for a “circular eco‐innovation”

At a micro level, eco‐innovation marks a transition towards a circular economy (CE), and standardised routines and controls are being implemented by businesses to introduce eco‐innovative processes and thus a circular business model. Eco‐innovation applied to a circular model implies changes to companies' environmental management and accounting practices used to manage natural resources. In this context, this study analyses and measures formal and informal environmental management systems, such as certification standards and other management and environmental accounting procedures used in eco‐innovation and the CE within the dynamic capabilities theoretical framework. The study also investigates the cause‐and‐effect relationship between firms' “circular eco‐innovation” and environmental capabilities using partial least squares structural equation modelling and tests it using a sample of Spanish companies. This study offers new knowledge about the interposition of business eco‐innovation and CE‐related activities introduced by firms from the dynamic capabilities perspective.     

Industry 4.0 and circular economy: An exploratory analysis of academic and practitioners' perspectives

The union between Industry 4.0 and the circular economy (CE) appears relatively recent. In this sense, new trading zones for sharing a common scenario among academics and practitioners are needed. The paper aims to investigate the link between Industry 4.0 and the CE by understanding how Industry 4.0 can foster the impact of the CE on companies. The study proposes a broader perspective that includes thematic and content analysis gathering data on professional documents based on business cases, newspaper articles, press releases and specialised blogs, as well as scientific papers. The joint academic-practitioners view highlights how Industry 4.0 has the potential to impact on the CE through countless actions: increasing waste disposal; promoting remanufacturing; enhancing the efficiency of critical resources such as water, energy, gas and CO₂; and improving business models and the mission of companies. However, barriers still exist in its adoption, stressing the need for holistic and integrated design and a proactive environment of collaboration among stakeholders. Results lead to practical as well as research implications.     

Industry 4.0 and circular economy practices: A new era business strategies for environmental sustainability

Amid rising environmental concerns, Industry 4.0 and blockchain technology (BCT) are transforming circular economy (CE) practices and prevailing business models. Recognize the same; this study examines the role of blockchain technology in circular CE practices and their impact on eco-environmental performance, which influences organizational performance. The study collects data from 404 enterprises located in Chinese and Pakistani territories, involved in cross-border supply chain operations. Both countries' sample has great relevance due to the China Pakistan Economic Corridor (CPEC), which possesses several positive fallouts in terms of technology spillovers across firms. Using the partial least squares structural equation modeling (PLS-SEM) modeling framework, this study provides three key findings. First, BCT significantly improves the circular economy practices (circular procurement, circular design, recycling, and remanufacturing). Second, CE practices help improve firms' environmental performance and stimulate their financial performance. Third, higher eco-environmental performance significantly boosts organizational performance. This study sets out the foundations for participating countries/firms that simultaneously achieve financial and sustainable goals by integrating blockchain technology in circular economy practices.     

Proposition of a structural model for business value creation based on circular business models,innovation, and resource recovery in the pet industry

Based on the assumptions of circular economy, resource recovery, and innovation, the aim of this research is to analyze the relationship between innovation constructs, resource recovery practices, Circular Economy Business Models (CEBMs), and value creation in a fast-growing emerging economy. A set of empirical data from 443 companies in the pet industry were used. In terms of methodology, the study was processed using the SPSS software, using Structural Equation Modeling, with manipulation of primary data. CEBMs demand greater engagement, internalization of initiatives, and synergy with the operating ecosystem of the pet industry. Innovation is present but has the potential for expansion through adherence to the innovation ecosystem and its technological package, partnerships, and relationships so that companies can scale up and create value with the support of resource recovery practices. The results of this study can be useful for companies in the pet industry, as it allows the identification of areas and practices that require their attention to improve organizational performance and create value for the business based on initiatives supported by the assumptions of circular economy and sustainability.     

Outsourcing logistics operations in circular economy towards to sustainable development goals

One of novel manners to achieve sustainable development is concentrating on circular economy in order to manage greenhouse gas emissions, energy consumption, and waste. It also helps to protect the environment and optimize usage of input resources. The main element of circular economy is closed-loop supply chain which covers both forward and reverse products flows. This study aims to outsource logistics operations in a closed-loop supply chain. An innovative analytical multi-step fuzzy decision-making method is proposed to rank sustainable third-party logistics service providers (3PLSPs). Fuzzy Decision-Making Trial and Evaluation Laboratory (DEMATEL) is first used to evaluate the relationships among the main criteria. Then, fuzzy analytic network process (ANP) is applied to weight the determined set of criteria. In order to develop the hybrid fuzzy DEMATEL-ANP method and to simplify the computation, the expert judgment method is used between the two techniques as a middle step to reduce the number of criteria. As many of the criteria overlap with each other on content and context, expert opinions are used to shortlist and rank the criteria. Finally, the 3PLSPs are ranked through the fuzzy complex proportional assessment (COPRAS) method. To validate the practicability and applicability of the improved decision-making model, a household appliance case study is applied with data obtained from industry experts. In this case, five service providers are considered and ranked, while the first one gets the best score. A sensitivity analysis is performed by altering the criteria weights to validate the proposed approach, data, and the obtained results. In terms business and the environment, this study provides success critical criteria for decision-making problems in circular economy for addressing sustainable development.     

How and when do purchasers successfully contribute to the implementation of circular purchasing: A comparative case-study

The transition towards a circular economy puts pressure on organizations to purchase in a circular manner. The aim of this research is to investigate the role, behaviors, and characteristics of purchasers in the circular purchasing process, and the contextual factors that influence circular purchasing. To address this aim, we interviewed purchasers, supervisors and policy makers of seven Dutch organizations. The results of the comparative case-study show that the main roles of the purchaser are those of coordinator, facilitator and advisor, and that the successful circular purchaser can best be described as intrapreneurial, sustainability-minded and knowledgeable about the circular economy. Purchasers are successful in implementing circular purchasing when they share responsibility with budget holders and when they are part of organizations that have processes in place to ensure the inclusion of circularity in their purchasing projects. The drivers that influence the success of circular purchasing can be described as creating a sense of direction and grasping the complexity of the circular economy. Furthermore, the market, organizational, legal, conceptual and cultural constraints that limit the success of circular purchasing were identified.     

Circular economy and the policy: A framework for improving the corporate environmental management in supply chains

The transition to the circular economy (CE) creates value through the closed-loop systems, reverse logistics, product life cycle management, and clean production in terms of corporate environmental management. During this transition process, the organization faces many barriers such as financial, organizational, technology-based, social, policy-related, market-based, and logistics-based barriers. The objectives of this study are to propose a framework highlighting policy-related barriers for a supply chain in the transition to CE and finally discuss potential implications on enhancing corporate environmental performance of a business. Further, this study evaluates the causal relationships between the policy-related barriers using fuzzy Decision-Making Trial and Evaluation Laboratory (DEMATEL) method. The application was conducted in an apparel firm in Turkey. From findings, lack of legislation for efficient CE (C4), lack of mandatory requirements and responsibilities for manufacturers/suppliers for the CE (C17), and lack of government support for environmentally friendly policies (C2) are revealed as the most important barriers, respectively. It is found that lack of attitude and awareness about CE in government institutions (C19) is the most influencing factor, whereas lack of effective recycling policies to achieve quality in waste management (C8) is the most influenced factor. The recommendations were developed for enhancing the corporate environmental performance of businesses through incentives and unique rewards, improving communication among stakeholders, the government's perception of CE and current linear economy, cooperation with nongovernmental organization (NGOs) and civil actions, the vision of government towards circular principles, the circular public procurement, the local governments in circular policymaking, and awareness of bureaucracy and government officials.     

How to innovate business models for a circular bio-economy?

Shifting from a linear to a circular bio-economy requires new business models. The objective was getting insights into the uncharted research field of business model innovation for a circular and sustainable bio-economy within the agrifood sector. Eight European cases valorising agricultural waste and by-products by closing loops or cascading were studied regarding their innovation drivers and elements, via interviews, on-site visits and secondary data. In this domain, the findings highlight that business model innovations are depending on the (i) macro-environmental institutional-legal conditions and market trends, (ii) driven by internal economic, environmental and/or social objectives, but especially strongly linked to (iii) other actors often from different sectors seeking synergies and (iv) value co-creation via combined organisational and technological innovations. Business models for a circular bio-economy thus depend on various action levels and need radical combined organisational and technological innovations for a most efficient usage of agricultural waste and by-products. This also means new business configurations instead of linear innovation strategies currently still being dominant due to economic viability.     

Circular business model evolution: Stakeholder matters for a self-sufficient ecosystem

Food waste is a key issue in the circular economy. A circular ecosystem results from the contributions of various stakeholders; however, the claims and value propositions of these stakeholders can differ, hampering long-term sustainability of the ecosystem. This study analyses the case of RiCibo, a circular ecosystem based in Genoa, Italy. RiCibo collects surplus food and redistributes it to the needy in the local community. The study examines the conditions that facilitated RiCibo’s evolution from a simple project to a circular self-sufficient ecosystem characterised by a co-designed circular business model with a broad range of stakeholders. The results show that sharing people, infrastructure and knowledge, together with mutual trust among stakeholders, are the preconditions of a circular ecosystem. Long-term continuity depends on additional tools that enhance financial self-sufficiency, namely, participative governance, a co-designed circular business model, accountability, frequent engagement, local actions and the development of advocacy power.     

Sustainable development and circular economy: The role of institutional promotion on circular consumption and market competitiveness from a multistakeholder engagement approach

The transition from a linear economy to a circular economy (CE) is a real challenge to achieve long‐term sustainability. To push CE in the market, institutional promotion could become a key driver to positively impact both circular consumption and the competitiveness of the market. This paper analyzes the influence that soft and hard initiatives have on circular consumption and market competitiveness. Based on a survey of 1,281 respondents from different types of stakeholders, structural equations modeling statistical analysis was run. Results show that soft initiatives support the achievement of both objectives, whereas hard ones only influence greater circular consumption. However, the perception of the different stakeholders considered is very heterogeneous. It is indicative that not all institutional promotion initiatives are effective. Thus, institutions should guide, in an adequate and differentiated manner, their efforts to promote CE and sustainable development depending on the stakeholder they are targeting.