How does business model redesign foster resilience in emerging circular value chains?

Abstract

This paper aims to elucidate how companies can innovate their business model to strengthen their resilience and timely respond to current ecosystem challenges, like the emergence of new cross-industry value chains in the circular economy. The adoption of new sustainable technologies leads to the disruption of current linear settings and to the need of business model innovation. This study draws upon a case study from the circular economy rooted in by-product valorisation and presents an innovative bio-based process enabling phosphate recovery from rapeseed oil press-cakes. Incumbent actors of established (linear) value chains have been interviewed to highlight potential business model innovation. To this end, an inductive theory-building case study approach has been applied. Results reveal that a business model redesign is needed in order to build novel circular value chains, but it depends on chain actors’ capacity to adapt to change, namely to be resilient. The new value proposition needs to reach new customer targets more sensitive to sustainability issues and/or to enhance the awareness towards bio-based technological solutions into extant customers. Value creation and capture highly depend on the coordinating role of the chain actor willing to invest in the new bio-based technology, which becomes the focal company within the emergent value chain. Two scenarios are open, according to who is playing this role: if the new recovery and release process is carried out by an incumbent, the new process requires exploratory, transformative and exploitative learning together with extra investments in highly specific assets and the establishment of new cross-industry relationships to complement missing assets and knowledge about such technological breakthroughs available on the market. If a new actor enters the emerging value chain, business model innovation is mediated and moderated by a company owning both tangible and intangible resources, thus catalysing technology implementation. • Business model innovation is evaluated in its interplay with emerging value chains. • The valorisation of agri-food by-products to recover scarce resources has been used as a case study. • Four types of potential new value chains are identified as emerging from cascading usage of agri-food by-products. • Elements which companies need to change in their current business model to implement sustainable innovations are outlined. • Cross-industry relationships are fundamental to redesign business models for a successful sustainable transition.