Circular Business Models that Extend Product Value : Going Beyond Recycling to Create New Circular Business Opportunities

Abstract: Over the past ten years, significant industry, policy, and scientific attention has been given to the ‘circular economy’, which aims to create a more sustainable society by decoupling economic growth from resource consumption. Firms are expected to play a significant role in the shift to a circular economy model by implementing circular business models that encourage prolonged use of products, components, and materials. Yet, despite interest in the circular economy, there is a lack of empirical research about the effects of these business models and how to support theiradoption. This thesis aims to advance understanding of business models for a circular economy, with a focus on firms that slow resource loops and reverse product obsolescence. Using an interdisciplinary research approach, the thesis draws on business model theory and product life extension. The thesis presents theoretical and empirical examinations of circular business models using a variety of qualitative research methods. This includes a case study approach with Nordic firms in the ICT and maritime sectors to identify specific constraining and enabling factors for firms to adopt circular business models. A document study of participants’ reflections was also performed to evaluate one circular economy tool – the ‘In the Loop’ game.It was found that firms contribute to a circular economy through two main overarching circular business model strategies: ‘Extending Product Value’ or ‘Extending Resource Value’. While lack of market demand and high costs were identified as main constraints to adopting ‘Extending Product Value’ business models, the findings suggest that firms themselves can make adopting these models more competitive and cost-effective by refining their business offering. The findings confirm a number of factors could support the adoption of these business models, including policy interventions and game-based learning tools. Contextual differences between sectors and firms were also identified, including firm type (i.e., original equipment manufacturers or gap-exploiter), customer base (i.e., business-to-business or business-to-consumer), and geographic scope (i.e., national vs. international).The thesis underlines several environmental implications of circular business models. It suggests firms focus on maximising efficiency and that the adoption of circular business models does not guarantee reduced resource consumption or primary production. Solutions beyond firm-level interventions are a key part to a circular economy that achieves its intended environmental goals.