A conceptual methodology to screen and adopt circular business models in small and medium scale enterprises (SMEs): A case study on child safety seats as a product service system

Abstract

While small and medium enterprises are already aware of the increasing benefits of resource efficiency, reducing waste, and closing material loops, the adoption of circular economy principles in small and medium enterprises is still nascent. Despite a large body of academic literature providing numerous definitions and business models to elucidate circular economy, these approaches lack systemic research from a small and medium enterprise's perspective and are often vague and overwhelming. Furthermore, small and medium enterprises lack financial and organizational resources to implement a (systemic) change to their already optimized business models. This paper addresses this knowledge gap by presenting a conceptual approach that not only serves as a decision-making tool and a possible starting point towards circular value creation, but also provides an initial estimation on how well forms of circularity can be achieved within the adapted business models. The developed methodology was applied to a complex product within the plastics sector. Starting with the product-disassembly-workshop, an in-depth analysis to identify various circular concepts was then conducted, using design thinking tools. The results are presented and summarized in the form of a decision tree analysis. Using a contradiction matrix and environment mapping tool, it was then attempted to narrow down the circular solution spectrum to a manageable level. To conclude, a cross impact balance analysis was applied to validate the identified business model scenarios. The presented methodology aims to show small and medium enterprises how to generate business model innovations systematically, narrow down the solution space in a structured manner, and how to evaluate the resultant solution options against each other and weigh their trade-offs. The tools and techniques used were chosen in such a way that they can be applied with as few resources and complexity as possible, and therefore can serve as a guidance for small and medium enterprises in their transition towards circular value creation.