A Conceptualisation of Circular Business Models and Explanation of Their Adoption: Evidence From Four In-Depth Case Studies

Abstract

The scale of the ecological crisis and a combination of socio-economic and regulatory trends (rising global demand for goods, increasing resource price volatility and legislative efforts to reduce waste), are severely undermining the viability of linear operating business models which rest on a take-make-dispose logic. It is within this context that the circular economy gains relevance by proposing more resource efficient industrial processes that mirror the cyclical functioning of the eco-system where waste does not occur. A crucial constituent in the achievement of a circular economy is business model innovation. However, the academic literature on sustainable business models is still in its early days and pays very little attention to the circular economy and to circular business models. Hence, this research contributes to the sustainable business models literature by proposing a conceptualisation of circular business models and by illustrating the processes leading to their emergence and development. Organisational (resources and capabilities) and institutional (regulatory, normative and cognitive) perspectives have been applied mostly separately in the management literature examining why companies pursue ecological and social sustainability goals. This research attempts to reconcile the above agency versus structure dichotomy in explaining the adoption of circular business models. To accomplish this task, a qualitative, hermeneutical study has been conducted. Four holistic British case studies, considered as a form of contextualised explanation and chosen via purposive selection, delineate this research strategy. Participant observations, shadowing and semi-structured interviews (n=33) are the methods used for collecting primary data. Using narrative and comparative analyses, this thesis conceptualises circular business models as characterised by enhanced customers’ value, diffused and interconnected value creation, boundary spanning relational structures and idiosyncratic value capture mechanisms. It finds that their emergence and development is dependent on a combination of organisational and institutional influences.