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.