Product-service system business models and circular economy

Abstract

The shift of production and consumption from ‘linear’ to ‘circular’ structures requires innovation in business models. This chapter argues that product-service systems (PSS) business models can enhance the circular economy and illustrates how different type of PSS, that is, product-, use-, and result-oriented PSSs, can improve the restorative and regenerative effects of inner circles, creating long and cascading use circles. Among the different types of PSS, business models akin to result-oriented PSS have tighter and more efficient circularity of supply chain operations. The chapter also presents an empirical case of a manufacturing firm operating a traditional product-based business model and three different types of PSS business models. The circularity of each type of PSS is analysed and discussed.