ArticlePublisher preview available

A Review and Typology of Circular Economy Business Model Patterns

April 2018
Journal of Industrial Ecology 23(1):36-61

DOI:10.1111/jiec.12763

Authors:

Florian Lüdeke-Freund

ESCP Europe Berlin

Stefan Gold

Universität Kassel

Nancy Bocken

Maastricht University

The circular economy requires companies to rethink their supply chains and business models. Several frameworks found in the academic and practitioner literature propose circular economy business models (CEBMs) to redefine how companies create value while adhering to circular economy principles. A review of these frameworks shows that some models are frequently discussed, some are framework-specific, and some use a different wording to refer to similar CEBMs, pointing to the need to consolidate the current state of the art. We conduct a morphological analysis of 26 current CEBMs from the literature, which includes defining their major business model dimensions and identifying the specific characteristics of these dimensions. Based on this analysis, we identify a broad range of business model design options and propose six major CEBM patterns with the potential to support the closing of resource flows: repair and maintenance, reuse and redistribution, refurbishment and remanufacturing, recycling, cascading and repurposing, and organic feedstock business model patterns. We also discuss different design strategies to support the development of these CEBMs.

Process of developing a morphology of CEBMs. CE = circular economy; CEBMs = circular economy business models; CLSCs = closed‐loop supply chains.

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Major reverse cycles for the circular economy (adapted from EMF 2012).

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Morphological box of CEBM design options. Notes: (a) CEBMs can be assigned to multiple options per business model dimension; totals per dimension do not always add up to 26. (b) The abbreviation “n.s.” means “not specified” (the number of CEBMs described in appendix II in the supporting information on the Web that do not specify options for the respective business model dimension). BM = business model; CEBMs = circular economy business models.

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Repair and maintenance CEBM pattern (dark shaded = combined design options). The dark‐shaded design options together propose a generic repair and maintenance business model pattern. For example, “cost‐conscious customers” in the value delivery/target customer dimension means that this is a primary target group of this business model. B2B = business to business; B2C = business to customer; BM = business model; C2C = customer to customer; CEBM = circular economy business model.

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Reuse and redistribution CEBM pattern (dark shaded = combined design options). The dark‐shaded design options together propose a generic reuse and redistribution business model pattern. For example, “take‐back management” in the value proposition/services dimension means that this is a primary offering of this business model. B2B = business to business; B2C = business to customer; BM = business model; C2C = customer to customer; CEBM = circular economy business model.

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RESEARCH AND ANALYSIS

A Review and Typology of Circular

Economy Business Model Patterns

Florian L¨

udeke-Freund ,1Stefan Gold,2and Nancy M. P. Bocken 3,4

1Chair for Corporate Sustainability, ESCP Europe Business School, Berlin, Germany

2Faculty of Economics and Management, University of Kassel, Kassel, Germany

3Lund University, IIIEEE, Lund, Sweden

4TU Delft, Industrial Design Engineering, Delft, The Netherlands

Summary

The circular economy (CE) requires companies to rethink their supply chains and business

models. Several frameworks found in the academic and practitioner literature propose

circular economy business models (CEBMs) to redeﬁne how companies create value while

adhering to CE principles. A review of these frameworks shows that some models are

frequently discussed, some are framework speciﬁc, and some use a different wording to

refer to similar CEBMs, pointing to the need to consolidate the current state of the art. We

conduct a morphological analysis of 26 current CEBMs from the literature, which includes

deﬁning their major business model dimensions and identifying the speciﬁc characteristics

of these dimensions. Based on this analysis, we identify a broad range of business model

design options and propose six major CEBM patterns with the potential to support the

closing of resource ﬂows: repair and maintenance; reuse and redistribution; refurbishment

and remanufacturing; recycling; cascading and repurposing; and organic feedstock business

model patterns. We also discuss different design strategies to support the development of

these CEBMs.

Keywords:

business model

circular economy

review

supply chain

typology

value creation

Supporting information is linked

to this article on the JIE website

Introduction

The negative effects of the currently dominant production

models based on taking, making, and disposing of resources and

goods threaten natural ecosystems and affect human health and

well-being (Braungart et al. 2007; Stahel 2016). Human activ-

ity has even been connected to a global “sixth mass extinction”

of animal species and “massive anthropogenic erosion of biodi-

versity and of the ecosystem services essential to civilization”

(Ceballos et al. 2017, p. E6089). Fundamentally, our global re-

sources are ﬁnite, and we are exceeding our planetary resource

capacity (Steffen et al. 2015). In its search for alternatives to

Conﬂict of interest statement: The authors declare no conﬂict of interest.

Address correspondence to: Florian L ¨

udeke-Freund, ESCP Europe Business School, Chair for Corporate Sustainability, Heubnerweg 8-10, D-14059 Berlin, Germany. Email:

ﬂuedeke-freund@escpeurope.eu, Web: www.escpeurope.eu/, www.luedekefreund.com

DOI: 10.1111/jiec.12763 Editor managing review: Reid Lifset

Volume 23, Number 1

unsustainable resource use, the ﬁeld of industrial ecology (IE)

provided the foundations for the idea of a circular economy (CE)

(e.g., Bocken et al. 2017; Ghisellini et al. 2016; McDowall

et al. 2017). Building on original IE thinking (e.g., Ayres and

Ayres 1996; Ehrenfeld 2004; Lifset and Graedel 2002), the CE

has recently been (re-)popularized as both a public policy and

business concept (EMF 2012; European Commission 2014). On

the national level, China (Tong et al. 2018; Yuan et al. 2006)

and Europe (Andersen 2007) in particular are trying to adopt

CE principles as guidelines for the envisioned redesign of their

economies (McDowall et al. 2017), which requires changes on

36 Journal of Industrial Ecology www.wileyonlinelibrary.com/journal/jie

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