A typology of circular start-ups: An Analysis of 128 circular business models

Abstract

The circular economy (CE) concept is much-heralded among policy-makers, scholars and industry professionals as an accelerated pathway towards sustainability. This move away from the dominant linear system where products are discarded at the end of product lifecycle is deemed necessary since it is the main cause of an accelerated resource consumption. Business models are considered as a key enabler for the shift from a linear to a CE. However, research on circular business models has mainly focused on circular approaches adopted by incumbent firms, while the contributions of newly established firms (the authors call these 'circular start-ups') have been largely overlooked. This article scrutinises the business models of circular start-ups and how they may differ from those of incumbent firms embracing CE. For this, it analyses the circular business model strategies and innovations adopted by circular start-ups, relying on a novel data sample of 128 circular start-ups identified in three major CE ecosystems in Europe: the Randstad region in the Netherlands, Berlin and London. Based on this data, a novel typology of circular start-ups is proposed, distinguishing between five circular start-up archetypes: design-based, waste-based, platform-based, service-based and nature-based start-ups. The results also show that circular start-ups tend to embrace strategies corresponding to higher levels of circularity than those of incumbents. This preliminarily suggests that circular start-ups can indeed make major contributions to transitioning towards CE.

Circular Economy Concept in the Context of Economic Development in EU Countries

“…There are authors looking into strategies and innovations for business models in circular economies sparked by start-ups aiming to add to the known theory about sustainable innovations. Additionally, this also contributes to possibilities to operationalize circular business models through already established frameworks [34]. A concept has also appeared known as the Circularity Deck, described by Konietzko et al It presents a tool, much like a deck od cards, in order to assist companies with analyzing, forming ideas and developing their business into a circular ecosystem full of potential innovations [35].…”

Systemic circular business model application at the company, supply chain and society levels—A view into circular economy native and adopter companies

“…It is framed within the strategies of slowing and closing material loops between production and consumption (see, e.g., Bocken et al, 2016). Many researchers have pointed out that novel business models are one of the key enablers in the transition to a CE (Brennan, Tennant, & Blomsma, 2015; Ellen MacArthur Foundation, 2012; Geissdoerfer, Savaget, Bocken, & Hultink, 2017; Henry, Bauwens, Hekkert, & Kirchherr, 2020; Kirchherr et al, 2017; Lewandowski, 2016; Lieder & Rashid, 2016). Moreover, business models have been suggested to bridge company‐ and system‐level changes in CE implementations (Boons & Lüdeke‐Freund, 2013; Pedersen et al, 2018).…”

The Effect of Phases of the Adoption of the Circular Economy on Firm Performance: Evidence from 28 EU Countries

“…Based on a comprehensive literature review, in [11] the CE was defined as an economic system that operates at micro, meso and macro levels and switches the 'end-of-life' concept to the concept that is focused on sustainable development. Moreover, working on a sample of 128 circular start-ups, [12] distinguished between five circular archetypes: design-based, waste-based, platform-based, service-based and nature-based.The broad consensus in this literature is that the investment in the circular economy can generate positive effects on firm performance [7,8,11,[13][14][15][16][17]. More precisely, it is considered that firms could profit from the circular economy adoption through the generation of environmental benefits associated with the reduced impacts and resource usage, cost savings generated from reduced natural resource requirements, and the new markets formation [13][14][15].…”

“…Based on a comprehensive literature review, in [11] the CE was defined as an economic system that operates at micro, meso and macro levels and switches the 'end-of-life' concept to the concept that is focused on sustainable development. Moreover, working on a sample of 128 circular start-ups, [12] distinguished between five circular archetypes: design-based, waste-based, platform-based, service-based and nature-based.…”