The circular economy (CE) is frequently proposed to lead humanity towards a sustainable future. While public authorities increasingly build on CE narratives, the progress and efforts of the private sector are key drivers to enable more circular resource flows. Still, the world falls far short from becoming circular and large-scale implementation of CE in actual problem-solution spaces is scarce.
This study sheds light into the external strategies of circular start-ups (CSUs) in building an adequate socio-institutional embedding for their innovative, circular business models (CBMs) and puts the findings in context of wider CE and sustainability transformations research. CSUs are a distinct group of CE-oriented private sector players that build and implement viable CBMs wholistically and from scratch. Thereby, they directly and indirectly contribute to the creation of circular innovation systems.
This research defines the common CE mission of CSUs, puts it in context of overarching missions in the CSUs’ socio-political systems, and scrutinizes the roles that CSUs adopt to contribute to wider CE implementation. We apply the concept of mission-oriented innovation to examine the dynamics that are the cause and the result of CE transformation processes. Mission-oriented innovation better reflects the complexity of sustainability transformations’ dynamics than existing concepts because a variety of technical solutions, sectors, and regions need to act in a coordinated manner to address the increasing complexity of systemic failure.
The analysis follows the research question: What are circular start-ups’ roles and institutional activities in building circular innovation systems?
We observe that CSUs’ strategic interventions to diffuse circular practices and mindsets often go further than only novelty creation. This article proposes and elaborates on four roles that CSUs adopt: reinforcers, conveners, pioneers, and champions/mentors. The roles differ according to the stakeholders, the institutional elements that are addressed, as well as the directionalities that CSUs follow and stipulate.
To conceptualize CSUs’ approaches to building circular IS, this article draws from literate on sustainability transitions, IS, institutional theory, and circular economy. The study uses a data sample of 40 CSUs from Europe and Australia. IS literature is enriched based on cases of a distinct group of actors and their roles in systems building as well as interplay with cultural-cognitive norms when advancing the common mission of CE. This study is useful for the strategic management of the various directionalities in which CE is currently developing. Furthermore, inadequacies and limitations for CE innovation in norms and regulation, policy, and governance evince. CE value chains and circular IS are currently in a ‘formative’ stage wherefore this research can be relevant for the transition to a ‘growth’ stage.
We find that CSUs’ stakeholder interactions are purposeful – rather than unintended consequences of business activities – and driven by CSUs’ circular missions, ambitious goals, and limited institutional support. This study offers theoretical contributions to the scientific field of CE, circular business models, and to innovation systems literature. It is one of the first studies to analyze the agency perspective in mission-oriented innovation systems using empirical evidence. The analysis of functioning business models that navigate the systemic challenges posed by CE, helps the scholarly perspective to depart from various classifications and descriptions and shift emphasis to the solution space, i.e., desirable systemic configurations. This study takes on an actor-based view of private sector players with a common CE mission and provides insight into the system actors and activities that are relevant for bottom-up circular innovations to spread. Thereby, this study takes a step towards closing the research gap on the connection of CE, business models and sustainable transition literature, helps understanding the role of bottom-up innovations in circular transformation processes, and adds to the agency and governance perspective in mission-oriented innovation. Furthermore, this study provides theoretical insight into roles and institutions in IS that are required for an adequate socio-technical ‘embedding’ of circular economy innovations. Therefore, we identify various examples of how systemic acceptance can be achieved through institutional work, mobilization of supply chains, and new forms of collaboration.
Policymakers can leverage the evidence that CSUs provide to legitimize transformative CE policy agendas and accordingly stimulate and co-shape innovation systems that take circular principles into consideration. Business collaborators can create competitive advantage when adapting to the forms of collaboration that are demonstrated by CSUs and thereby creating societal or systemic value based on circular innovation. This could mean to develop the technical and contractual infrastructure that allows joint value creation and fair value allocation or build on CSUs’ supply chain mobilization activities to actively shape future resource flows in alignment with corporate strategies.
This work links to the conference track 2.2 Partnerships and cross-sectoral collaborations for Circular Economies. Mission-based innovation policy and mission-based innovation systems perspectives can contribute to stronger cross-sectoral collaboration and value co-creation which are needed to address the increasingly complex societal challenges of today. To accelerate sustainability transformation processes, stronger directionality in innovation and policy is required. Policy and corporate innovation efforts can be guided and informed based on the insights that this study provides.
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