A Circular Business Model Framework Based on Insights from Systems Thinking

Roberta De Angelis

Cardiff Business School, Department of Marketing and Strategy, Cardiff (UK)

[email protected]

Extended Abstract1

It is more than ten years since the first report outlining the concept of the circular economy (CE) and its potential contribution to address multiple sustainability challenges has been published by the Ellen MacArthur Foundation in conjunction with McKinsey & Company. Regarded as one of the memes for a new wellbeing economics narrative for a sustainable future (Waddock, 2021) and conceptualised as “an industrial system that is restorative and regenerative by intention and design” (EMF & McKinsey, 2012, p. 7) that provides opportunities for “multiple value creation mechanisms decoupled from the consumption of finite resources” (EMF et al., 2015, p. 14), the CE has catalysed the attention of business leaders, policy makers and academics alike across the globe as no other sustainability-transitions related concept before (Leipold et al., 2022).

The scholarly literature on the CE has proliferated recently. Research shows that the CE field has started growing exponentially since 2015; accordingly, the number of published articles rose by 4255% between 2015 and 2021 (Dominko et al., 2022). Contributions have emerged from different fields including the physical and natural sciences as well as business and management studies, and have dealt with the definition of the CE concept, its theoretical foundations, the relationship with the sustainable development concept, drivers and barriers to implementation, indicators, standards and potential benefits among other themes (Nikolaou & Stefanakis, 2022). Yet, despite the existence of an ample literature on the subject, Nikolaou & Stefanakis (2022) argue that the “CE is an overused concept in the current literature but without an uncontested and a clear definition” (p. 2).

As a potential opportunity yielding a “$4.5 trillion reward for turning current waste into wealth by 2030” (Lacy & Rutqvist, 2015, p. xv), a core interest among business and management scholars has developed around the concept of the circular business model (CBM), enabling value creation and capture in a CE (Hofmann & Knyphausen-Aufseß, 2022; Suchek et al., 2021). There have been different scholarly efforts in this sub-theme of the broader CE literature, with scholars providing both definitions of the CBM (e.g., Frishammar & Parida, 2019; Geissdoerfer et al., 2020), and categorisation tools, including archetypes (e.g., Kortmann & Piller, 2016), frameworks (e.g., Ranta et al., 2018), canvasses (e.g., Daou et al., 2020), taxonomies (e.g., Urbinati et al., 2017) and typologies (e.g., Lüdeke-Freund et al., 2019).

Yet, mirroring the parent CE literature, a common definition of the CBM does not exist yet (Rovanto & Bask, 2020). Furthermore, Ferasso et al. (2020) and Geissdoerfer et al. (2020) lament that “we currently lack a unified understanding of the current state of knowledge on circular business models” (p. 3007) and that “despite the importance of the circular business model notion, there is considerable lack of clarity about its theoretical conceptualisation” (p. 1) respectively. This is unfortunate for conceptual development and theory building as well as practical implementation. Furthermore, as noted by De Angelis (2022), not only there exist conceptual and dimensional ambiguities in the way CBMs are conceptualised but also some construct fallacies. Particularly, while it is acknowledged that the concept of the CE draws substantially on systems thinking (EMF & McKinsey, 2012; EMF & McKinsey, 2013), the latter is not reflected in the way CBMs are conceptualised and typified (De Angelis, 2022), ultimately resulting in a disconnection between the CBM concept and CE thinking and principles.

Hence, the purpose of this conference paper and presentation is to contribute to conceptual and theoretical development in the CBMs literature by proposing a CBM framework based on insights from systems thinking and theory. Particularly, drawing on recent business models research (i.e., Liu et al., 2021) based on systems theory, this paper presents the view of CBMs as resilient complex adaptive systems. By doing so, this article contributes to consolidate current CBMs research both conceptually and theoretically overcoming limitations in the way the concept of the CBM is understood and theorised in current literature. In fact, the CBM framework informed by systems thinking and here proposed, brings the CBM concept into line with CE thinking and illustrates the CBM construct in simple and comprehensive terms, ultimately contributing to clarity, which is necessary to knowledge building and practical implementation. As a result, this article line of enquiry is also fully aligned with this year’s conference track “Business Models for a Circular Economy: Assessing the conceptual development of Circular Business Models - harvesting and analysing six years of tracks on CBMs at the NBM Conferences”.

Keywords

circular economy, circular business models, conceptual clarity, systems thinking, resilient complex adaptive systems.

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