Circular economy and sustainability

The report emphasises the importance of organisations implementing circular business models to achieve the aims of the circular economy. The authors argue that there is a knowledge gap on the underlying implementation challenges of circular business models, which necessitates further research on the subject.

Introduction

The circular economy presents itself as an alternative to the linear model, which is the current economic system. The circular model aims to decouple economic growth from negative environmental impacts by encouraging the recycling and reuse of goods. However, businesses face several barriers when implementing circular business models, hindering their effectiveness.

Research Process

The report presents a preliminary empirical framework for connecting specific cultural, regulatory, economic, and technical barriers with relevant dimensions of a circular business model. The report’s findings are based on empirical data collected through an innovation project conducted within an European Union (EU) initiative.

Results

The report proposes four dimensions for circular business models—value proposition, value creation, value delivery, and value capture—and identifies specific cultural, regulatory, economic, and technical barriers hindering their implementation. The authors provide examples, such as cultural misalignment between the objectives of circular business models and a lack of regulatory support for initiating circular economy measures. They argue that such barriers are likely to be distant from the micro day-to-day activities of individual firms and suggest that targeted and macro-oriented interventions may be necessary to overcome them.

Framework and lessons for managers

The report’s framework offers researchers a starting point for investigating why circular business models are not implemented across various sectors and geographical areas. The framework is structured to capture how different barriers affect specific circular business model dimensions. The authors suggest that future research might build on this framework to systematically collect and structure more granular empirical data. They link the framework to the emerging focus on how managerial practice can overcome the barriers to circular business model implementation.

The authors provide four lessons for managers on how to navigate the design-implementation gap and overcome implementation barriers affecting circular business model dimensions. These lessons include creating a shared vision of the circular business model, building a supportive ecosystem, experimenting with pilot projects, and ensuring continuity of circular business models.

In conclusion, the report highlights that the difficulties of implementing circular business models result from a range of cultural, regulatory, economic, and technical barriers. The report provides a preliminary empirical framework that links circular business models with specific barriers and offers useful lessons for managers looking to tackle these challenges. Further research is vital to identify the specific reasons why new circular business models fail to be implemented and to determine how barriers to implementation affect different sectors and areas.