Linear Business Models Research Articles

From awareness to practice: Insights from the managers of Finnish circular economy pioneering companies

In recent years, research on circular economy has increased tremendously, as well as gained attention from governments and business practitioners. However, the knowledge of effective and efficient transition from a linear business model to circular economy remains limited. Therefore, the objective of this research is to explore the awareness and current practices of managers from companies implementing circular business models. The required data for this research were collected from 22 managers, whose companies belong to the list of "41 pioneering Finnish circular economy companies". Methodologically, the study adopts a qualitative approach, following content analysis. The collected data is analyzed rigorously to uncover insights regarding managers’ awareness to circular economy, experienced barriers, drivers, and indicators of circular economy. Key research results show that 66.7% of responses represent circular economy as a core activity, with 68% having already integrated circular economy principles into the supply chain. Main barriers include lack of knowledge and technology (21.4%), while strategies to address the barriers focus on promoting technology innovation (33.3%) and improving education and communication (31.3%). Besides, circular economy performance is measured primarily through recycled materials used (21.7%). Additionally, the study investigates the approaches companies employ to develop circular economy implementation strategies, an area often overlooked in circular economy literature. The findings indicate that process-led and market-led management strategies are commonly practiced, accounting for 32% and 21%, respectively. Overall, this study sheds light on the current state of circular economy implementation at the micro level and provides valuable insights for policymakers, practitioners, and researchers aiming to promote the transition towards a circular economy.

DISCLOSURE ANALYSIS OF 7R♲ SUSTAINABILITY MATERIAL INDICATORS IN THE CIRCULAR FASHION INDUSTRY

The fashion industry is one of the most polluting industries in the world, which makes it a candidate for attention towards what concerns the circular economy, along with other sustainability-related practices. This industry has great potential of disposing itself from the unsustainable linear business models that it adopted for a long period to more circular business models, which promotes closing the loop. In order to find out the circularity performance of the selected companies towards the disclosure of circular economy-related information in their corporate sustainability reports, this study transformed the quantitative material circularity performance indicators proposed by Rossi et. al (2020) into qualitative indicators, which makes it more inclusive for the analyzed companies, because not all of them report and disclose information respecting the same guidelines. Upon transforming the quantitative indicators into qualitative ones, the circularity performance was measured through a score-based method, which offers an insight perspective on data that makes possible a comparative analysis and also an interpretation of the extent of circular information disclosure. Seven circular material indicators were selected and analyzed for fifteen companies representing the European fashion industry. Results revealed that the higher average disclosure score is on the recyclability of materials and resources while the poor disclosed information in the sustainability reports is regarding remanufacture and refurbishment.

ECONOMIC MECHANISMS FOR THE DEVELOPMENT OF URBAN TRANSPORT AND LOGISTICS SYSTEMS

The article proposes the definition and substantiation of economic mechanisms for the development of urban transport and logistics systems that are appropriate in Ukraine, acceptable and implemented for use within "smart" cities on the basis of sustainability, reliability and safety, based on certain signs and principles of understanding sustainable transport and logistics systems that should be built on: understanding the use of means of transport with a low level of impact on the environment, include both the industrial component of the system and public and private traffic, transport-oriented development, ecological means of transport, car sharing, as well as construction and/ or the protection of urban transport and logistics systems that are energy efficient, take into account measures to save space and promote a healthy lifestyle. The proposed approaches provide for obtaining an economic effect by creating a greater added value from each unit of used resource compared to traditional methods and linear business models. Such economic incentives should contribute to the market demand for energy-efficient vehicles in two ways: - through the gravity effect, by increasing the demand for such environmentally attractive vehicles from consumers, users and the population of the urban agglomeration; - due to the "push-out" effect, which increases the attractiveness of new vehicle developments for manufacturers. These methods can be most effective when combined. In the first case, when the demand for vehicles that will meet the established criteria of ecological efficiency increases, in the second case, in the case of creating a critical market mass with sufficient leverage to justify specific developments and/or equipment on the part of manufacturers, where the development and implementation of environmentally friendly and of energy-efficient vehicles is considered as one of the tools for reducing the impact of transport and logistics systems on the environment of "smart" cities that strive to increase innovation and obtain competitive advantages.

Mitumba: second-hand clothing industry in Kenya. A blessing or a curse?

Kenya is one of the leading SHC importers in Africa. The aborted import substitution industrialisation, the liberalisation of the economy, and the failure of the domestic textile industry led to the SHC trade surge, which is the direct product of the global (ultra)fast fashion linear business model. SHC industry is beneficial for the economy and the people of Kenya due to job creation, income and revenue generation, and the provision of affordable clothing. However, it has detrimental impact on the environment and the local textile/fashion industry. To maintain the benefits and reduce the negative effects, it is important not to completely eliminate it. In the short run, quantity should be decreased, and the quality should be improved to reduce waste. In the long run, there should be a gradual decrease and eventually elimination of second-hand clothing imports, depending on the revitalization of domestic garment industry.

Exploring the enablers for building resilience in solar photovoltaic Energy supply chains

A solar photovoltaic energy supply chain (SPvESC) is a global network with several linkages, including mineral and metal mining, material processing, and module and panel manufacturing. Due to the wide range of uncertainties and the unfavorable environmental effects associated with current linear business models, this global network is vulnerable to disruptions. Strengthening the resilience of SPvESCs is crucial for addressing any disturbances. This requires identifying the key enablers of resilience in SPvESCs, an area that has been understudied in the existing literature. An enabler is an aspect that facilitates the achievement of a goal by another aspect. This research contributes to the existing literature by systematically investigating the enablers for SPvESCs to achieve resilience. Thus, the objective of this analysis is to identify enablers that have the potential to enhance the resilience of SPvESCs in Türkiye. This was done by applying the Nominal Group Technique (NGT) in conjunction with a review of the current literature. Neutrosophic (N)-DEMATEL was then utilized to determine the relationships between the identified enablers. Finally, the results were validated using N-DELPHI. The results revealed that sensing and seizing new business models, adaptability to changes in novel energy generation and information technologies, and business contingency plans for natural and man-made disasters were the most influential enablers. The findings provide implications for practitioners, policymakers, and researchers to help ensure improved resilience in SPvESCs.

Valorisation of cotton post-industrial textile waste into lactic acid: chemo-mechanical pretreatment, separate hydrolysis and fermentation using engineered yeast

BackgroundThe textile industry has several negative impacts, mainly because it is based on a linear business model that depletes natural resources and produces excessive amounts of waste. Globally, about 75% of textile waste is disposed of in landfills and only 25% is reused or recycled, while less than 1% is recycled back into new garments. In this study, we explored the valorisation of cotton fabric waste from an apparel textile manufacturing company as valuable biomass to produce lactic acid, a versatile chemical building block.ResultsPost-industrial cotton patches were pre-treated with the aim of developing a methodology applicable to the industrial site involved. First, a mechanical shredding machine reduced the fabric into individual fibres of maximum 35 mm in length. Afterwards, an alkaline treatment was performed, using NaOH at different concentrations, including a 16% (w/v) NaOH enriched waste stream from the mercerisation of cotton fabrics. The combination of chemo-mechanical pre-treatment and enzymatic hydrolysis led to the maximum recovery yield of 90.46 ± 3.46%, corresponding to 74.96 ± 2.76 g/L of glucose released, which represents a novel valorisation of two different side products (NaOH enriched wastewater and cotton textile waste) of the textile industry. The Saccharomyces cerevisiae strain CEN.PK m850, engineered for redirecting the natural alcoholic fermentation towards a homolactic fermentation, was then used to valorise the glucose-enriched hydrolysate into lactic acid. Overall, the process produced 53.04 g/L ± 0.34 of l-lactic acid, with a yield of 82.7%, being the first example of second-generation biomass valorised with this yeast strain, to the best of our knowledge. Remarkably, the fermentation performances were comparable with the ones obtained in the control medium.ConclusionThis study validates the exploitation of cotton post–industrial waste as a possible feedstock for the production of commodity chemicals in microbial cell-based biorefineries. The presented strategy demonstrates the possibility of implementing a circular bioeconomy approach in manufacturing textile industries.Graphical

Assessing the Financial Viability and Sustainability of Circular Business Models in the Wine Industry: A Comparative Analysis to Traditional Linear Business Model—Case of Georgia

In the contemporary global context, waste management and the judicious utilization of resources have emerged as pressing concerns. Consequently, the concept of a circular business model has gained prominence as a viable solution. This innovative model reframes waste not as a disposable byproduct but as an opportunity to generate new value, setting it apart from the conventional linear business model, particularly in financial, economic, and operational dimensions. Numerous industries grapple with the issue of excessive waste generation, among them the wine industry, notable for its substantial water and grape waste outputs. This predicament holds significant ramifications both on a global scale and within the specific context of Georgia. Yet, it also presents an innovative avenue for waste recycling. This study draws upon a comprehensive review of internationally recognized literature, noted for their scholarly significance and citation prevalence. In its practical segment, two distinct investment projects have been meticulously developed which seek to evaluate the financial viability of the circular business model in contrast to the conventional linear business model. The investment projects considered are as follows: 1. Under the framework of a linear business model, the company exclusively engages in the production and sale of wine. 2. Within the circular business model paradigm, the company not only produces wine but also harnesses waste processing to yield grape seed oil, which is subsequently marketed alongside wine bottles. Both models undergo rigorous scrutiny, employing a comprehensive analysis of key financial indicators essential for assessing project profitability and efficiency. The outcomes of this investigation reveal that, under identical capital investment conditions, the circular business model surpasses the linear model in terms of profitability. This underscores the potential for sustainable practices within the wine industry and the broader business landscape.

Russian fuel and energy complex modernization in the circular economy direction

The article discusses promising areas that contribute to the formation of a closed-cycle economy or, in other words, a circular economy in the Russian fuel and energy complex. The basic principles of the circular economy model aimed at preserving the environment through the transition from linear business models to more closedones and by increasing the efficiency of natural resources use have been outlined. The data on the estimates of the negative impact combustion of associated petroleum gas have been presented, the methods of its rational utilization and further use as raw materials for high-grade products have been analyzed. The petrochemical complex is presented as one of the fundamental elements of the circular economy. The advantages of using biogas as a supplement and alternative to fossil natural gas when moving towards a circular economy have been substantiated. The importance of implementing biogas projects in Russia in modern conditions has been emphasized. Factors’ number of constraining the development pace of the circular economy in the fuel and energy complex sectors have been identified. The key support measures and stimulation of companies by the state have been outlined.

White Paper on Textile Fibre Recycling Technologies

As both governments and customers push for sustainable and recyclable textile products, textile companies will have to change their linear business model to a circular one. The aim of the present work is to help these companies take action by providing an update of the state-of-the-art of textile recycling technologies. Extensive desktop research was performed in order to prepare an overview of existing textile recycling technologies, their current state, and projected developments, also including facilitating technologies for sorting and disintegration of textile products, as well as virtual platforms that connect stakeholders and inform consumers.

Transitioning to a Circular Economy: Paradoxical Tensions of the Circular Business Model

The circular economy is seen as a way to replace the dominant linear business models, which are based solely on increasing economic value. However, organisations transitioning to a circular business model usually face multiple tensions arising from the paradoxical relationship between achieving circularity and creating economic value. Therefore, we combine the literature on circular business models and paradox theory to systematise knowledge on paradoxical tensions that occur while transitioning to circular business model. Following an abductive approach, the research methodology employs semi-structured interviews and observation in the cross-sectorial manufacturing context. The research results allow us to identify novel insights into organisational-level tensions, namely, goal setting, performance orientation, compliance, in-network collaboration, and innovation adoption. In addition, we define the concept of a strategic paradox in the circular economy, which acknowledges the tension between true circular products and products as usual.

Use of life cycle assessment to evaluate circular economy business models in the case of Li-ion battery remanufacturing

PurposeThe purpose of this study is to advance and illustrate how life cycle assessment (LCA) can assess circular economy business models for lithium-ion batteries to verify potential environmental benefits compared to linear business models. Scenarios for battery repurpose are assessed to support future decision-makers regarding the choice of new versus second life batteries for stationary energy storage. A procedure to determine the substitution coefficient for repurpose and reuse of batteries is proposed.MethodsTwo different circular economy business models are assessed by applying primary data from two Norwegian companies for the development of a new life cycle inventory. With this new data, the authors compare second life battery (from first life in electric vehicle) scenarios and avoided production potential by performing a complete consequential LCA. Building on earlier work, a procedure to identify the substitution coefficient (i.e., potential for avoided production) for battery life cycle assessments is proposed. Interviews during factory visits were performed to identify a technical and a market factor affecting the substitution coefficient.Results and discussionThis study illustrates how life cycle assessment methodology can detect and thus enhance the potential environmental benefits and trade-offs of circular economy business models. Results show that the CBMs which use second life batteries correspond to 16% (for global warming potential) of manufacturing a new battery. This means that a second life battery must avoid > 16% production of a new battery to become the preferred alternative. Hence, circular economy business models with second life batteries can generate net environmental benefits while the remaining battery capacity and market price are identified factors that can alter the potential environmental benefits. The findings suggest that assumptions concerning the avoided production emissions are crucial for understanding the overall impacts of battery value chains.ConclusionsCircular economy business models which enable second life batteries show lower environmental impacts compared to a new battery when it can partly avoid production of a new battery. Based on the identified technical and market factor affecting this potential, a key message to industry and other organizations is that second life batteries should be chosen over new batteries. This depends on the remaining capacity being satisfactory for the new application, and the investment is not performed because of a low price compared to a new battery. Consequential LCA practitioners adopting a market approach while evaluating battery reuse and repurpose should model and account for the avoided production potential.

Risk assessment for circular business models: A fuzzy Delphi study application for composite materials

Circular economy (CE) implementation requires the transition from linear business models (BMs) to circular ones, with related uncertainties and multi-disciplinary risks, which often discourage organisations. However, there is still a lack of understanding of risks associated with this process. This work thus aims to identify, classify and prioritise key risk factors for innovative circular BMs in order to enable the development of appropriate risk management strategies.A fuzzy Delphi method was tailored to assess the risk factors obtained from the literature and was applied to the industrial case of composite materials. 24 major risk factors for innovative circular BMs were identified and classified into six categories. The probability and impact of the risk factors were evaluated by experts and the risk factors were then ranked by calculating their risk scores. The resultant major risks appeared to be related to the external context in which organisations operate. Among those risks, the greatest were those generated by take-back systems and low customers’ acceptance of CE products.This research is the first to address risks for circularity in a structured way and contributes to the field of CE by providing an extensive list and classification of risk factors for innovative circular BMs as they are perceived by industry, acting as a reference for academics and practitioners. Furthermore, it provides the first evaluation and prioritisation of risk factors within the CE domain, highlighting critical risks within the specific industrial context of composite materials and suggesting action priorities for the establishment of circular BMs.

Implementation of circular economy technologies in the agricultural and industrial complex of the Russian Arctic

The paper presents the results of the study of the content and capabilities of Circular Economy (CE), its technologies and tools that increase the economic and environmental efficiency of limited resources. The paper uses the example of the Russian Arctic and its agricultural and industrial complex, which has its own features, ranging from providing raw materials and the necessary semi-finished products, feed to the manufacturing industry for which agricultural products are the main source of raw materials. The authors present the key CE technologies allowing achieving a set of goals of Russian Arctic zone development. The comparison with international experience, namely that of Egypt, is of a particular importance. The main results obtained by the authors in the study include trend assessment in the development of the Russian Arctic and its land territories with agricultural and industrial complex based on reindeer herding as a traditional type of economic activity of the North indigenous peoples. Comparative analysis of sedentary and nomadic reindeer herding was carried out. A CE model was built using the example of agricultural enterprise "Smart Herd" and other participants in the agricultural and industrial complex, ensuring the transition from a linear business model to a cyclical one.

МЕТОДОЛОГІЇ ПРОЄКТНОГО МЕНЕДЖМЕНТУ ДЛЯ ЦИРКУЛЯРНИХ БІЗНЕС-МОДЕЛЕЙ: ПЕРЕВАГИ ТА МОЖЛИВОСТІ

The article discusses the features and types of circular business models. Circular business models are aimed at minimizing the generation of industrial and consumer waste through recycling, reuse and disposal of materials. The need to transition to circular business models is substantiated, which will contribute to the increase in the efficiency of use and conservation of resources, the reduction of dependence on primary raw materials and the damage to the environment. The purpose of the study is to systematize and improve the methodology of managing circular business models using project management tools. Project management methodologies are a set of guidelines and processes used to plan, manage, and execute projects. Despite the fact that each enterprise chooses its own circular economy business model, and each project is unique, there are general methods spread in management practice that can be adapted to a specific situation and used successfully. The main project management methods are systematized: Waterfall, Agile, Scrum, Critical Path Method, PRINCE2, Kanban, Critical Chain Method. Typical areas of application of each method are characterized. The directions of using project management methods for the introduction and development of circular business models of various types depending on the volume and cost of work, the scope of operation and the size of the team have been determined. The rules for building a tree of goals and a tree of problems and their importance for the development of an idea, concept and business plan of a circular model have been studied. it is important to analyze the specific needs of the business and choose what best fits the context of the individual company. It is necessary to identify the causes, consequences and key challenges associated with standard linear business models and to consider the problem from the point of view of environmental, social and economic dimensions. A problem tree is a graphical tool for analyzing a problem and its root causes. A goal tree is a tool for identifying and organizing the main goals and sub-goals in a specific circular business model. It helps establish a hierarchy between goals and connections between them. Each management methodology has its strengths and weaknesses, so you can use several methodologies at the same time, based on the features of the business model, its goals and organizational structure.

Challenges and barriers in transition to circular economy business models

Circular Economy (EC) is a term that has not been studied fully yet and is attracting the growing interest of scholars. It is vital for our planet and each of our lives to take care of EC principles. In this process, the business sector plays a leading role. This process is challenging and requires understanding circular economy principles first, after analyzing linear business models and comparing them to the CBM (Circular Economy Business Model). Based on these, it will be easier for businesses to adopt any of them. The aim of the paper is to discuss these and give recommendations based on the literature, research papers, and publications available at this moment. Key Findings: The barriers to moving from BM to CBM are still strong, but business behavior shows that there are already some signs of a circular economy, which can be considered an important step for the planet and people’s lives; recommendations are given on how to help businesses to overcome obstacles on this difficult path.

The circular economy and resource use reduction: A case study of long-term resource efficiency measures in a medium manufacturing company

Manufacturers are often identified as agents of change to conserve resources. The circular economy is the paradigm of the societal operation model that aims to decouple economic growth from environmental degradation through a system of efficiency measures. However, a growing body of literature reported the failure of efficiency measures to conserve energy and resources in the current socio-economic environment. Several complex compensatory mechanisms called the rebound effect were reported to offset efficiency gains and resulted in higher resource use. In this paper, we addressed the lack of data on the microeconomic one-company rebound effect investigation by presenting the case study of a medium manufacturer from the US that implemented energy, water and material efficiency measures. While the company qualified as a top-performing “circularity developer” according to the published self-assessment questionnaire, it retained its linear business model. Energy efficiency and renewable energy measures resulted in a short-term rebound effect of 161% or backfire. In the long term, the rebound effect of 25% was calculated. The drivers and barriers that the company encountered when implementing efficiency measures were identified. In conclusion, it was found that the system focused exclusively on efficiency was incapable of conserving resource use and delivering on CE decoupling promise. Wider societal acceptance of sufficiency measures was suggested to improve resource-saving capacity in manufacturing.

Financing solutions for circular business models: Exploring the role of business ecosystems and artificial intelligence

AbstractThe circular economy promotes a transition away from linear modes of production and consumption to systems with circular material flows that can significantly improve resource productivity. However, transforming linear business models to circular business models posits a number of financial consequences for product companies as they need to secure more capital in a stock of products that will be rented out over time and therefore will encounter a slower, more volatile cash flow in the short term compared to linear direct sales of products. This paper discusses the role of financial actors in circular business ecosystems and alternative financing solutions when moving from product‐dominant business models to Product‐as‐a‐Service (PaaS) or function‐based business models. Furthermore, the paper demonstrates a solution where state‐of‐the‐art artificial intelligence (AI) modeling can be incorporated for financial risk assessment. We provide an open implementation and a thorough empirical evaluation of an AI‐model, which learns to predict residual value of stocks of used items. Furthermore, the paper highlights solutions, managerial implications, and potentials for financing circular business models, argues the importance of different forms of data in future business ecosystems, and offers recommendations for how AI can help mitigate some of the challenges businesses face as they transition to circular business models.

Circular economy business models: Towards achieving sustainable development goals in the waste management sector—Empirical evidence and theoretical implications

AbstractThis paper investigates how and whether circular economy (CE) business models affect the implementation of sustainable development goals (SDGs) in the waste management sector. A case study is used to determine the relationship between CE business models and SDGs. It shows that CE business models, potentially, can contribute directly to achieving a significant number of SDGs. The strongest relationships are between the CE business model and the targets of SDG4 (Quality education); SDG 5 (Gender equality); SDG 7 (Affordable and Clean Energy), SDG 8 (Decent working and economic growth); SDG 9 (Industry, innovation and infrastructure), SDG 11 (Sustainable cities and communities) SDG 12 (Responsible consumption and production). After a narrative literature review on the intersection between CE and SDGs, the paper performed a case study on Contarina SpA, a firm that developed a business model to recycle wastes into recyclable materials under a CE approach. The case findings could stimulate further research into how this and similar types of business models will help societies to change from the ‘use‐it‐once‐and‐throw‐it away’ mentality of linear business models to the integrated, holistic, CE model that seeks to emulate nature's cyclical systems, and achieve the implementation of sustainable development goals (SDGs).

Approaching circular economy in an emerging economy: a solid-waste reutilization initiative in a small fresh market in Thailand

Fresh markets play crucial roles in everyday life in emerging economies such as Thailand. Operated by local governments or small companies, these facilities are regarded as less equipped actors for utilizing resources and handling environmental problems, including solid waste. Therefore, the operations of fresh markets are considered as a linear business model where materials and wastes are not efficiently utilized in the economic system. Taking the case of the Don Klang Market, Thailand, this research investigated how a strategic environmentally motivated corporate social responsibility (CSR) initiative on solid waste can transform a linear flow of solid waste for realizing circular economy (CE). Through a society-wide social return on investment analysis, the results reveal that the strategic environmental CSR on solid waste creates impacts toward CE benefiting the company and stakeholders. Moreover, the study reveals that assistance is essential for small companies to take up a role in promoting CE. This research contributes to the improvement of solid-waste management and sheds some light on CE realization through CSR in the context of emerging economies.

Circularity and sustainability in the construction value chain

This paper debates how circularity can contribute to value creation in the construction value chain. In traditional linear business models, value is often limited to financial value for the firm and customers. Here, value is seen more broadly considering a wider range of stakeholders, such as value chain partners, the environment, and the society. Findings from relevant literature and recent research projects are brought to transform linear cradle to grave processes to sustainable cradle to cradle ones. Circularity can contribute to sustainability in many ways: material recovery from existing buildings and reusing, recycling or even upcycling them into new ones and design for disassembly that eases reuse and value retention. Findings indicate that circular economy has significant potential to create and maintain value in the construction value chain. Most of the decisions that affect value creation are done in the design stage, but it is strongly linked to the other stages and affected by business models, circularity platforms, and external influencers such as financing, client’s requirements, regulations and incentives.