Abstract

The circular economy is a systematic approach to economic development design that benefits business, society, and the environment. In comparison to the ‘take-make-waste’ linear economy, a circular economy is regenerative by design and aims to gradually decouple growth from the consumption of finite resources. The goal of the circular economy is to eliminate resource waste by providing various opportunities and solutions to keep materials and products in use for as long as possible (Korhonen et al., 2018).  In particular, the food industry can substantially gain from effective resource utilization and optimization throughout its value-chain activities to achieve a more sustainable production and consumption of food.

Circular business models can be defined as a business model in which a focal company, together with partners, uses innovation to create, deliver and capture value to improve resource efficiency by extending the lifespan of products and parts, thereby realising environmental, social and economic benefits (Frishammar and Parida, 2019). In addition, circular business models help to describe, analyse, manage, and communicate the company’s sustainable value proposition to its customers, and all other stakeholders, while maintaining or regenerating natural, social, and economic capital beyond its organizational boundaries (Schaltegger et al., 2016). 

But moving to more circular operations require close collaboration with existing and new business ecosystem partners. Understanding of the business ecosystem is critical when deciding how to go ahead with the transformation towards circular business models. Therefore, the purpose of this study is to identify and understand circular business model development strategies based on the analysis of the ecosystem. The study is based on a case study with 30 interviews with SMEs from the food processing industry. 

Our results show that the dominant dimensions that determine the circular business model ecosystem are the ecosystem roles and the state of ecosystem evolution. The ecosystem roles are divided into ecosystem leaders and ecosystem complementors. The ecosystem evolution describes the state of the formation of the ecosystem can be divided into emerging ecosystems that are still developing and established ecosystems that are well-functioning and only refinements are needed. This study develops a framework that presents strategies for circular business model development that depend on the role and evolution of the ecosystem. The four types of circular business model development strategies are Adventurer strategy, Circular Hero strategy, Explorer strategy and Sustainability Enabler strategy.  The choice of strategy has large impact on the economic and sustainable value generated.