Circular business model innovation: Uncovering practices and patterns to retain the value of resources

Abstract

Transitioning to a circular economy offers an alternative to the current linear model. Research on circular business models is growing but remains at a nascent stage, leaving a gap in understanding how individual firms transition towards circularity. This study analyses 63 cases of companies having implemented a circular business model innovation (CBMI) using content analysis of case studies descriptions and related corporate websites. We extend previous research by using a three-level analysis examining simultaneously resource retention options (RO), managerial practices, and business model value dimensions to understand how firms introduce circular economy practices in their business model to maximize resource value retention. Our study shows which 10 ROs are chosen by companies when they move to a circular business model and besides recycling and reducing, rethinking appears the most implemented RO. We identify 46 distinct CBMI managerial practices that companies implement across the three core business model dimensions—value proposition, value creation and delivery, and value capture. The analysis of the various combinations of RO and managerial practices in the different value dimensions of the business model implemented by the studied companies identifies five CBMI patterns, representing recurring combinations of practices that reshape business models towards circularity. Our results show that CBMI cannot be implemented as a one-size-fits-all solution and that firms must adopt a tailored approach depending on various aspects such as size, industry, consumer segment, as well as, resource availability and motivational drivers, by implementing circular practices across multiple business model dimensions while combining various ROs to enhance circularity. These insights contribute to the literature by offering a structured three-level approach for analysing CBMI and providing actionable guidance for firms aiming to implement circular strategies. Our study highlights the need for a holistic approach that integrates business model and circular economy perspectives.