Three circular business models that extend product value and their contribution to resource efficiency

Abstract

Circular business models aim to preserve the value of material resources in society by slowing and closing resource flows. Various models have been identified, including the Extending Product Value business model, which plays a role in extending product lifetimes by reversing product obsolescence. However, the characteristics of these business models and their associated environmental consequences have remained largely unexplored in research. This paper aims to address this gap by analysing three types of Extending Product Value business models and reflecting on their resource efficiency contributions. A framework, developed from an analysis of 56 firms, is used to facilitate this reflection.The framework considers the level of interaction between the product and firm and introduces three Extending Product Value business model archetypes: Facilitators, Redistributors, and Doers. The analysis suggests that different environmental impacts are relevant for each type of firm, and the higher the firm-product interaction, the greater the resource efficiency potential of the business model. The paper also suggests characteristics that should be considered if such business models are to contribute to a more resource-efficient circular economy. The findings are relevant for a variety of actors interested in the circular economy, including researchers assessing the resource efficiency of business models, firms interested in developing new resource-efficient business models or increasing the resource efficiency of existing ones, and policymakers promoting the adoption of circular business models.