Abstract
Circular Economy (CE) has emerged as a potential strategy for developing business practices based on sustainability concerns, especially in the fashion industry, which presents high environmental and social impacts. Startups are responsible for introducing innovations in business conduction toward CE. As a current theme, research on Business Model Innovation for Circular Economy (BMI4CE) has increased. However, empirical research in the fashion industry and startups is still scarce. This paper aimed to identify the key elements of startups' BMI4CEs, using the fashion industry as the context of the study. We conducted an exploratory and descriptive multiple case study composed of ten early-stage fashion startups from Europe, North America, and Asia. The findings suggest that environmental and economic sustainability dimensions receive priority in the analyzed BMI4CEs. On business type, we found differences between product-based and service-based Business Models (BMs). The Business Models Innovations (BMIs) were based mainly on CE principles of closed-loop and reducing material use and consumption. BMs focus on CE strategies of product reuse and extend resource time by lowering consumption and material use. Findings also demonstrate the role of emerging and digital technologies (e.g., blockchain and artificial intelligence) for BMI4CEs effectiveness. We developed five propositions and a theoretical framework from a triple bottom line perspective. This research highlights new theoretical perspectives under an investigation area still little explored in the literature. Results enable fashion startup managers to understand better the functioning of BMI4CEs and the critical elements needed for their effectiveness.
Highlights
Circular Economy (EC) has emerged as a strategy for achieving sustainability (Korhonen et al, 2018)
We identified that the social dimension of sustainability is still little explored in the BMI4CEs of the fashion startups analyzed
How the startups offer the benefits to costumers Circular principles are i) design out of waste and pollution; ii) regenerate natural systems; and iii) extend materials lifetime Corresponds to the target customers and is part of the value proposition component Comprises the incentives and benefits offered to the target customers
Summary
Circular Economy (EC) has emerged as a strategy for achieving sustainability (Korhonen et al, 2018). CE seeks to change the systemic logic of economic activity It proposes that companies no longer operate in a linear production and consumption system, but in an economy based on circularity (Prieto-Sandoval et al, 2018), in which aspects of sustainability are essential for shaping the performance of companies and the relationships among these and other social and economic agents. In this context, companies need to rethink their business models (BMs), aligning them with the circularity precepts. BMI4CE analysis is essential for identifying the key elements of BMs to reach a higher level of circularity than incumbent firms and support industries’ transition toward CE (Henry et al, 2020)
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