Emerging Business Models for Circular Economy: A Systematic Literature Review

Abstract

Business models for circular economy keep products alive and operating for as long as possible during their use and consumption. Business model (BM) innovation in the circular economy (CE) helps firms design their BMs based on CE principles and identify new value-creation opportunities. Since research on the design of circular business models (CBM) is at an early stage, there is a lack of unified terminologies, and the meanings and relationships between the various CBM archetypes are unclear. This study aims to review and analyze existing emerging BMs in CE from peer-reviewed journals and recommend future research directions. The systematic review of 76 research articles resulted in identifying 23 CBM archetypes. This study analyzes the CBM archetypes based on descriptions, examples, similarities in the terminologies, and the frequency of use in the literature. The review identifies the three widely adopted CBM classification frameworks, the ReSOLVE framework (Ellen MacArthur Foundation), Accenture’s CBM framework, and the CBM strategies by Bocken et al. Most of the studies in this review combine BMs derived from several classification approaches to categorize suitable BM archetypes for the CE, which illustrates the lack of comprehensive classifications. The key findings show that providing access to a product’s functionality, recycling materials that would otherwise be sent to landfills, and restoring the functionality of existing products (re-manufacturing/refurbishing) are the most discussed archetypes in CBM literature, and other types do not get adequate attention. Future studies should examine BMs that have not received enough attention and provide a comprehensive classification of CBMs that clarifies their meaning and relationships. With this study, we contribute to advancing the body of knowledge in CBM and help practitioners in developing new CBMs.