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A Review and Typology of Circular Economy Business Model Patterns

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Abstract and Figures

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.
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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
© 2018 by Yale University
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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