Abstract
Recent studies advocate that digital technologies are key enabling factors for the introduction of servitized business models. At the same time, these technologies support the implementation of the circular economy (CE) paradigm into businesses. Despite this general agreement, the literature still overlooks how digital technologies enable such a CE transition. To fill the gap, this paper develops a conceptual framework, based on the literature and a case study of a company implementing a usage-focused servitized business model in the household appliance industry. This study focuses on the Internet of Things (IoT), Big Data, and analytics, and identifies eight specific functionalities enabled by such technologies (improving product design, attracting target customers, monitoring and tracking product activity, providing technical support, providing preventive and predictive maintenance, optimizing the product usage, upgrading the product, enhancing renovation and end-of-life activities). By investigating how these functionalities affect three CE value drivers (increasing resource efficiency, extending lifespan, and closing the loop), the conceptual framework developed in this paper advances knowledge about the role of digital technologies as an enabler of the CE within usage-focused business models. Finally, this study shows how digital technologies help overcome the drawback of usage-focused business models for the adoption of CE pointed out by previous literature.
Highlights
The circular economy (CE) paradigm has reached increasing attention among academia and practitioners as a mean to promote sustainability [1], i.e., development that meets the need of the present without compromising the ability of future generations to meet their own needs [2]
To contribute to the building of knowledge on this aspect, this paper focuses on how new digital technologies, such as Internet of Things (IoT), Big Data, and analytics act in the deployment of usage-focused business models (BMs) to increase resource efficiency, extend product lifespan, and close the loop, i.e., to attain the fundamental CE value drivers recognized in literature [20]
To contribute to building knowledge on this aspect, this paper focuses on how IoT, Big Data, and analytics act in the deployment of usage-focused BMs to attain the three fundamental CE value drivers pointed out by literature, i.e., increasing resource efficiency, extending product lifespan, and closing the loop [20]
Summary
The circular economy (CE) paradigm has reached increasing attention among academia and practitioners as a mean to promote sustainability [1], i.e., development that meets the need of the present without compromising the ability of future generations to meet their own needs [2]. The literature has pointed out the potential benefits that companies may gather from servitized BMs, such as strengthening customer relations, creating higher barriers for competitors, and generating new and resilient revenue streams [12,13,14]; it notes the great challenges implied [15,16,17], since servitization requires fundamental changes in the way of delivering value and dealing with customers and stakeholders [18] In this context, the role of new digital technologies that constitute the backbone of the fourth industrial revolution (such as Internet of Things (IoT), 3D printing, Big Data and relating analytics, virtual and augmented reality, etc.), has been indicated as “disruptive”.
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