Circular value creation: business models and supply chain strategies

Abstract

This paper aims to advance research on the circular economy, sustainable innovation through adopting a circular business model (CBM), and circular supply chain management (CSCM). The circular economy is gradually acknowledged as promising to attain ecological growth by minimising resource input, waste, emissions and energy loss. This article investigates the environmental efficacy of circular value creation and its implications for business models and supply chain strategies. It intends to incorporate CBM and CSCM for sustainable innovation and ecological growth, relying on a review of the literature and four case analyses. The context identifies five distinct CBM propelling supply chain strategies and sustainable innovation, supply chain loops, which differ in intricacy and worth. The study demonstrates that circular business models (CBM) and circular CSCM models can facilitate organisations in accomplishing ecological objectives. The companies examined in the study have different characteristics, but all face comparable challenges in persuading consumers and suppliers to adopt circular business models and supply chain management. A significant challenge is that customers perceive products made from recycled or remanufactured materials as inferior to traditional products, leading to lower prices despite meeting comparable quality standards. Therefore, we review the current literature on the business model background to technological, organisational and social innovation. Since the existing literature does not provide a general conceptual definition of sustainable innovation and circular business mode for circular supply chain management, we present normative examples of requirements that circular business models should meet to support sustainable innovation. Finally, we outline the research agenda by asking some guiding questions.

Keywords: Circular business model (CBM); Circular economy (CE); Circular supply chain management (CSCM); Ecological efficacy; Environmental and economic goals; Sustainable innovation.