Multiple Case Analysis of Business Models in Circular Economy Initiatives: Cases from EU, China, the US and Finland

Abstract

Growing rate of consumption coupled with a growing total population is leading to increasing burden on the consumption of non-renewable resources on our planet. The concept of circular economy has been introduced as a potential way of decoupling consumption from the use of natural resources. However, knowledge of how to implement circular economy through business models is limited, together with the knowledge of whether different geographical areas favor different business models due to the institutional landscape in place. To address these issues, this study aims to answer the following research questions: With what kind of business models do circular economy driven business ventures operate with regards to value proposition, value creation and delivery, and value capture? How can business models advance the circular economy? How does the institutional landscape affect the business model in question? To answer these questions, a multiple case study of four cases from a variety of different business model types from multiple industries from Finland, EU, China, and The United States was conducted. The data was a combination of primary data through interviews, and secondary data through news articles and company releases. Interviews were conducted as theme interviews, and were recorded and transcribed. The news articles used were collected from reliable sources combined with the use of LexisNexis as a database. The data was analyzed in within case studies by systematically identifying aspects of the cases with the analysis framework created based on a review of literature of business models, circular economy, and institutional theory. In cross-case analysis, the same framework was used to identify patterns across cases. Results indicate that circular economy business models share similarities in their components across industries. A co-existence of a service and a product offering is usual for implementing multiple value capture mechanisms and providing a mean to acquire suitable waste. Recycled materials communicate lower price compared to virgin materials as the primary value proposition, while for products made from recycled materials the value proposition is sustainability combined with equal or higher performance compared to virgin materials. In advancing circular economy, the results indicate a significant emphasis on recycling. Extending the scope beyond recycling is identified as an underutilized area for circular economy business models. The results indicate that regulative processes in the geographical areas are not alone effective to support circular economy business, and the creation of normative and cultural-cognitive support is equally important.