As circular economy and sustainability gain greater attention of governments, industry and academia, business model innovation for circularity and/or sustainability is becoming fundamental to sustain companies' competitive advantage. A variety of business model innovation approaches have been proposed to suit circular economy or sustainability principles. Although they largely have been addressed independently as two separate knowledge areas, there is an opportunity to seize synergies from the intersection of both streams. This paper provides a review of approaches for business model innovation for circular economy and/or sustainability, based on a systematic review of academic literature and practitioner-based methodologies. The systematic literature review identified 94 publications and 92 approaches (including conceptual models, methods or tools). The different approaches were categorized according to the business model innovation process, following a three stage dynamic capability view. Subsequently they were compared based on five characteristics (nature of data, boundaries of analysis, level of abstraction, time-based view, and representation style), to allow for a better understanding of how to use the approaches in research and practice. Based on the review, key findings outlining trends and a reflection about the interface of the scopes of circular economy-oriented and sustainability-oriented business model innovation are presented. Moreover, a number of gaps are identified and a framework that maps a future research agenda to simultaneously advance both streams is outlined.
Sustainability and circular economy (CE) are of growing interest for governments, investors, companies and the civil society. Sustainability envisions a balanced integration of economic performance, social inclusiveness, and environmental resilience, to the benefit of current and future generations (Geissdoerfer et al., 2017a). CE emerged as an umbrella concept in the 20100 s (Blomsma and Brennan, 2017), and envisions the achievement of a more resource effective and efficient economic system by intentionally narrowing, slowing and closing materials and energy flows (Bocken et al., 2016; EMF, 2015). CE is often seen as a means to achieving sustainability, but with a narrower focus on the economic and environmental dimensions (Geissdoerfer et al., 2017a). Nevertheless, not all systems (e.g. businesses, value chains) incorporating circular principles are intrinsically more sustainable (Geissdoerfer et al., 2018b). Enhanced sustainability or circularity requires changes in the way companies generate value, understand and do business. Companies are compelled to interact within an ecosystem of actors, moving from a firm-centric to a network-centric operational logic. This transition requires rethinking their incumbent business models (BM), in order to enable a decoupling of value creation and resource consumption (Bocken et al., 2016). Hence, business model innovation (BMI) towards sustainability and circularity is a fundamental capability for companies. Research related to the BM concept within the boundaries of sustainability and CE is still recent, with just 10 and 5 years of activities, respectively (Diaz Lopez et al., 2019; Foss and Saebi, 2017; Lüdeke-Freund and Dembek, 2017). As expected, these bodies of knowledge or potential ‘emerging’ research fields are still in a conceptualization stage and literature is fragmented (LüdekeFreund and Dembek, 2017; Merli et al., 2018; Nubholz, 2017). Likewise, the boundaries and synergies between circular and sustainable BMI are not clearly explored (Geissdoerfer et al., 2017a). While researchers are focusing on understanding and describing these fields, practitioners are already being ‘pushed’ for the transformation of their BMs as a means of embedding circular or sustainability thinking (European Commission, 2018, 2014). Therefore, sustainable and circular BMI approaches have also been proposed in the gray literature by companies, consultancies, governments or NGOs. Despite the excitement, a shared framework does not yet exist to support researchers/practitioners in need of understanding how to conceptualize, design and implement circular or sustainable BM as a means to solve or avoid environmental or social issues, whilst aiming for economic benefits. In addition, the way in which general BM-related research has evolved might generate confusion in regards to the interpretation of the BM construct (Lüdeke-Freund and Dembek, 2017). Research about conventional BM concepts and BMI has progressed into a more robust body of knowledge over the past 15 years. However, it is still in a consolidation phase, with inconsistencies and conceptual ambiguity associated with multidisciplinary contributions from different research fields and the elusive nature of the BM construct, which allows for interpretative flexibility (Foss and Saebi, 2017; Massa and Tucci, 2014; Wirtz et al., 2016). The BM construct is applied widely and sometimes promiscuously. Many of the proposed approaches for circular or sustainable BMI are inspired by conventional BM theory and consider circular/sustainable BMI as sub-fields of conventional BMI (LüdekeFreund and Dembek, 2017), which to a certain extent inherits the aforementioned lack of consistency. Furthermore, many authors proposing approaches for sustainable and circular BMI try to highlight their differentiation from the conventional stream and assume a positioning of individual ‘silos’, instead of promoting complementarity or integration of approaches for synergistic gains. Additionally, there is a lack of clarification of where existing tools for conventional BM are sufficient and where new tools are required for embedding circularity or sustainability in BMI (Lüdeke-Freund and Dembek, 2017; Nubholz, 2017). Not only have they assumed a ‘silo’ positioning regarding conventional stream, but also in relation to each other. Several approaches have been proposed either for circular or sustainable BMI, however few approaches try to address the integrated vision of both concepts (Antikainen and Valkokari, 2016; Geissdoerfer et al., 2018a; Vogtlander et al., 2017). In this dynamic scenario, characterized by an intensive boost of heterogeneous intellectual content in a short period, it is difficult for researchers/practitioners to decide on where to start or which approach to follow.